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July 31, 2020

Amazon - The Call of The Sirens

Amazon - The Call of The Sirens

Are you currently listing or thinking about listing your products on Amazon? Wondering whether you are simply handing your customers over to Amazon? Wondering if you should continue to advertise using Amazon? Tired of Amazon's fees?

In this episode, Andy explains why Amazon may be the modern-day ‘Call of the Sirens’ for eCommerce store owners. In addition, he looks at why it is so easy to list products on Amazon and why you should be better off focusing on building your own brand beyond Amazon.

ABOUT THE HOST:

Andy Splichal - Make Each Click Count PodcastAndy Splichal is the World's Foremost Expert on Ecommerce Growth Strategies. He is the acclaimed author of the Make Each Click Count Book Series, the Founder & Managing Partner of True Online Presence and the Founder of Make Each Click Count University. Andy was named to The Best of Los Angeles Award's Most Fascinating 100 List in both 2020 and 2021.

New episodes of the Make Each Click Count Podcast, are released each Friday and can be found on Apple Podcast, iHeart Radio, iTunes, Spotify, Stitcher, Amazon Music, Google Podcasts and www.makeeachclickcount.com.

Transcript

Andy Splichal  0:03  

Welcome to the Make Each Click Count Podcast. I am Andy and in today's episode, we are going to discuss the advantages of listing and advertising your products using Amazon. I remember once upon a time learning about Greek mythology, and in Greek mythology, there are sirens. Now sirens there are beautiful women who would lower boats to their doom with seductive voices, promising sailors of treasure. Now for ecommerce merchants today's siren could well be listing their products on Amazon. Now before you think I've gone crazy well, let me explain what I'm thinking. And once I explain, I think you'll also see the similarities between Amazon and the mythological sirens and why e commerce business owners need to focus their resources building their own brand and promoting their own website. So the lower of Amazon sirens call so Amazon offers easy access to their shopping portal. In fact, it has never been easier than now for Ecommerce merchants to list their products to millions of potential buyers, those who search Amazon each and every day. This is an Amazon song of treasure that rings out for all to hear. Now merchants who decide to list their products on Amazon are given a couple of choices. They can either ship their products themselves, it's called FBM. Or even easier, they can send their products to one of Amazon's giant warehouses and have Amazon ship their products for them. That's called FBA. And when a product is sold, Amazon will charges the buyers payment method. And then they coordinate the delivery of the order between the merchant and the customer, whether the merchants sending the order or Amazon sending it. Now for this service, Amazon takes a commission approximately 15% plus a fee for shipping it fulfilled by Amazon plus an additional storage fees along with a few other miscellaneous fees. These fees are just for the items that sell when randomly appearing on Amazon's platform in order to gain premium placement. Amazon allows merchants to purchase where they would like to appear within Amazon and for which search terms using a pay per click model. Now these paid placements can appear either is displaying your products called sponsored product ads or his banners above the product listings called  Sponsored Brands ads. And when running ads, there is no upper limit to these fees and Amazon can be charged you for these premium placements within Amazon. And you'd be surprised I've managed accounts and highly competitive product lines with him Amazon for companies initially launching where the ad fees for product placements have actually exceeded the total number of sales generated. And all these fees Amazon charges lies the untold dangers of listing your products on Amazon. Now how exactly can Amazon be your doom? Well, it's important to remember a couple of facts when selling your products on Amazon. First and foremost, the customer does not have a relationship with the seller. Instead, they have a relationship with Amazon. Use the seller or an interchangeable to the customer. You don't believe me? Just think how often have you heard someone tell you, I just purchased that new stapler from Amazon. Compared to I just purchased that new stapler from Joe Blow staple company off of Amazon. It's always from Amazon well at least 99% of the time. Now when Amazon orders the merchant whose product it is, is not allowed to communicate directly with the customer. In fact, the merchant receives a coded Amazon email that forwards to the customer's email just to make sure they aren't tempted. In addition, merchants are not allowed to add promotional material to their orders and maybe most important, merchants are not able to market in the future. To those customers who pay Just their products from their Amazon listings. Second is a merchant listing your products in Amazon, you are at the mercy of Amazon. Now if a merchant violates any of Amazon's numerous policies, their products can be removed from Amazon with little to no warning. And if Amazon changes their algorithm, which changes the order in which they list the products, well, a merchant may find that their traffic leaves their free traffic instantly evaporates, with absolutely no recourse. Finally, unless you sell your own private label merchandise, there is nothing, nothing preventing other merchants including Amazon, from competing directly against you, purely on price. Since you all are using the same listing, the only distinguishing factor is price and how quickly it can be delivered. In fact, this competition is what has made Amazon such a behemoth. Now these facts of doom are what makes the strategy of listing on Amazon and ventually destroy many of the Ecommerce merchant boats out there. So there's a better way you need to work on building your own brand outside of Amazon. Now, without a doubt, building your own brand is much harder to build using your own website compared with simply listing your products on Amazon. However, for all the reasons we just discussed, it is an absolute must specially if you want to survive, not just survive. But if you want to survive and thrive long term in the world of Ecommerce. This all might sound good you're thinking but how should you go about building your own brand outside of Amazon? Well, I've broken it down into three main ways. First, you need to find a reliable and predictable source of traffic that you can scale. Second, ensure you're able to effectively compete with your competitors, including Amazon if they're selling the same product. In third, build a loyal customer base. Well first, regarding finding your traffic source, from the time that ecommerce has started in the late 1990s. Through today, finding that predictable traffic source has always been the most important thing in determining success of selling your products online. In fact, this is a reason why it's so tempting to be lured into Amazon's call the sirens. However, there are other good options beyond Amazon although it's going to take a little bit more legwork for my private clients. Google ads and specifically Google Shopping continues to provide customers with substantial profitability selling products. In addition, being Microsoft advertising can generate profitable traffic as well as Facebook. And even Google organic traffic generated through optimizing the pages of your website, aka SEO can work to drive your own brand. Now effectively competing with your customers the second step in it when it comes to effectively competing ecommerce, I'm not merely referring to the price, it was just about price, then there would be nothing less than a race to the lowest price for your product. And Amazon and Walmart store stores would be the only ones left when that race was over. Now, you don't have to necessarily have the lowest price, no. Instead, you can work with your product offerings to show there are worth a premium. And even if you sell that exact same item as others, there are ways such as bundling that will allow you to create a package offer that will support a premium price. However, generally you do need to at least be in the ballpark when it comes to your shipping. Amazon has changed the landscape with customers in regard to shipping. Customers will thanks mostly to Amazon have grown very accustomed to receiving their orders one to two days after their orders place. Today for a customer to be willing to wait to receive that order more than two days, you're going to have to make sure your products are either worth them waiting for or you will need just to make sure that you deliver it in the timely manner that they have come to expect. Finally building a loyal customer base. Once you have determined your price and your shipping strategies, it's important to think about what sets your business and your products apart from your competition. Think about what you can give your customers that no one else can. Is it a community? Is it expert knowledge? Is it keeping them informed on the best and the newest products in a vertical with their interest? Well, one steadfast technique to keep your customers engaged is constant communication, through email, through mail catalogs or even through a newsletter or a Facebook group. constant communication will keep your customers loyal. It'll keep them engaged. And most importantly, it's going to keep them ordering from you and referring you to their friends and family. The bottom line is in order to succeed, make your website and your product offerings different, and a value compared to all of your competitors, including Amazon. So final words, selling products on Amazon is an effective way to promote your product line. However, with the listing fees with the advertising fees, it can be quite expensive. In addition, there are downfalls and there are other warnings that suggests that this may not be a viable long term strategies for many companies. Given this, you know, it's puzzling to me how much attention some companies will spend prioritizing, listing and working on their product listings and their advertising on the Amazon platform. Now, I've worked with quite a few companies that will spend all their time optimizing their Amazon product pages, while not working to promote their own website or optimizing their own product pages. In fact, occasionally, they don't even have a website to promote if you can believe that. Now don't misinterpret what I'm saying here, I believe that Amazon can be a nice supplemental revenue stream, especially for companies just starting that need to quickly grow their brand recognition. Amazon can work wonders. However, I also believe that it is more important to work on growing your brand outside of Amazon, in order for the merchant to have the relationship with the customer. Because growing your business is almost all about the relationships that you are building with your customer base. The current 2020 COVID pandemic is predicted to rapidly accelerate the growth of Ecommerce, many baby boomers and even generation xers that did little to no online purchases have been left with no other choice to shop online. And when things return to normal, and they will eventually return to normal. It is predicted that much of these online shopping behaviors will remain. The question you must ask yourself now is will you be ready? Well, that's it for today. Remember, if you liked this episode, please go to Apple podcasts and leave a five star review. And if you're looking for better results, and in particular, using Google Shopping so you don't have to rely on Amazon. Or check out my new book Make Each Click Count Using Google Shopping. It's available on Amazon. But it's also available at www.makeeachclickcount.com That's it remember to stay healthy, keep safe and happy marketing and I will talk to you in the next episode.