Dallas, TX -- (SBWire) -- 05/20/2014 --Recognizing there are valid reasons to sell on Amazon, here are the three reasons that you should not sell there. If you use Fulfillment by Amazon —Amazon does the shipping — you know nothing about the customer. All you see is the revenue. They own the data and the customer relationship.
Pricing. It’s not cheap; the pricing structure means it will not work for low margin products. You’ll pay a subscription equivalent to $480 per year, plus per-transaction fees based on a share of your revenue. Fees for media products are higher with closing fees per item as well (typically $1.35).
If someone is an ecommerce business then they shouldn’t rely on Amazon. But if they're ecommerce business is funding their lifestyle, and they don’t want to change the world, then Amazon could possibly work. This distinction is important: It’s essentially asking this critical question about their business, “Who do you want to be when you grow up?” If your ambition is large, then Amazon is not for them. However, if one merely wants to make enough money to pay the bills each month, then it could be good. Please understand that one will be hitching a ride on the back of a very strong 900-pound gorilla.
If Amazon accounts for 50% of the business, then it is very difficult to turn off a significant revenue-producing channel. Amazon is a good strategy for some merchants. It represents 30% of the ecommerce market, so listing your product on Amazon’s marketplace will get your product in front of a huge potential volume of traffic. But one needs to recognize that they are merely the supplier of the product, and while it may generate a significant revenue stream, it’s not for everyone, and it’s not building a business in a sustainable way.
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