Sometimes I take a consulting opportunity where the company just wants my expert opinion. And even though I’m an avid fan of using marketplaces, in fact I literally said, “If you’re not on Amazon you’re irrelevant…” there are some risks and challenges to know about before launching. So I present to you, 10 Reasons to NOT Launch Amazon.
- Every eCommerce opportunity has an opportunity cost. The biggest one for marketplaces comes from execution. It takes a lot of time dedicated to an idea to see it to fruition, and this non-unique argument can be largely applied to the unknowns. For most companies who are deciding to launch marketplaces for the first time, that’s an unknown.
- Requires multiple departments to be successful.
- Requires feeds.
- Requires time investment.
- This is not an actual risk… yet. However, Amazon is self policing themselves at this time. This will become a risk when it becomes a risk for everyone. That is, when the internet becomes taxed by the state or federal government in all 50 states.
- There is conflicting “grey” information on the interwebs. Your accountant may Google something and claim that nexus will exist if you sell on Amazon. Or if you sell on Amazon Prime. So while there isn’t a risk, there’s a perception of a risk. And it may require internal education to pass through this challenge.
- If you could buy Victoria’s Secret at Walmart, would it be sexy? Probably not. Some brands may not want to be associated to the ongoing brand found on the marketplace. This might seem obvious, but you don’t sell clothing on Newegg. Similarly, technology pieces like a video card, aren’t the best sellers on Sears. And demographically, maybe you have a luxury brand, and part of the lure to your brand is the sales process. On a marketplace, you lose some control. This could impact your brand.
- For most companies, there’s no brand impact. But it could DEFINE your brand. It could force your company to become more efficient with cost and shipping times. It could require you to improve your quality control, and improve your customer service response rates.
- Margin / Fees
- Data Management (Building the Feed)
- Warehousing & Inventory Management
- Ops – Order Management
- Customer Service Impacts
- Amazon’s SEO on Google
- Amazon’s PLA version of your product
- Prime Risks
- Wholesale Prevention (Future Risk)
- Time Involved – Opportunity Cost
- Your SEO on Amazon
- Brand Exposure
- Unique products thrive on Amazon
- New Customers
- Additional Transactions / Growth
- Prime Benefits Including Faster Shipping
- Free Shipping Benefits
- Benefits From Building Feed Improve Database
- Other Marketplaces such as eBay/Sears/Rakuten