Amazon Webstore - Pros and Cons - 1Digital® Agency
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What makes Amazon Webstore different from the other major ecommerce platforms like Volusion and Bigcommerce is how well it can integrate with Amazon. Amazon webstore brings you (at an additional cost) all of the features that are great about Amazon, most notably their fulfillment service (Fulfillment By Amazon), Amazon Prime, Amazon user accounts, Amazon checkout, and the ability to list your products on Amazon as a third-party seller. It’s possible to connect to and sell through Amazon on other platforms, but it’s much more complicated and you might need to use third party vendor like SolidCommerce to integrate.

Selling on Amazon as a third-party vendor has significant drawbacks if you aren’t hosting your store independently. You won’t be able to manage customer relationships easily, as you lose visibility into your customer’s activity and their primary focus is Amazon instead of your store.

Running your retail business on Amazon Webstore will allow you to reap benefits that no other platform is able to deliver. Reddit, a site that features user-generated links to content, has over 34 million user per month. If a smaller site is featured in one of the links (ranked by votes), they can experience a surge of traffic that users describe with “Reddit hugs too hard,” because the traffic overwhelms their bandwidth and the site goes down. As Amazon Webstore is hosted on the same infrastructure that hosts Instagram, foursquare, Newsweek and many other top sites, merchants that build on this platform will be able to benefit from spikes in fame that would otherwise shut them down. This is referred to as scalability, made possible with hosting on Amazon Elastic Cloud (EC2). This cloud computing offering provides stores with unlimited bandwidth and a content delivery network (CDN) in which images and javascript content are cached, ensuring your webstore pages load quickly for your customers.

Amazon does a great job providing Webstore users with everything they need to begin selling. This includes a payment gateway, the communication channel between your store and the bank. Most other platforms require merchants to tap into an external payment gateway to do their payment and credit card processing, but with Amazon Webstore, this function is built in from the start. The included full checkout process gives you the option of using your own store-branded checkout, or allowing customers to use their Amazon account to login.

Fraud protection is another huge selling point here. You won’t have to shop for SSL (secure socket layer) encryption, as it is provided. Verifying orders is extremely time consuming, when you have to identify red flags and cancel orders you learn are fraudulent after they are placed. Amazon’s payment processing technology computes hundreds of individual risk indicators per order and leverages complex machine learning algorithms to identify orders that need to be stopped. Amazon’s sophisticated risk models can instantly detect patterns of fraud. Plus, you’ll be privy to updates that provide you with the most current protection systems.

Amazon Webstores are backed with Fulfillment By Amazon. They have over 80 fulfillment centers worldwide, and are able to quickly scale up and handle peaks in delivery at busy times of the year while managing operational costs. Amazon partner carrier rates can be leveraged to send inventory inbound. To use their fulfillment service, you or your supplier first ships inventory to one of its fulfillment centers. When an order is placed on your website, an automatic order fulfillment request is sent to Amazon Fulfillment, which will pick, pack and ship the product to the customer. This allows you to fulfill orders from all ecommerce channels from a single inventory pool.

There are many more benefits to using Amazon Webstore, but they all come at a price. I think small to medium size businesses will typically benefit from this platform more than enterprise level players, as the buffet of fees will quickly add up for the larger retailers. Merchants are charged a transaction fee, which is 2% of every transaction. You’ll also see Marketplace fees for selling on Amazon.com, fraud prevention fees, and a monthly service fee that doubled at the beginning of the year from $39 to $79.

In many cases, the benefits and additional visibility that employing Amazon’s brand will bring more than justify the increased costs. But it must also be said that there are cases where migrating to an Amazon Webstore will hurt your margins without the salvation of increased sales. It depends on your industry, product categories, and doing the math to see whether it will benefit you or not be worth the trouble.

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Joe Chilson

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