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Is it worth selling on amazon in 2021? Things to consider.

Amazon is the world leader when it comes to the E-commerce business. Amazon founder Jeff Bezos is the richest person in the world. So why Amazon is growing so rapidly and what makes it stand out amongst competitors?

Amazon’s core principle is to be the most customer-centric business on the planet. Their efforts to achieve convenience for customers and to gain their trust are 2nd to none. That’s why people prefer amazon whenever they want to buy anything online. As of 2021, Amazon has over 200 million Prime subscribers. Amazon is present in multiple countries and Marketplaces such as the US, IN, DE, UK, SA, etc. They have more than a hundred categories and subcategories of products.

So if you have an offline business and if you want to grow your business online, then AMAZON is definitely one of the platforms you should be checking out. On amazon you can sell products that are manufactured, sourced from different brands as well as your own brand(s), you can even sell customized products where a customer can choose certain aspects of a product. Amazon has grocery, pharmacy categories as well. So whatever the products that you are selling offline there is almost a 90% chance that you will be able to sell on amazon. Certain products are prohibited, or restricted based on the marketplace. Amazon has strict policies against selling illegal or counterfeit goods.

Let’s talk about the pros and cons of selling on amazon.

Pros:

  1. Large customer base: Amazon has a huge number of users which gives the opportunity to get more exposure and customers for your product.
  2. You can sell on multiple Marketplaces: You can be a seller from India, but you can sell choose to sell on any of the Amazon marketplaces.
  3. Less or Zero Marketing cost: Amazon allows you to get more exposure without having to spend anything on marketing your product.
  4. Amazon FBA services: FBA(Fulfilled by Amazon) is a service that lets sellers just hand over products to amazon and amazon will take of storing, shipping and returns, etc.
  5. Amazon lending: Amazon even lets you borrow money from them to scale your business when you are eligible.

Cons:

  1. Huge competition: Just like amazon has a vast number of users, amazon also has millions of sellers as well which increases competition.
  2. Amazon bias towards buyers: A buyer on amazon has more convenient policies when it comes to returns which at times may frustrate you as a seller. A buyer on amazon can choose to return a product even if there is nothing wrong with the product and you will have to refund including even the shipping cost that you incurred.
  3. Amazon has its own products and subsidiary seller accounts: Amazon has its own brand in certain categories and also some big seller accounts such as Appario and Cloudtail are amazon’s subsidiary seller accounts(partnership with other ventures).
  4. Amazon fees: Amazon takes a cut for each of your orders this is excluding the services such as FBA. Availing of amazon’s certain services may not be affordable for some sellers.

So, What type of sellers have more opportunities to grow on Amazon?

  1. Sellers who have their own unique products or have their own brand which offers quality products.
  2. Sellers who have better resources or are more established can cut on their shipping costs, inventory costs and offer products at a lesser price compared to competitors.
  3. Sellers that can offer products that do not lie in the same categories of more established sellers or Amazon.
  4. Sellers who have an eye for researching or sourcing unique or new products with the potential to sell.

Amazon also has a unique mechanism that lets sellers compete to sell a product which is called ‘Buybox’. Winning the Buybox allows you to sell more than your competitors. When a buyer clicks to purchase the product directly from the product page, the seller with the Buybox will be the one that will get the order. In order to win the ‘Buybox’, a seller has to have excellent performance metrics such as low complaint rate, etc.

What are some of the high-selling amazon product types in 2021?

Remember certain products in the list such as masks have strict rules in place and you may need to provide documents to be eligible to sell. Breaking amazon rules results in a suspension or permanent termination of your seller account.

  1. Face masks, e.g. peel-off face masks:
  2. Fitness items
  3. Office accessories
  4. Toys & Games
  5. Camera & Photo
  6. Electronics
  7. Books
  8. Gift Cards

Choosing between FBA and MFN:

FBA(Fulfilled by Amazon) as I already mentioned makes it easier for sellers to manage their orders.

Pros:

  1. Amazon stores your products in their warehouse.
  2. When a customer places the order, Amazon will pack and ship the product themselves.
  3. FBA offers prime shipping which attracts more customers due to faster delivery.
  4. Customers have more trust in FBA than MFN.
  5. FBA gives small sellers a better chance of competing. Better chance to win ‘Buybox’.
  6. Amazon will handle the buyer return process.
  7. Seller ratings are protected for order damages that occurred during transit.

Cons:

  1. FBA fees may be costly for you depending on the product type based on aspects such as size etc.
  2. If your products don’t sell, you may incur more losses compared to MFN.
  3. Making a profit may become harder.

MFN(Merchant Fulfilled Network) also has its own pros and cons.

Pros:

  1. Let’s you handle packaging yourself which may help you choose sufficient packaging to avoid damage during transit and avoid returns.
  2. You may be able to cut down on shipping and inventory costs.
  3. Custom receipts and packaging option that helps you market your brand better.
  4. Customers will choose MFN if the product is not available as FBA.

Cons:

  1. You need to handle returns yourself. Amazon has strict rules in place which require sellers to respond to return requests or buyer messages within 48 hours.
  2. Amazon Atoz claims lets buyers raise claims against you regarding an order. Failing to meet the responsibilities will affect your order defect rate which is an important metric in keeping your account active.
  3. MFN may require you to set up your own customer service that needs to deal with buyer’s issues in a timely manner.
  4. Less chance of winning the ‘Buybox’.

These are some of the main aspects that need to be looked at before trying to sell on amazon. Amazon is a growing platform and it will be relevant for years to come. Determining if it is worth selling on amazon completely depends on the person or business who wants to sell as it is affected by several things that are explained in this article.

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