Building a small business on Amazon: the main challenges and opportunities

There was a rush at the outset of the pandemic for brands and merchants to start selling on Amazon as soon as their high-street stores were shut down. However, this was primarily a result of ad hoc tactics rather than a well-thought-out eCommerce strategy.

Why should I sell on Amazon:
Online commerce is rising as a result of the pandemic. In the United Kingdom alone, around 75% of shoppers have abandoned high-street businesses in favour of online shopping. Many firms have increased their online sales approach as a result of this shift in consumer behaviour. However, brands are facing both obstacles and possibilities, and this is especially true for brands that sell on Amazon.

What are some of the challenges of selling online?
Luzern teamed up with Censuswide to poll over 250 e-commerce decision-makers from the UK, France, Spain, Italy, and Germany who have or have worked with Amazon.

While the poll revealed a variety of problems that firms encounter when selling on Amazon, the following are the most difficult to overcome:

Taking control of their brand

Almost half of the eCommerce decision-makers (45%) agreed that obtaining and maintaining brand management on Amazon is tough, and more than half said that navigating Amazon is extremely difficult. Losing control of your brand has far-reaching ramifications, including reduced margins, channel conflict, and the possibility of generating little or no profit on some products. The loss of brand control is felt most acutely in pricing.

Developing a pricing plan that ensures long-term profitability

The ability to select an average order value (AoV) that matches their pricing strategy was cited by 42% of respondents as critical. Selling on Amazon frequently results in a loss of price control, which can hurt margins and profitability. Ecommerce decision-makers are aiming to lower margin constraints, explore new markets, and add new products to their Amazon offers in both short and long-term goals.

Effective advertising to reach target customers

Despite the fact that high-quality content is required for successful Amazon trading, more firms are using effective advertising to reach new buyers and convert more sales. According to the survey, 40% of respondents found it difficult to get out to their target audience. Brands could consider raising their Amazon advertising and Demand-side Platform (DSP) investments to increase content and listings.

Brands can reduce sales cycle time, improve brand awareness, increase product visibility, capture customer insights for more precise and targeted campaigns, gain a better understanding of the shopper's journey, know when shifts in buyer behaviour are occurring, and track advertising results by advertising on Amazon.

Are there any opportunities?
Many people who want to establish an online business, especially on huge e-commerce sites like Amazon, may be put off by the problems listed above.

You cannot be fully dissuaded from starting an online business on Amazon because it is apparent that businesses on Amazon are expected to grow, therefore you should consider utilising omnichannel marketing to increase revenue and improve customer experience.

Here are some of the main opportunities you can take advantage of right now:

One-stop shopping

Amazon’s one-stop shop narrative to sell more and more things and function as an intermediary to sell even more goods is creative and incredibly successful. It's a one-stop store for everything a customer could need, from sanitiser and masks to clothing, food, literature, and games.

As an Amazon seller, there is a myriad of items and products you can sell on that platform right now.

Evolution of customer buying behaviour

It's critical to conduct thorough product research before beginning to sell on Amazon to understand which categories are in high demand. You can use the data gathered to keep the momentum going once you've created a presence and made some sales. Once you have analysed this data, you can start to select which items you would like to sell.

Distinguishing from other online competitors

Selling on Amazon allows your business to get a head start in the early phases of its business. The top of search engine result pages (SERPs) is dominated by Amazon results, and adopting essential advertising methods like paid ads and product listing optimisation can assist enhance product visibility and reaching new customers.

Establishing a business online can be a difficult venture, with this in mind, Persona Finance can provide your expert business advice to simplify your overall business needs, and also offer your business essential remote accounting services. For more information on our services, please contact Persona Finance at [enquiries@personafinance.co.uk]