800lb Gorilla: The Dangers of Selling on Amazon

This post is by Travis Romine, an ecommerce growth consultant at Sharp Commerce and previous owner of ParadiseFibers.com.

There’s no doubt that Amazon will continue to gobble up an incredible chunk of online retail in the coming months and years. Amazon has a huge audience with 54 million users of their Prime service alone!

As an ecommerce merchant, how can you best use this channel to your advantage but also protect your company?

For most B-to-C retailers I consult with, I recommend selling on Amazon as a general rule. A properly created Amazon listing will get your brand and product in front of a giant group of consumers ready to buy. However, there are some significant risks to using Amazon as your main or only selling channel.

Getting kicked off Amazon

What happens if you get kicked off Amazon for a technicality? That’s right, Amazon can suspend you and kick your entire inventory off for a handful of reasons. Once you are suspended, it can be very difficult to recover from, time consuming to get your account re-activated, and can crush your business. Here are a few ways Amazon can kick you off:

• Late fulfillment – That’s right, if you have too many late shipments for any reason you can suspended.
• Re-direction of a customer off Amazon – Yup, if you accidentally watermark an image with your website, include a link to your website in the description or even just reference your website that’s all it takes for listing removal or account suspension.
• Late or ignored Amazon email messages – If your late getting back to customer questions or complaints through Amazon, you’re toast. Also remember that if you include an external hyperlink to your site in these messages you’ll likely get suspended.
• Duplicate ASIN/product pages – If you list the same item under multiple ASINs you can get suspended. Amazon has a very strict policy on duplicate product pages in general.
• A-to-Z Guarantee claims – If you have many unsatisfied customers using the A-to-Z Claims issue as their “last resort” with returning an item/getting a refund you can get suspended.
• Selling at a lower price – Amazon requires you to sell at the same price you do on your webstore. Amazon will suspend you for offering better deals on your webstore.

These are only the top ways to get kicked off Amazon, scared yet?

Even a temporary API connection error that doesn’t update tracking numbers can get you kicked off Amazon. How can you protect your company against Amazon throwing you overboard on a whim?

Diversification

A common thread with my most successful clients is diversification. Selling through many channels besides Amazon reduces the liability of Amazon suspension. It also helps smooth out overall sales if other channels are temporarily performing poorly.

Selling through multiple channels also allows for valuable market data and baselines. For example, if a particular SKU is performing well on Amazon but not well on your webstore, you might need to work on the product page SEO, checkout process or product page presentation.

It’s very dangerous to put all your eggs in the Amazon basket. Serious online retailers at the very least should have a comprehensive webstore independent of the Amazon channel.

Can your webstore compete with Amazon?

It’s a David and Goliath scenario, but yes, there are ways to keep up with and even outshine Amazon. Here are a handful of strategies I’ve personally used successfully (in my former ecommerce business) and have put into play for my clients.

You are investing in Amazon – Many sellers experience the power and profitability of moving high volume through this channel. Don’t kid yourself, you are building Amazon’s brand, email list and customer base for them. At any time, another seller with more buying power may find your supplier, undercut you, and even use your listing and image through the same ASIN!

I’ve also seen Amazon use various tactics to chew up and spit out wholesalers using Vendor Central. This is where Amazon buys at a distributor price from wholesalers/manufactures for direct sale under the Amazon brand. The excitement from the initial Amazon PO fades quickly when merchants see their products being sold at heavy discounts.

Personality – Purchasing from Amazon is a plain vanilla experience. Take advantage of this by personalizing the user experience (UX) on your local webstore to excite your customers and set your webstore apart. Create a “staff picks” section with overview of contributors and bios. Use verbiage throughout your descriptions and articles that matches your demographic and company culture. Interlink your blog articles with appropriate product pages for added punch.

Product presentation – Amazon presents all of its listings basically the same way. Take advantage of this weakness by using a custom template to display your products optimally. Some high end webstores will allow custom templates that can be assigned to each product type to optimize UX. Some common examples are detailed info on compatibility, specs, application and presentation of these elements.

Authority – Amazon is a solid source for items if you know what you want. But what if you have questions about which product fits your needs? Take advantage of this Amazon limitation with in depth staff reviews and applications of your most popular and newly released products on your blog.

In-the-box marketing – When shipping your local webstore orders, include some marketing materials to increase the customer engagement and lifetime value. As a best practice, Amazon frowns on this as it sends the customer to you for their next sale. Add an attractive one-time use coupon, flier on upcoming promotions/showcase of popular items, or a paper catalog if you have one.

Keep specialty products special – Don’t list your really special, hard-to-quantify products on Amazon. These are products that customers are seeking you out for and Amazon doesn’t have access to. This may not make sense in all scenarios but it’s something to strategically consider depending on supply and demand. Carefully deciding which products to keep exclusive to your local webstore can be an advantage, especially if your site has enough rank and traffic to fill the general demand in the marketplace.

Prompt customer service – Many online retailers selling on their own webstore as well as Amazon, deal with Amazon questions and shipments first. Amazon scares retailers with threats of account suspension. This tactic results in Amazon questions and shipments taking priority over local webstore orders.

Amazon can’t answer the phone – This seems simple but presenting your phone number loud and proud and actually answering the phone greatly increases customer confidence. It’s simple, it works and Amazon can’t do this.

To combat this: make sure your staff knows to treat all inquiries and shipments with the same intensity as Amazon. And yes, you’re likely going to need to up your game with your customer service to make that work. Also implement a solid CRM system and live chat to respond to customers quickly and improve the customer experience.

Conclusion

Amazon is absolutely ruthless and will not rest until they devour every last scrap of the ecommerce pie and really any damn pie it can find.

Amazon is however a slow ship to steer and smaller niche companies with focus, culture, and strategy can still outmaneuver this beast in many areas.

Keep in mind, all of the performance strategy above will not only provide some advantages over Amazon, but will have your company soaring above your competitors, and customers singing your praises.

This post was by Travis Romine, an ecommerce growth consultant at Sharp Commerce and previous owner of ParadiseFibers.com.

Travis consults for online retailers throughout the US on building high performance ecommerce businesses, growth strategy and digital marketing.