As an eCommerce vendor, it may seem like it’s Amazon’s world and we just live in it. But you didn’t become an entrepreneur just to play by someone else’s rules. Use your relationship with Amazon as a springboard to building your own eCommerce empire.
Rented vs. Owned Platforms
Just as with brick-and-mortar businesses, online vendors have the choice of rented or owned storefronts. Rented platforms include Amazon, Facebook, and other third-party options, while owned platforms are created and operated exclusively by the vendor. An owned platform would be your own ecommerce website.
Of course, both types have their pros and cons. Let’s look at the different elements of eCommerce platforms and how they apply to your business.
Range
This one is a no-brainer. Amazon has a built-in user base that’s second to none. New eCommerce retailers can quickly jump-start their business by tapping into Amazon’s ready-made customer base.
But as your business grows, this benefit can become a drawback. With Amazon controlling all communication between you and the buyers, you have no opportunity to nurture the customer relationships that are key to building sales and developing customer loyalty.
Cost
Again, for a start-up, there’s a financial advantage to using Amazon’s platform. You can bypass the expense of designing and maintaining a digital storefront and invest your funds in product, marketing or other areas that may need it.
If time is money, Amazon’s platform also provides savings in labor. There’s no need to divide your energies between operating your storefront and handling other business activities.
Eventually, these savings become offset by the increased fees you pay as your sales go up. Loss of repeat business is an indirect cost, but one that can ultimately add up even more.
Competition
This is one of the bigger disadvantages of Amazon’s size. Their doors are open to just about anyone, so you’ll often find yourself going up against multiple retailers offering similar or even the same products.
vAmazon does have tools to help you promote your products, but they’re not easy. Prime positioning in the Buy Box or Merchant Offers List is awarded by rankings based on pricing, merchant history, customer reviews and other factors. In essence, it’s a catch-22: to gain one of these spots, you must beat the competition you’re trying to overcome in the first place.
When you’re operating from an owned platform, your products have the spotlight all to themselves. When you get visitors to your website or mobile app, you know they’ve come because they’re interested buyers.
Shipping
Once your product has been sold, Fulfillment by Amazon handles the shipping end of the transaction. You send your products to one of Amazon’s fulfillment centers, where orders are shipped out to customers.
A time-saver? Absolutely. But one that comes with a lot of strings attached. For example, merchants sometimes find a discrepancy between the actual cost of shipping an order and the amount reimbursed by Amazon.
In addition, Fulfillment by Amazon has stringent requirements for the procedures used to package and ship products to their centers. Failure to comply can result in penalties ranging from additional charges to refusal of inventory. Plus, Amazon may limit your warehouse space or even change what is available to use in peak seasons.
When you operate on an owned platform, you’re free to work with an independent fulfillment center that offers the flexibility to scale along with your business. You can still work with Amazon, confident in the knowledge that your fulfillment center will comply with Amazon’s rules.
With the unique Fulfillment by Medallion program, we warehouse your Amazon stock and then ship to the Amazon warehouse when you need a stock refill. Allowing you to fulfill orders from your own website AND Amazon stores or the Amazon warehouse from our company’s two locations – L.A. or Boston.
Fulfillment Services to Fit Every Need
Medallion Fulfillment & Logistics started out in our family garage, so we understand what it takes to grow a business. Contact us to learn more about our full-service fulfillment solutions, including our Amazon replenishment warehousing program.