Amazon: The Big, Bad, Bane of Small Businesses? Maybe Not.
Amazon might seem like the enemy of small businesses, but are they really?
Sure, Amazon has engaged in some... questionable business practices. But you can’t ignore their massive share of the e-commerce market and the incredible logistical advantages they offer to sellers. Many brands write off Amazon completely because they want to focus all sales on their DTC site. Although that can be entirely warranted, don’t sleep on Amazon as just a logistics provider for your business.
Consider this: The cost to pick, pack, and ship a box of shoes anywhere in the US via Amazon’s Fulfillment by Amazon (FBA) program is around $7.64. Compare that to USPS, UPS, or other carriers, which can charge upwards of $15 for the same service! 😲 Even with bulk discounts, it's nearly impossible for any business to match Amazon's shipping rates, not to mention the cost of packing materials, the labor to prep the order, and the insane speed of that shipping via Amazon Prime! Plus, Amazon handles delivery issues, customer service, and refunds for you!
🍁Note for our Canadian friends 🍁-- the economics are often even better, as shipping costs in Canada are notoriously high - and utilizing Amazon’s FBA may be the only way it's worth even selling at all within Canada (especially on lower AOV purchases).
While it’s essential to recognize the advantages Amazon provides, it's equally important to be aware of the challenges and risks. Amazon has knocked off products made by small businesses, have some very annoying pricing policies, and typically cause a lot of headaches for sellers on their platform. Typically the biggest gripe about selling on Amazon is the ~15% referral fee.
But when you factor in these logistical savings, many brands come out nearly even despite the fees. If you don’t want to make Amazon a significant sales channel, it’s worth looking at even if it’s just to fill orders from your DTC site. Embracing Amazon’s strengths might just transform a daunting challenge into a remarkable opportunity.
