As the world’s largest e-commerce marketplace, Amazon has been making moves to attract a broader range of merchants. On top of its proven infrastructure, features like Amazon Storefronts and Amazon Business make the platform an appealing option for DTC and B2B brands alike.
But competition on Amazon is notoriously fierce and brands that aren’t already selling there might wonder if it’s still profitable to expand into this key sales channel in today’s climate.
Let’s break down the pros and cons of selling on Amazon for DTC brands and B2B merchants so you can make the right decision for your business. And no, it’s not too late to start selling on Amazon. Here’s more of what you need to know.
Selling DTC and B2B Brands on Amazon
- Selling on Amazon: What’s in It for DTC Brands?
- Benefits of Amazon for B2B Sellers
- Top 4 Challenges to Consider Before Selling on Amazon
Selling on Amazon: What’s in It for DTC Brands?
Nearly 2 million small- and medium-sized businesses are Amazon selling partners. And 60% of those sellers say Amazon is their fastest-growing channel. Here are some of the biggest benefits of selling your private-label products on Amazon.
Lower Customer Acquisition Costs
Amazon is the most visited e-commerce site in the US and has more than 300 million active customer accounts. In other words: Your target customers are already shopping on Amazon.
You could be missing a huge opportunity by not selling your products there.
When you sell on Amazon, you’ll likely see lower customer acquisition costs compared to other channels. Why? It’s all about the audience.
Users who find your products on Amazon are already in buying mode. They’re at the very bottom of the funnel. And if they’ve made it to your product page, it’s because they’re looking for what you’re selling. They’ve either searched for it or seen an ad for it based on their shopping behavior.
It doesn’t get much more in-market than that.
Efficient Advertising
Speaking of ads, advertising on Amazon is also an efficient way to reach more buyers. The average cost-per-click (CPC) is low, at $0.75 compared to around $1.00 for Walmart advertising and $2.32 for Google search ads.
How do they keep CPCs so low? It comes down to the sheer amount of in-platform data they collect.
People go to Amazon to buy. All the data about what a user is searching for, which products they browsed, and purchase history is readily available for brands. When it’s time to serve your ads, Amazon has an excellent idea of which shoppers will be interested in your product.
Selling DTC and B2B Brands on Amazon Delivers Robust Branding Opportunities
When it comes to researching and buying a product, Amazon does everything it can to make sure customers don’t leave the platform. That means detailed product pages, which are great news for you as a DTC brand.
Product pages on Amazon are very robust. In addition to basic product information, they also include sections like:
- Manufacturer details and specs
- Product videos
- Customer questions and answers
- Reviews including photos and videos
These are all opportunities to showcase your brand and build trust with your customers. In particular, the Q&A section gives merchants a rare opportunity to interact directly with potential customers — answering their most important questions and influencing their purchase decisions.
Repeat-Purchase Friendly
Customer retention is every bit as important as acquisition and retaining happy customers is easy on Amazon.
Any product a customer has viewed or purchased remains in their account history. For qualifying products, customers can even use the Subscribe and Save feature to set up automatic recurring purchases.
Examples of DTC Brands Winning on Amazon
Smile Direct Club sells teeth aligners and whiteners directly to customers, bridging the gap between expensive oral treatment and consumers.
Amazon is a key player in Smile Direct Club’s multichannel strategy. The brand’s Amazon storefront features its bestselling accessible-to-all products like whitening and cleaning solutions. Customers can then get started with more personalized alignment products on the website.
Lovevery offers educational toys for kids. Customers can buy products through Amazon or a subscription service on the brand’s website.
The brand positions its high-end toys as “the only playthings you’ll need,” and uses its Amazon storefront to showcase products segmented by their target stage of childhood.
Benefits of Amazon for B2B Sellers
Amazon Business can help you scale your B2B e-commerce business. Traditionally, B2B buyers have been slow to evolve. Once a supplier is established, the relationship often stays in place for years. The perceived costs of switching suppliers have historically outweighed the benefits.
But Amazon has done everything it can to “break” the B2B buying process and lure customers away from their comfort-zone suppliers. Testing out Amazon Business is a no-brainer for most B2B companies once they get wind of benefits such as
- Product and quantity discounts
- Items made only for businesses (e.g. industrial mops and wires)
- Information on sellers’ background and experience
- Tax-free items
- A quote request system
- Customizable workflows
- Permission and spending controls
- Analytics and reporting tools
- Order bundling
- Ability to sign up for Business Prime
- Compliant invoices and paperwork
- Flexible payment options, from credit cards to invoicing
Amazon Business users can sign up for a free account or opt for a business account so multiple users can make purchases.
While it’s not as ubiquitous as Amazon for DTC, B2B buyers are definitely on Amazon Business. Here are the main benefits for you as a B2B seller.
Multichannel Sellers Make More Money
Numbers don’t lie — and the bottom line is, stores that sell on two platforms make 190% more than those selling on one.
It’s all about expanding your reach. By adding Amazon Business to your sales channel mix, you’re bound to see a boost in revenue.
Storefront Customization Features
Amazon has applied lessons from decades of experience in B2C selling to enhance its B2B marketplace. Sellers have plenty of ways to customize their digital storefronts, like the ability to:
- Upload enhanced product content to listings (user guides, etc.)
- Display your business’s quality and diversity credentials
- Showcase your logo and tell your company’s story
- Allow buyers to request quotes
Built-In Customer Trust
Almost everyone has heard of Amazon, and most people have made a purchase. When you sell on Amazon Business, customers will have a certain level of trust based on Amazon’s reputation and their previous experience with the platform.
And B2B sellers need all the help they can get in the trust department — only a third of suppliers feel they’re good at fostering brand trust and loyalty.
B2B Brands Getting Amazon Business Right
Poly, a conferencing and communication technology company recently acquired by HP, has excellent consistency across its Amazon Business storefront and e-commerce site.
It’s clear that the brand has developed a solid buyer’s journey and adapted it for both channels. Polished video content is also a nice addition on Amazon and sets it apart from the more traditional, copy-heavy Business pages.
Dr. Scholl’s is ubiquitous with foot comfort in the B2C realm, but the brand also has a significant B2B presence partnering with retailers, healthcare organizations, and other businesses.
With astronomical levels of brand recognition and trust already, incorporating Amazon Business into its multichannel strategy is an easy win. Users searching for “insoles for work boots” will see Dr. Scholl’s pop-up as an Amazon’s Choice product.
Top 4 Challenges for DTC and B2B Brands to Consider Before Selling on Amazon
Selling on Amazon isn’t all sunshine and roses. There is a learning curve for both DTC and B2B businesses. Here are some of the main challenges you may face.
Product Listing Nuances
Like every marketplace, Amazon has its quirks and requirements for listings. To sell to your full potential, you’ll need to invest the time in learning how to optimize your listings to grab shoppers’ attention and shine above the competition.
This includes elements like:
- Stellar product photography. Amazon requires all primary images to be on a white background and at least 1000×1600 px. Images are usually the first thing a shopper engages with, so investing in clear images that show off your product is essential.
- Engaging product descriptions. Showcasing your brand’s personality can be particularly effective on the B2B side where shoppers are accustomed to cookie-cutter product descriptions. Don’t forget to highlight the benefits and finish with a call to action.
- Profitable keyword research. Well-curated keywords are the backbone of every successful store. Take time to learn what your customers are searching for and blend those terms into your listings.
Fees
Let’s level-set. Amazon didn’t become the behemoth it is today by giving away its benefits for free. There are a ton of advantages to selling on Amazon, but it’ll cost you to get them. In addition to a monthly subscription fee, sellers may face a variety of other fees from additional storage capacity to referral fees.
Inventory and Shipping Terms
Sellers have the option to sell their products on a Fulfillment by Amazon (FBA) basis. This is a great way to reduce the pressure associated with shipping and handling. However, it also takes away control from the seller.
If a customer has a bad shipping experience, there’s not much you can do about it. There’s also a learning curve to understanding Amazon’s FBA capacity limits. You can only store so much inventory and if you’re not moving product, Amazon could penalize you.
Stiff Competition
Amazon’s goal is to keep customers purchasing in-platform, whether it’s from your store or someone else’s. For this reason, the user experience makes finding alternatives very easy.
Some brands may find that when buyers can easily view cheaper items, it causes a “race to the bottom” in terms of pricing.
A Partner for Amazon and Beyond
Whether your business is DTC or B2B, there’s a lot to consider when deciding whether Amazon is the right addition to your e-commerce channel mix.
The opportunity to reach more potential customers who are already shopping on Amazon is an attractive one. Sellers who want to invest in in-platform advertising will find lower CPCs on Amazon than some of the other major e-commerce sites.
However, selling on Amazon means playing by Amazon’s rules. Getting all the benefits we’ve covered will require additional time and budget to set up your storefront, optimize your listings, and learn how to minimize your fees.
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