FBA Vs. Shopify: What Amazon Sellers Need To Know

PART I


The Amazon Seller Battlefield

Amazon is a battlefield between 1.9 million sellers. Competition is at an all time high and Amazon’s exponential growth reflects the increasing rate of new sellers and products sold. This is wonderful for the Amazon shareholder community, however, less so for the Amazon seller. There is an ever-present risk of account suspension, product devaluation, selling counterfeit products accidentally, maintaining a poor seller rating due to Amazon’s mistakes, increasing seller fees, listing hijacks, and the list goes on.  Selling on Amazon is massively profitable (most of the time), however, in the end, your account is only active because they say so. Your livelihood depends on corporate satisfaction. The bubble can burst at any moment. That is NOT a reason to abandon ship, rather, it is a perfect reason to build another one.


Amazon Disadvantages

Amazon is loaded with advantages. That is why sellers are making a fortune. Let’s talk about them. Amazon has the largest customer market share in recorded history. In the fourth quarter of 2020, Amazon raked in $125.6 BILLION. They have 44% year over year increase and that is good for sellers. Amazon is full of opportunities, however, it is full of disadvantages as well. Although Amazon has record numbers of shoppers, Amazon restricts non-essential communication with customers. Leaving no room for remarketing, abandoned-cart follow ups, or any increased order value strategies. Amazon can sometimes make it difficult to track inventory, their seller fees are regularly very high, FBA sellers encounter many returns, and Amazon even repackages unsellable items by default to make the sale, however, that can cause customers to be skeptical about the authenticity of items and complain to Amazon about your counterfeit items. It is a circle of nightmares. For the most part it’s worth it but there are other solutions out there namely, building your own ecommerce store that will come with much less headache. We’ll go over that soon.


* MORE FACTS:


  1. Amazon is the most popular shopping app in the United States. It had 150.6 million mobile users accessing the Amazon app in September 2019 (Statista, 2019).
  2. Customers trust Amazon. 89 percent of buyers agree that they are more likely to buy products from Amazon than other ecommerce sites (Feedvisor, 2019).
  3. There are currently 150 million Amazon Prime subscribers (VentureBeat, 2020).
  4. Amazon brought in $125.6 billion in sales revenue in the fourth quarter of 2020 (Amazon, 2021).
  5. The electronics category was the most popular product category purchased by Amazon shoppers in the United States. 44 percent of US Amazon shoppers had purchased electronics via Amazon (Feedvisor, 2019). 
  6. 82 percent of Amazon buyers say price is an important factor to consider when shopping on the platform (Statista, 2019).
  7. 67 percent of Amazon Shoppers prefer to shop using their desktop computer or laptop (Cpcstrategy, 2018).
  8. On average, small and medium sized businesses (SMBs) located in the US sell more than 4000 items per minute (Amazon, 2019).
  9. Amazon has 1.9 million sellers actively selling on the marketplace (Marketplace Pulse, 2021).
  10. 23 percent of online shoppers go first on Amazon for inspiration when they don’t have a specific product in mind for purchase (Episerver, 2019).

Although Amazon seems to be winning right now, don't ignore the movement of over 22 million households and counting -  boycotting Amazon and finding alternatives for their basic needs. 

 (according to data from Kantar Retail ShopperScape)

Read this Business Insider article which articulates many consumers frustrations with Amazon.


Political Correctness And Corporate Controversy 

In March 2021, censorship and ‘cancel culture’ gained a lot of power. 

Big Tech has set the stage and made their intentions clear. If they don’t like you, they can cancel you. This is a very frightening reality we have come to face. The power of the companies we once cheered and trusted have betrayed us and sold the people out. The once innocent child book so many children grew up on with invaluable life lessons has now been the center of controversy, being labeled racist and immoral. It seems that logic and reason has been erased from the minds of the masses and anything that disagrees from the official narrative, or of the powers that be (Big tech, government), is immediately disgraced and erased.

We live in a country where a sitting President lost the freedom to speech. The book burning much resembling 1933 Germany is here and maybe here to stay. Although books may not be burned with fire, they are being digitally erased from history and alternative voices are being cut off from society. It is a war on liberty, freedom, and diversity which is what the people burning books claim to love. This is a very controversial topic and requires logic to strategy to navigate this rough territory.

Logically speaking, if the powers that be can ban a children's book, they will certainly come for Torah, products that they deem as “racist”, or “pro-freedom” which may come in the form of gold or silver coins, ammunition, and storable food because it is untraceable, dietary supplements, books on history, alternative news, and alternative health because it may promote a healthy physical and mental lifestyle that goes against an agenda, and who knows what else. It is a matter of time before 1933 Germany repeats itself in full form. This impacts all sellers! Anyone with a business. Unless your company will always be politically correct and avoid controversy even when that goal post is pushed beyond how bad it is now, you will suffer the tyranny that has clearly expressed itself in recent days. The best way to avoid being a victim is to be in control of your story.

Building a threat-proof ecommerce store is not exactly possible as there are always threats and vulnerabilities waiting to be exploited. However, building an infrastructure that does not rely on one main sales channel is crucial for long term survival. This is an evergreen philosophy that has the most effective strategy in the face of instability. Furthermore, if we have learned anything over the last year, it’s that nothing is 100% stable. When a crisis hits, it hits hard and the best plan is to have a backup plan.


Consequences Of Poor Infrastructure

The paragraph above describes the threat of big tech censorship and the immoral cancel culture we find ourselves in today. However, another important takeaway is the fact that a poor infrastructure is a recipe for disaster. What even is a poor infrastructure? 

Let’s break it down like this: 


1) Relying on one or even just a few unreliable channels.

2) Unable to communicate

3) Unable to manage customers

4) Unable to deploy marketing campaigns

5) Unable to build a customer database

6) Unable to manage data

7) Unable to control fulfillment quality

8) Unable to test products and ideas without heavy investment

9) Unable to control fees and pricing

10) Unable to design and build with creative freedom

11) Unable to sell restricted items

12) Unable to sell globally

13) Unable to accept multiple currencies

14) Unable to understand customer needs

15) Unable to define data points for growth

 

This is what I think matters a lot. When creating an ecommerce infrastructure, these factors are keys to success and without them they cause headaches. Selling on Amazon is its own headache that these are headaches you didn’t know you have.

The consequences of a poor infrastructure disables you from knowing your company best. It restricts knowledge. AND KNOWLEDGE IS POWER. 


Marketing Essentials: What Amazon Doesn’t Let You Get Away With.

 Ever wanted to say thank you to your Amazon customer?

Perhaps give them a heads up about a new product and a discount because you love their loyalty? If you like making your customers happy which most business owners do, then the answer is OF COURSE. If you’ve ever tried to find the outreach button on your seller dashboard, you know it doesn’t exist. 

That is because Amazon doesn’t want you to steal their customers away. Although in fact #2 listed above, customers say they’re less likely to buy items off of Amazon, logically, if they knew that you were offering a discount, had a lower price - because selling on your own store removes FBA fees, or they knew they would be supporting a small business purchasing from you off of Amazon, chances are they’d do it in a heartbeat.

People are shopping on Amazon because things they want are there. Ironically, Amazon has become a junkyard of counterfeit Chinese garbage, and original Chinese garbage, most people would agree that Amazon has poor quality control. Why? Mo’ money! And since consumers have ‘bought’ the name Amazon, they trust that they are getting the best items for the cheapest. However, it turns out it’s far from the best, and in many cases NOT cheaper. This all depends on what items we are talking about, but in my experience and in many other peoples experience, it seems there is a consensus. People share the same concerns even though they're interested in unrelated niches. It is surely an issue across the board.

That is why many people are ‘opting out’ of their Amazon memberships although 150+ million seems so high. People are finding alternatives to meet their shopping needs as Amazon is saturated with junk. As the rule points out, it is hard to maintain quality with increased quantity. It is important to capture the non-amazoners in your ecosystem before your competition...as they are looking for a place to go. Amazon won’t let you upsell, Amazon won’t let you remarket organically, Amazon won’t let you communicate, offer personal discounts, or collect data to help you out. All the things you can do off-Amazon.



Selling On Amazon Vs. Shopify

 Shopify has its flaws but not in the way that prohibits you from selling and growing.

When looking at Shopify from a perspective compared to for example Wordpress or other website developing software, Shopify is much more limited. Although custom coding can be implemented with Shopify, it is much more difficult to design freely. Shopify has the most creativity in my opinion out of all ecommerce-specific platforms but not the way you could design a site knowing HTML,CSS, JAVA, etc. This is not a bad thing, it is just a thing. At the end of the day, Shopify makes up for their lack of design freedom by providing amazing tools and resources that make managing an ecommerce storefront a breeze. When looking at Shopify from a perspective compared to Amazon, you have unbridled freedom. This is the important part. A Shopify store built right can be an invaluable asset. Take Kylie Jenner’s cosmetic storefront which generated 400 million in the first 18 months of launch, or:


https://www.kyliecosmetics.com/ 

https://www.bluebella.com/

https://www.taylorstitch.com/

https://triangl.com/collections/sets

https://helmboots.com/

https://www.bando.com/

https://www.bremont.com/

https://negativeunderwear.com/

https://kkwbeauty.com/


These are great examples of well built stores that generate income.

Remember, the goal is NOT to replace Amazon. It is to supplement while giving you enhanced control.



Customer And Product Control

 What kind of customer and product control are we talking about here?

First, let’s talk about the product. Amazon comes with a nasty side effect. Some sellers don’t experience it, but many do and that is the devaluation of products. Another is low perceived quality due to the pressure of competition. These negative influences flood all areas of the market. The highly competitive nature of Amazon takes away the needed control over the products you sell. This hurts the bottom line, especially when Amazon fees are unreasonably high. Shopify works on a 2.9% CC rate +$.29-.30 / transaction for the Basic plan which is high but significantly lower than Amazon. Plus when these sales come in when they wouldn’t have without a store, that’s a plus in and of itself. Have better control over your packaging, your returns, your pricing, your perceived quality, and your bottom line. Now comes control over your customers. This is so important because this is how your brand stays relevant. 

Think of the lifetime journey of your customer. It may be harder to get the customer to buy initially due to your brand being new and untrustworthy, but we can change that. With strategic marketing, good prices, and design elements to improve your store’s authenticity, such as live chat, badges, picture reviews, the ability to even leave reviews, a page outlining returns and refunds, etc… We are leaving a positive impression on cold traffic. Although they may have decided to shop elsewhere this time, we haven’t given up on them quite yet. We can employ strategic marketing campaigns and incentives to earn their business but that is not where we see the big difference. The big difference is found after a long-term relationship with the customer. Each customer purchase provides an opportunity to repeat that sale. Ideally multiple times.

While Amazon offers subscribe and save and other recurring methods, it is still limiting as a seller. Whereas, controlling your storefront provides flexibility and options. Providing a quality experience to customers is an art and one that over time can be refined and perfected. There is no one size fits all solution to anything. Finding the sweet spot of marketing without being too aggressive or annoying, or the right product price comes with experimentation.

All possible while owning your store. I go back to the beauty of testing without heavy investment because that is the kind of control I am talking about. For example: Amazon will require an LLC, an approval phase, listing requirements, invoices, or whatever else they want before you can even test the product - this is if you’re starting from scratch with a new Amazon account to keep products, businesses, and money separate. Whereas on Shopify, with the right guy, A Shopify store can be up and running in no time to test an idea without having to jump through hoops. That is what makes having your very own ecommerce infrastructure such an invaluable asset. 

Take control of your products, your customers, and your ideas. 


Building More Decentralized Brands

There is a gift we’ve all been given. It’s called the internet. It’s so incomprehensibly large that we don’t even realize it’s true potential. We only use 0.004% of the internet. Most of the sites that exist are unindexed by search engines. These sites exist within what’s known as the deep web or even the dark web. Now this is not relevant to us, at least not yet anyways… But what is important to note is that even within that 0.004% there are 4.5+ billion websites. It’s fair to assume that the average person barely visits 0.001% of that in their lifetime.

But also it’s fair to assume that there are many websites that just because you don’t know about, doesn’t mean they aren’t visited and interacted by a community of people. Or perhaps loyal fans, followers, customers, etc. Building out your own ecommerce machine, allows you to build a community of loyal followers interested in your niche/product category. Big doesn’t always mean better. A great example of that rule is when it comes to micro influencers over influencers with millions of followers. The small group tends to be more active, loyal, engaged, and committed. It is important to understand the significance of catering to a specific demographic.

Knowing your customer allows you to provide better experiences to your customer. And building a brand that is decentralized, meaning it is less mainstream, perhaps more controversial, allows you to cater more personally to those who love your products. For the seller, this gives you the ability to test as mentioned earlier in a highly effective manner. The Decentralized brand is a brand that isn’t for everyone and doesn’t rely on big marketplaces to sell because it doesn’t have to! The loyal customers will actively seek your products and find you without having to find them. It is because certain interests appeal to certain crowds, that does not just mean adult-themed stores, collectibles/rare items, movie props, nicotine, alcohol, CBD, legal firearms, ammunition, hunting gear, and illegal items which I am not promoting. The idea is while the internet is still around, people will search for what they want and what they want may not be as accessible on common marketplaces leaving opportunity open to the ‘decentralized brands’ that carry the needs of certain niches.

 

Understanding The Long Game

Building out an ecommerce infrastructure is not something that happens overnight. Depending on the products, the budget, and the vision the time varies. Oftentimes you’ll find that the slower you go the more you can pay attention to detail. Speed has its uses as well, specifically for testing products, niches, and audiences. It helps to set the expectations from the beginning to avoid miscommunication and disappointments.

I have built e-commerce stores in less than a day and I have built stores that took months. The key is knowing the intention behind it. Ideally a website can be functional and able to collect sales in under two weeks. In special circumstances it can be within a week. However it’s not just building the website that matters. It is dissecting data to improve the user’s experience, the website’s functionality, the drop-off points, the engaging points, the overall feedback.

The long game is about building a sustainable brand that serves as an asset in the future. I will never tell you that it’s possible to make a store profitable right from the start. It may be possible under extraordinary circumstances, a large marketing budget, and an exceptional product, but I think long term. That is how you build a brand, not a fad. I want to engage the user, provide an exceptional experience, tell a story, get personal with customers, and provide a long lasting relationship that is in both parties' benefit. It is through those eyes that will bring long-term success.


PART II


An Ecommerce Blueprint

Over the years, I have built several brands of my own and have helped others do the same. 

I have learned a lot about what I love to do and I have the passion and drive to push past the challenges that inevitably show up at every turn. From what I have learned through trial and error is this: Be honest about the product and brand and know when to continue and when to jump ship. The ecommerce blueprint is simplified by this formula: Product + Storefront + Marketing + Marketing + Data + Refinement + Time = Results. Then it continues: + Remarketing + Marketing + Patience = More Results. In other words it’s more about the fixing and the testing then it is about your product and website. It is through persistent focus and strategy adjustments that create the desired events such as sales.


Putting The Ad Dollars To Work

Before we work with any big budgets, it’s important to note that it will take some time to build the ecommerce infrastructure. Of course this depends on the vision, how many products, how many unrelated stores, etc. It is also good to build organic traffic and flow before advertising.

This is what I have found to work great. For example: Build a few stores before you market one. Give them time to be indexed, backlinked, searched, and revised before sending millions of people there at once. It is at that point marketing goes from cue to play. I’ve worked with Facebook, Instagram, Snapchat, Tiktok, Google, and all the major players. It’s helpful to know that I know which industries will fail on which and what to expect from them based on budget. For the most part, advertising channels are pretty saturated, especially the big dogs.

We have for sure hit ‘consumer fatigue’ in many industries. It may be wise to test several other platforms and alternative marketing methods in addition to the traditional ways, as this has proven to be most effective at reaching the most amount of people and collecting the much needed data.

Putting the ad dollars to work at the right time is exciting. However, to set expectations right from the start, marketing requires more testing than any other component of ecommerce. There are many variables to test. Some need isolative testing and others need group testing. From creatives to demographics, to interests, to budget, to best time of day, there is plenty to explore and a lot to learn before things click.


Customer Care & Remodeling Amazon’s Brilliance

It turns out it isn’t as hard to have good customer service as you may think.

It all starts with preparing the storefronts with as much self-help information as possible. Setting up the right team to respond and manage to customers is easy and doesn’t need to be expensive. If we build out stores, I won’t have the capacity to respond to customers but I can surely automate most of it leaving less for real humans to deal with. Through strategic automations, Amazon’s customer care can be replicated perhaps even better. I like to keep things simple and clean.


Automation & Scaling

Over time, expect to have each store automated, leaving room to duplicate and scale. 

The time varies based on the goals, the product, the budget, etc. 

The best way to automate is to leave as little room for error as possible. That requires building things right from the start.

 

In conclusion, consider the points mentioned above. It is wise to begin transitioning away from Amazon and onto your own storefront. Of course we aren’t leaving Amazon, we are simply complementing and duplicating an already efficient machine.


What Should You Do Now?

Put together a list of products that you sell on Amazon and send it over to team@cobemedia.com along with your name, company name, and brief description of what you have in mind. After an easy conversation and if we’re a great fit, you’ll go from being wise to wiser, and secure to even more secure, and from having a poor infrastructure to a significantly better one. Let me know what you think, your thoughts always matter.