Most brands, after weighing the pros and cons, will decide that they shouldn’t give up the exposure and reach Amazon provides (some brands even have unique product lines specifically for Amazon and other marketplaces). As we move closer to a cookieless future, zero- and first-party data assets are becoming more valuable than ever, and brands cannot lose these assets to Amazon. This means loss of valuable consumer data that brands can later use for email/SMS outreach, personalization, or advertising retargeting. And some brands are wary that Amazon acts as a retailer in its own marketplace for private-label products like Amazon Basics Amazon could be your direct competitor, and you may not want Amazon to have access to your merchant data around sales, price, margin, or popular products.īut perhaps the biggest cost to selling on Amazon is the loss of the direct customer relationship you have when selling through your native site. Brands have faced reputational concerns around counterfeiting on marketplaces like Amazon. On the other hand, selling on Amazon can become expensive with commission and advertising costs and pressure on price/margins-since consumers see Amazon as the place to get the best deals. Some benefits to selling on Amazon include massive audience reach, consumer loyalty, repeat sales (for example, “subscribe and save”), consumer reviews, and online-to-offline (showrooming) behavior. Benefits and Costsīrands must strive to attain the proper balance between leveraging Amazon’s audience and protecting the brand. Of course, Amazon takes commissions, fulfillment, and shipping costs from these sales.Īdditionally, Amazon has built a massive advertising business, with many sponsored ad products to help sellers generate traffic to their Amazon storefronts: text and visual ads within shopping results triggered by consumer search queries, contextual (not keyword-based) sponsored display ads, and Amazon’s programmatic demand-side platform (DSP) enabling brands to drive traffic from inside or outside Amazon with display, video, and audio ads. Per Statista, Amazon’s net sales generated through third-party sellers hit US$27.4 billion as of the first quarter of 2022, a 13 percent year-over-year increase, and third-party sellers made up 57 percent of Amazon’s paid unit sales. For brands, it begs the question: Do we meet consumers where they are and where they want to shop-on Amazon? Many brands have, seeing that much of Amazon’s recent growth has come from third-party sellers.
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