Editor’s note: This is a guest post by Thomas Pruchinski, Director of Marketing at LandingCube.
In this article, we are going to explain why Amazon sellers should consider expanding off Amazon to grow their brand and build a more robust business. And then we’ll provide some guidance for different channels that sellers can expand into.
The Costs of Selling Exclusively on Amazon
Selling on Amazon has tremendous benefits, but it comes as a tradeoff. You get access to millions of online shoppers, Primed to buy (pun-intended). But so do your competitors on Amazon.com. And competition is fierce. Just think how your competitors can place ads on your own listing. It benefits Amazon and its customers to encourage dog-eat-dog competition. Prices go down and product variety goes up.
I should repeat that… they are Amazon’s customers. When you make a sale on Amazon, it’s not your customer. Amazon controls the buyer experience and restricts your ability to communicate with customers. They select which products to recommend alongside your product. And they try to keep everything within their ecosystem. It’s understandable for Amazon to do this, but it limits you, the seller.
While selling through FBA limits the hassles associated with fulfillment, shipping, support and logistics, it also costs you a hefty fee. Other channels and marketplaces have much lower fees.
It’s estimated by eMarketer that almost half of online sales this year in the US will be made on Amazon.com. That’s a lot. So we’re definitely not suggesting you ditch Amazon. But by selling exclusively on Amazon, you are missing out on the other half of potential sales.
And by being wholly dependent on Amazon for all sales, you put your business in a risky situation. One malicious negative review campaign can wipe out 90% of your sales (if you mostly sell only one product). You could drop in the rankings. Amazon can introduce a brand in your category. And you can even get suspended. If you don’t have an email list and aren’t selling on other channels, your business is in a precarious situation.
Building an email list and the infrastructure to make sales on other channels allows you to have more control over your business, build a more robust brand and make more sales.
Challenges Of Expanding Off Amazon
As mentioned above, there are certainly challenges associated with expanding off Amazon. Logistics get a bit more complicated, as you can’t rely solely on Amazon’s fulfillment services. You have to create new listings. And in the case of building your own e-commerce site, you’ll have to carry a much heavier load for marketing.
You also can’t take advantage of Amazon Prime, which helps customers convert at much higher rates on Amazon compared to other sites. But you’ll also have more control over the customer experience. So branding becomes even more important outside of Amazon (on Amazon you benefit from Amazon’s strong brand).
Expanding off Amazon Into Other Channels
Below we’ll talk about several different channels that provide you options for more sales, in addition to Amazon. When you have built a solid business on Amazon, it’s a good idea to expand into other channels and build real brand assets to “build your moat” (a term used by online business broker Empire Flippers, to denote the defensibility brought on by diversification of product sales & marketing channels – Your business will sell more if it expands into other channels. So if selling your business is a desire, this is an additional benefit to diversifying off of Amazon). Look into other online marketplaces that provide services similar to Amazon’s but cater to different audiences and product types to support your expansion.
Building Your Own E-Commerce Site
Creating your own website to sell products entails a bit more of a learning curve for Amazon sellers, compared to throwing up your products on other marketplaces. But it provides even greater brand benefits. That is, because you can control the entire customer experience. What people see when they land on your site, the colors and even music, products that you recommend them, and the messaging from beginning to end. There is no better way to build an army of raving fans and repeat customers who will tell all their friends about how awesome your brand and products are.
Really, every business should have their own website. Even if you don’t make any sales there, having a website lends credibility to your brand on Amazon. And if sales on Amazon should stop, at least you have the infrastructure to continue making sales on another platform.
Shopify is the most popular e-commerce platform and the one we recommend. It provides ease of use, but also many powerful features to build out a site to your liking.
After building your site, to get sales there you have to do some marketing. Typically, that is through Search Engine Optimization (SEO) & Paid Traffic. For SEO, you’ll have to structure your site & pages in a way that the Google search engine finds compatible. And for Paid Traffic, Facebook Ads & Google Ads typically provide the best options for sending high-quality visitors to your site.
Two Ways To Ease the Transition
There are two very powerful things you can do to expand off of Amazon, while taking advantage of your history of Amazon sales.
Building Email Lists With Discounted Promotions
The first is building an email list. Email is still the best and most direct way to communicate with customers. When someone gives you their email it indicates they are interested in your brand and are likely to have a higher lifetime value compared to other prospects. And having an email provides sellers a great way to ask for reviews.
One way Amazon sellers can collect emails is by driving traffic to a landing page to offer a discount code in exchange for emails. Tools specifically designed for Amazon, like LandingCube, provide a great option. Amazon sellers can practice with paid methods of traffic like Facebook Ads to drive discounted sales on Amazon to collect emails. This will boost performance on Amazon and set you up for selling on your own e-commerce site.
Using Amazon Customer Data For Lookalike Audiences
If you have a history of sales on Amazon, you can use this to jumpstart your Facebook Ads campaign. By using the Amazon customer data to create custom audiences & lookalike audiences in Facebook, you can show ads to people who have already bought from you (Custom Audience) or who are very similar to those who have bought from you (Lookalike Audience). This will drastically reduce the cost per acquisition with Facebook Ads. You can either drive this traffic to Amazon (through the landing pages mentioned above) or straight to your new e-commerce store.
In Summary: Expanding off Amazon For More Sales & A Stronger Brand
Expanding off of Amazon puts your business in a much stronger position. By being totally dependent upon Amazon for sales, you face high competition and risk and pay high fees. Selling on other marketplaces and building your own e-commerce site will make your business more defensible, your brand more meaningful, and will result in more sales.
Thomas Pruchinski is the Director of Marketing for LandingCube, a software tool that helps Amazon seller grow their business with external traffic. Before LandingCube, he worked on two e-commerce brands in the health space. His focuses were on growing Amazon sales, email marketing & influencer partnerships. He joined forces with LandingCube in December 2016 as the first marketing hire to help Amazon sellers make more sales & build a more robust brand by leveraging traffic sources outside of Amazon. He also runs an online apparel shop and performs stand-up comedy.