Are you an online retailer of consumer products? Do you have your own e-commerce setup? Are you facing difficulties in pushing your product despite multiple digital marketing activities? Do you feel you have wasted your time & money into developing your website for far too long without any tangible results? Well, if your answer to most of these questions is yes, we suggest you sign up as a seller on Amazon!
Amazon is the ultimate one stop-shop for product retailers! Let’s discuss the pros & cons of having your own website vs selling on Amazon!
- Amazon comes with its brand name, authenticity, fulfilment & guarantee ensuring features. As a seller you have easily dodged the ‘faith’ bullet if you are registered on amazon. Your website, on the other hand, could be relatively less-known and may not have an outlet of confidence for customer.
- Amazon guarantees traffic on your brand page. Even if your product caters to a niche, Amazon ensures that your product will have some or other traffic coming to it, this is because of its presence in multitude of industries and its magnanimous customer base. Your website, however, will require rigorous SEO & SEM activities to generate its first set of traffic.
- IN-BUILT MARKETING SETUP – This, right here, is a game changer! You would have already spent a huge sum of money on getting sales from your website and to get to that stage it could take you almost half a year. Amazon PPC almost instantly gives you tangible results with much lesser spends.
Here’s what will happen if you register yourself on Amazon and use AMS (Amazon Marketing Services) to the best of your ability:
- Within 6 months your sales could soar by almost 150%*. Whereas on the website it takes 6 months only to get the ball rolling.
- Your products will eventually start generating organic sales on Amazon without you having to spend too much money! This happens because of Amazon’s organic ranking algorithm! The higher the ratings, reviews & sales, the higher the rank your product gets. If it makes it to the top 10 of any category of any industry, be prepared to restock your inventory by volumes!
- Average Cost of Sales (ACOS) is the most important term here. [Formula : SPEND/SALES * 100] You initially start off with a higher ACOS of say around 50% which means that with every Rs. 100 spent you are getting a return of Rs. 200. If strategized correctly, your ACOS will eventually come down to 12.5% (pan-amazon ideal) which means that you are generating sales worth Rs. 800 with every spend of Rs. 100. From then on, it’s a game of volumes! Could you imagine generating these returns on your website within 6 months?
- Lightning Deals & Amazon Sales – This is the period where, as a seller, you prioritise volumes over margins. Go big on your ad spends and reap the most of the millions of traffic on Amazon during those days.
- You could get contacted by Amazon to sign up for their CloudTail programme which guarantees you a monthly sales volume!
All this & much more, but what are the costs that you incur? Amazon takes a 10-15% cut off your monthly sales depending on your industry. Additionally, your ad spends are also deducted from your total sales value. Regardless, you stand to maintain your profit margins, thanks to the high volume of sales, every month.
Here’s a case study:
XYZ company sells children’s board games and educational games.
Products are priced at either Rs. 299 or Rs. 699. XYZ company allocates Rs. 10,000 monthly on its Amazon PPC Campaigns. It is currently in its 7th month of selling on amazon and is doing very well with its marketing activities. Here’s a sample financial statement for the 6th month.
|Units sold @ Rs. 299||100||29990|
|Units sold @ Rs. 699||50||34950|
|Amazon Fee||12% of Sales||7790|
|Profit After Fee||57150|
|Profit After Ad Spend||47150|
|Return on Ad Spend (ROAS)||21.2%|
As you can see, Amazon provides an ROAS of 21.2% within 6 months which is almost double than that from your website. (Avg – 10-12%)*
We have got to give you a fair warning though! If you are already seeing a steady ROAS on your website, we advise you to stick to marketing your website. In the longer run, it is beneficial! And if you are already successful on Amazon, do NOT expect the same gains from your website, it is relatively a harder & longer game!
We hope we have resolved your dilemma of Website vs Amazon! Do reach out to us for any further queries.