Amazon was established by Jeff Bezos in 1994, and now it is one of the largest e-commerce companies that works globally. It began as an online bookstore and soon diversified to feature selling electronics, clothes, and groceries. Today Amazon is known for focusing on customers by offering fast delivery, low prices and a wide range of products. The company also offers Amazon Prime, a membership program that includes free shipping on products to thousands of members and access to the Amazon Web Services programming environment for its clients. Amazon is a household name now and with so many users using it every day globally, Amazon may have replaced the need for physical shopping almost altogether. But being one of the largest online marketplaces in the world, amazon offers numerous benefits and drawbacks for both consumers and sellers.
So here we are to discuss a few of the advantages and disadvantages of Amazon which helps us in doing our things so smoothly.
Advantages Of Amazon
1. Increased Product Visibility:
One of the biggest benefits of selling on Amazon is its capacity to utilise huge product visibility. By having 300 million active customer accounts and billions of visits each month, Amazon enjoys a wide audience to ensure that your products are displayed throughout the platform. This kind of exposure is nearly unheard of in the world of e-commerce and can vastly enhance your ability to sell products. When you list your products on Amazon; you access a huge audience who are ready to buy without the need for heavy expenditure to attract traffic.
2. More Customers and Sales:
Because so many people use Amazon, just by being on the platform you have access to more customers which results in increased sales. The fact that 6,500 American products costs offered every minute according to Amazon data from Americans effectively converts this into a profitable sales channel branch. This is very good for businesses as it helps in boosting their sales volume and revenue, listing your products on Amazon will give you more visibility. With a strong foundation, the platform facilitates an effortless buying journey and thus motivates customers to make higher-value purchases more often.
3. Global Reach:
The global exposure that Amazon provides businesses to grow their brand worldwide. Selling to Customers in Over 180 Countries: With Amazon, you are not just confined to your local market. For companies that want to approach new and diverse markets, this worldwide access is an especially lucrative opportunity. They do this while also giving you access to a global audience on one platform, avoiding the need for creating and managing local websites or setting up separate logistic integrations.
4. Customer Trust and Credibility:
Amazon provides the already established trust factor for most buyers of reliability and quality, giving sellers a big leg up. Powered by strict return policies, quick shipping, and a slew of product reviews on the platform that they know will make it right if expectations are not met, customers count on Amazon to deliver what people want. Because of this, Amazon has trust as well, and when you sell on Amazon, it’s a market niche with better branding than normal niches. Customers who trust a brand are more likely to convert and return since they believe in the items being sold.
5. Ease of Getting Started:
It is very easy to start selling on Amazon and you do not need advanced technical know-how, nor do you have large capital tied up in inventory. It provides plug-and-play, so you can start selling without the trouble of building your platform or logistics. Amazon fulfillment services including FBA, lets you take advantage of Amazon’s high-quality shipping and order fulfillment capabilities. It’s this low barrier to entry that lower middle-marketing like Amazon has made it the playing field of entrepreneurs and SMEs of all sizes – perhaps more than other major consumer or enterprise technology platforms.
Disadvantages Of Amazon
1. High Competition:
On the one hand, Amazon allows you to reach a giant audience, but you also have more competition. Given that there are 1.9 million selling partners globally, it can be difficult to break through the noise for new and smaller businesses on Amazon Marketplace. Visibility and the coveted Buy Box are in hot demand. With less visible positions, it may be difficult to gain customers as the platform often features multiple sellers offering similar products.
2. High Selling Fees:
One of the greatest drawbacks of Amazon is its pricing system for fees. The platform charges a series of fees, the most notable being the referral fee, which can be between 8% to 20% depending on your product category. Additionally, sellers utilizing Fulfillment by Amazon (FBA) incur storage and fulfilment service charges. This adds up quickly, eating into profits. For instance, selling a $150 t-shirt could result in more than $30 in fees, significantly reducing your final earnings.
3. Complex Order Management:
Amazon is a complicated marketplace, and dealing with orders will take up time. Sellers must constantly update their stocks, and the system should accurately reflect that orders are placed correctly. As you might sell through multiple channels, Amazon’s system may not play nice with your other sales platforms. Without integration, it could result in over-selling or stock-outs, which might leave the customer with a bad experience and affect revenue.
4. Lack of Control and Ownership:
Amazon selling at some level means losing control over your business operations and customer interactions. You also share control of not only your presence in the market but how and in what ways you are presented to that market. The problem is that at any moment, an Amazon algorithm change or policy shift could lower your sales. Additionally, it’s difficult for your brand to become memorable given that the platform prioritizes product listings over seller branding. For many businesses, that place a premium on their brand identity, this can be deeply frustrating.
5. Risk of Scams and Counterfeits:
Amazon is an open marketplace, and this often means people will come in endangering the reputation of Amazon’s products. Sellers face “bad actors who try to make a purchase that isn’t an authentic order and then apply for returns or take over your listings.” These scams result in inventory shrinkage and a tarnished reputation. While Amazon takes steps to address these problems, it doesn’t always catch them all before they happen. This vulnerability requires constant vigilance and additional efforts to secure your business.
Comparison Between Advantages And Disadvantages Of Amazon
| Advantages | Disadvantages |
| Access to millions of customers. | Intense competition among sellers. |
| Ability to reach customers globally. | Various high fees, including referral fees. |
| Established and trusted e-commerce platform. | Complicated order management processes. |
| Simple setup for new sellers. | Limited control over branding and product display. |
| Fast and reliable shipping with Amazon Prime. | Vulnerability to scams and counterfeit products. |
