Amazon is the most visited eCommerce platform in the United States, with 2.2 billion visits in April 2023 alone.
If you want to start selling products online, Amazon is a natural choice. But Fulfillment by Amazon (FBA) and third-party seller benefits make Amazon selling highly competitive.
The platform’s high competition might make you consider other ways to sell online — including on your own website. Both options have their advantages and disadvantages, so making an informed decision is vital for eCommerce success.
Wondering if selling on Amazon is worth it? Then this guide is for you.
Is selling on Amazon worth it?
Amazon is an eCommerce platform preferred by buyers and sellers around the globe. The platform’s huge customer base and features like Amazon FBA make it attractive for people who want to sell online.
But despite its popularity, Amazon’s business model is more suitable for some businesses than others. You’ll need to weigh the advantages and disadvantages to determine whether it’s worth selling on Amazon.
Advantages
Amazon lets you seamlessly move your business online by providing several benefits:
It increases your visibility
Amazon has an established customer base of billions who trust the brand. If you don’t want to focus too much on marketing, you can still tap into Amazon’s large customer base and potentially expand your reach, even if you’re a beginner.
61% of U.S. consumers start their product search on Amazon, in contrast to other popular platforms like eBay and Walmart. Amazon’s popularity gives your business more exposure, heightening your chances of reaching your target audience.
Moreover, Amazon displays products based on relevance rather than popularity. This can help your products gain higher visibility on relevant searches even if they’re newly listed.
Amazon FBA handles logistics
If you’re new to online selling, handling more than just product sales can get overwhelming. Amazon offers an outsourcing service called Fulfillment by Amazon (FBA) to help new sellers streamline their eCommerce operations.
Amazon FBA allows you to outsource inventory management, packaging, shipping and even customer support through Amazon’s fulfillment centers.
By becoming an Amazon FBA seller, you can focus on making better business decisions while establishing your store online with minimal risk.
It improves your credibility
Positive reviews are essential to building a credible brand. Plus, online shoppers usually read customer reviews before purchasing products on eCommerce platforms.
If you want to establish brand credibility but don’t know how, then Amazon is a great platform to start. According to a Feedvisor report, 75% of consumers check for product reviews and prices on Amazon.
The platform also displays all product ratings, which helps customers easily compare similar items.
While several perks make selling on Amazon worth it, it also comes with some drawbacks.
Disadvantages
Here are some disadvantages of selling on Amazon you need to consider before making a decision:
Your business won’t be on your terms
If brand development is a significant part of your digital marketing strategy, creating an Amazon store may not be for you.
Even if you own the products you sell on Amazon, the marketplace has several guidelines and restrictions to maintain its integrity.
For example, you can’t contact customers directly and can only use Amazon’s Buyer-Seller Messaging Service. Similarly, Amazon can withhold funds if they detect fraudulent or illegal activities.
Amazon also takes a cut out of your sales depending on your selling plan. This may not be feasible for all businesses.
If you want to sell on Amazon, read its seller policies thoroughly and only proceed if you can abide by the regulations.
High return and replacement rates
While returns and replacements are part of online selling, they might not work for all types of businesses. Returns will only add to your losses if you deal in custom or made-on-demand products.
Amazon is customer-centric and has a convenient return and replacement policy.
Buyers don’t incur any costs when returning products. Instead, Amazon charges sellers the cost of shipping and replacement, even if the return was the customer’s fault.
If your business can’t afford too many returns, then Amazon’s policy may not work in your favor.
Selling on Amazon incurs high fees
One of the major factors in deciding if it’s worth selling on Amazon is the cost. Depending on your selling plan, the platform has several charges, such as:
- Referral fees
- Amazon FBA fees
- Storage fees
These charges can go up to 50% of your Amazon sales revenue each month.
This high cost is a major disadvantage of having an Amazon business — especially when other methods, such as selling on your own website, can cost less.
While the platform’s policies might be rigid, it’s worth selling on Amazon if you’re new to eCommerce.
But even if your end goal is to build your own website and run a full-fledged eCommerce business, Amazon can help you put together the necessary revenue if you maintain a profitable seller account.
How to become a profitable Amazon seller
- Sell high-demand products
- Optimize your product listings
- Use images and be descriptive
- Price your products right
- Ensure product quality
- Respond to feedback and questions
Amazon has 9.7 million registered sellers. This makes the marketplace highly competitive, considering its ease of use and seller benefits.
While it’s easy to become an Amazon seller, you’ll need an effective online marketing strategy to differentiate your products from competitors and run a profitable online business.
Here are some best practices to become a successful Amazon seller.
1. Sell high-demand products
Listing all your products on Amazon might be tempting, but it will also result in high storage and fulfillment fees.
Instead, only list products that are in high demand. This will help you generate sales while minimizing expenses.
You can conduct product research by tracking product metrics on Amazon or using third-party extensions like SellerApp.
2. Optimize your product listings
The Amazon search algorithm is designed to show the most relevant products for a particular keyword. To ensure your product ranks at the top of search results, you’ll need to optimize your Amazon listings for relevant keywords.
However, optimizing your product listings for generic searches isn’t enough. You’ll also need to include specific criteria such as age, seasons or holidays.
For example, say you’re selling a watch. Your product could also show up when users search for “Christmas gifts” if you use similar keywords in the product description.
3. Use images and be descriptive
Online shoppers look for images and descriptions to understand a product better before buying. You can use images and vivid descriptions to showcase product features and distinguish the product from similar listings.
Ensure you add original and high-quality images and be as descriptive as possible to grab the buyer’s attention.
4. Price your products right
Your pricing determines your sales and revenue on Amazon. If your product price is too high, it won’t generate enough sales. But if the price is too low, you won’t make much profit.
To be successful on Amazon, you must strike a balance between profit margins and sales while also ensuring product quality. Usually, Amazon sellers strive to make a profit of one-third of the total product price.
5. Ensure product quality
Amazon handles order fulfillment if you’re listed as an Amazon FBA business. But the product quality depends on you.
A high-quality product gets you better ratings, reviews and recommendations. This helps you stand out, driving more sales and increasing profits.
6. Respond to feedback and questions
You can interact directly with customers on Amazon by responding to feedback and questions.
By being responsive, you can clarify customer doubts and build trust in your brand. Being responsive can also help you build a positive seller image, ultimately driving more sales.
While it’s worth selling on Amazon, you might also want to explore other options, such as creating a website. Read on to decide if selling on your own website is right for your business.
Should you sell on your own website?
Amazon is a great platform to get started with online sales. But like many other entrepreneurs, you might want to create your own eCommerce website.
An independent website comes with many perks for online businesses.
Here’s what you need to know before you choose to sell through your own website:
Advantages
Here are the most important benefits of having your own business website:
People will know your brand
When you sell on the Amazon marketplace, your product is listed among many similar products. Customers who buy from these listings might love your product but won’t know you as a brand. But if you sell through a dedicated business website, you’ll grow brand recognition.
You have complete control over your business
Even though it’s worth selling on Amazon, selling through your own website gives you more control over your business. Unlike on Amazon, you can create your own business processes, set up guidelines and establish customer contact on your own terms.
There’s little competition
Amazon has millions of sellers, mainly consisting of small- and medium-sized businesses. This makes it a highly competitive platform, especially for new sellers.
However, an eCommerce website consists of only your brand. Buyers visit your website solely for your brand and might be willing to explore more of your products.
Costs are more flexible
Selling on your own website involves several costs, such as website design, hosting and marketing. But these costs are more flexible as you can allocate finances depending on your business’s unique needs.
Plus, some major costs (e.g., web hosting and design) can be managed through reliable web hosts.
Bluehost has a cost-effective shared hosting plan designed especially for online store owners.
As a business owner, selling on your own website gives you more independence. But it also comes with challenges you must understand before building an eCommerce website:
Disadvantages
Here are some disadvantages to consider before selling on your own website:
It involves more risk
Selling through your website requires considerable investment to manage business operations such as inventory, logistics and customer care. This might not be feasible if you run a startup or small business with a limited budget.
The huge amount of investments might be risky for businesses without financial backups.
Marketing is a must
One of the main drawbacks of selling through your own website is the lack of a pre-established customer base. You’ll need to build brand visibility through marketing strategies such as search engine optimization (SEO), social media and pay-per-click (PPC) advertising.
You’ll also compete with large businesses for visibility, so your marketing strategy must be robust and on par with theirs.
But even though it’s worth selling on Amazon, an independent website helps you establish a recognizable brand.
Still, you must build a strategy to ensure your eCommerce website is profitable.
How to maintain a profitable eCommerce website
As of 2023, there are about 24 million eCommerce websites online. However, the success rate of new online businesses is less than 20%.
If you want to run a successful eCommerce business, here are some best practices to follow:
Improve website SEO
If you want more sales, ranking high in search results is crucial. Some SEO fundamentals include using relevant keywords and backlinks on your website. This can ultimately improve your rankings in relevant search results.
Even though there are other forms of marketing, SEO drives organic traffic and works for your long-term success. According to HubSpot, SEO is among the top five marketing trends that generate the highest return on investment (ROI) in 2023.
Here’s a checklist to ensure your eCommerce website is properly optimized for search engines:
Simplify the purchase process
Customers enjoy shopping from websites that offer a simple and hassle-free shopping experience. Steps like account creation might lengthen the process and drive away potential customers.
A quick and simple purchase process can help you generate more sales on your eCommerce website.
Offer incentives for shopping on your website
Incentives work well if you sell on multiple platforms but want more customers to buy directly from your website. While you display products on other eCommerce platforms, you can offer website-exclusive discounts, freebies and coupon codes.
This can help you increase sales on your website while building product awareness through other platforms.
Employ customer retention strategies
You can use several strategies to retain buyers and create a loyal customer base. For example, you can offer a rewards program for customers who shop multiple times from your business.
You can also send exclusive promotional offers to buyers who sign up on your website. Ultimately, your goal should be to encourage customers to shop directly from your website and generate predictable revenue every month.
Optimize the delivery process
While your products are a significant part of your business, the delivery process is equally important. According to ShipStation, almost 78% of consumers said they might not shop from a brand after a poor delivery experience.
To create a good delivery experience, properly package your products to ensure maximum safety under all conditions. Also, offer multiple shipping options and outsource delivery only to trusted partners.
Selling on your own website helps you run an online business on your terms. However, it’s worth selling on Amazon if you’re just starting out and don’t have the resources to run a full-fledged business.
If both options look viable, here’s a quick comparison to help you decide:
How to decide between selling on Amazon and your own website
Choosing the right platform for an online business depends on your goals, requirements and budget. These factors will help you decide if it’s worth selling on Amazon or your own website:
- Business goals: What are your business goals? If you want to sell products and generate revenue, then selling on Amazon is a great choice.
But if you want to build an independent brand, selling on your own website is a better option.
- Profit: Calculate all the costs associated with Amazon vs. your own website. If the total cost for selling through your website is less than selling on Amazon, then it might be better to set up your own eCommerce website.
- Product types: Certain products are better to sell on an independent website than through an online marketplace like Amazon.
For example, customized art pieces can’t be made and stored in large quantities. So it’s better to sell them on your own eCommerce website.
However, mass-produced products might be better suited for Amazon.
Final thoughts: Is selling on Amazon worth it? Selling on Amazon vs. your own site
Selling online is a big step for any business. That’s why you should carefully consider the advantages and disadvantages of selling on Amazon vs. your own website before choosing the best platform for your online business.
But you can get the best of both worlds by selling on your website and the Amazon marketplace. This will empower you to establish a reliable income source through Amazon while building your brand.
Bluehost’s WooCommerce hosting plans can help you build an online store while also selling on the best online marketplaces.
Ready to take your business to the next level? Check out WooCommerce hosting by Bluehost.
FAQs about selling on Amazon vs. your own website
Amazon is an excellent platform to sell products online and generate revenue. It offers several benefits, including order fulfillment and a global customer base. But the platform also has many fees, which can take up a considerable part of your revenue.
Ultimately, your business requirements and goals will determine if selling on Amazon is worth it for you.
No, you don’t need a separate website to sell on Amazon. You can create your own storefront through Amazon Seller Central once you register on the platform. Seller Central lets you manage business tasks such as inventory, product listing and prices.
Yes. Amazon doesn’t restrict you from selling on other platforms, including your own website. Note that if you sign up for FBA, Amazon warehouses will hold your inventory. This means you can’t sell it on other platforms.
FBA is Amazon’s order fulfillment service for sellers. First, you need to sign up for Amazon FBA and create product listings. Amazon will then transport the inventory for these products to one of its fulfillment centers.
You can list products, set prices and accept orders as usual through your seller page. Amazon packages and ships these orders based on inventory. The platform also charges storage and shipping fees, depending on the number of sales.
