Stop Sitting on the Gator: Up Your SEO or Amazon Will Eat You
In Florida’s wetlands, storks, herons, and other birds nest in trees above gator-infested waters. They do this for protection against predators like raccoons that will eat their eggs. But this protection isn’t free — the birds sometimes become food for the alligators. And that food is one or more of their sacrificed chicks.
More than 1 million small and medium-sized businesses rely on Amazon to sell their stuff. The 2020 Amazon SMB Impact Report shows that American SMBs sold more than 3.4 billion products on Amazon, up from 2.7 billion year-over-year. For many, Amazon represents a platform to get more reach and more sales.
But at what cost?
- Amazon: A symbiotic relationship for sellers?
- How to wrestle the gator
- FAQ: What are the risks of relying solely on Amazon as a sales platform for your business?
There’s no doubt: Amazon is a savvy business. It makes smart moves — moves that have built its market value to more than $1 trillion. Many would argue that Amazon operates in a “take no prisoners” manner. After all, market domination is its goal.
In Amazon’s 1997 letter to shareholders (the year it went public), Jeff Bezos stated that creating long-term value would be “a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.”
Since then, Amazon has consistently made moves to position it as the market leader. Some may say not always ethically. Remember the battle between Diapers.com and Amazon that ultimately ended in the demise of Diapers.com?
Yes, over the years, Amazon has made strategic acquisitions — Zappos and Whole Foods among them — proving that if you can’t beat ‘em, own ‘em.
There are, of course, inherent risks that come with selling on Amazon, including having to abide by my-way-or-the-highway rules, packaging requirements, and monitoring where and how you sell elsewhere. Many businesses believe that they cannot survive without at least a portion of their business on Amazon.
Amazon affiliates have also relied on the marketplace to make money off products that it sells. But that’s not a stable model, either. In April 2020, affiliate commissions were cut — drastically in some cases — hurting the bottom line of many affiliates but no doubt boosting Amazon’s.
Businesses that put the majority of their efforts into Amazon while neglecting to bolster their brand and products elsewhere online are setting themselves up for failure. We only need to look to Amazon’s previous strategies to predict what the future may hold.
Analysts are already forecasting the next businesses that Amazon could destroy. And let’s not forget that Amazon is promoting its own private-label brands right alongside competitor products as those products are being added to a shopping cart.
While some bigger retailers are walking away from Amazon, that may not hurt Amazon in the long run. It certainly doesn’t stop third-party sellers from selling their products in the marketplace.
Amazon promises to invest in its sellers, but how much can you trust it won’t eventually eat you alive?
Here’s another question: What would happen today if you could no longer sell on Amazon? Would you have any visibility in the search results? For every success story on Amazon, there is a story of how Amazon killed a revenue stream:
Comment on my LinkedIn update about relying on Amazon to sell
Businesses that sell on Amazon need to stop sitting on the gator. That doesn’t mean stop selling on Amazon. It means stepping up your digital marketing game so that you’re prepared for the worst.
By embracing Amazon, we gave them popularity, reach, links, and rankings — and all the power that comes with it. And they now can use that power to dominate to the point of not needing us.
I am a big user of Amazon for products. I also see the future … Amazon has been eliminating resellers (aka competitors) for high-margin products for a long time. Another step was to cut affiliate fees. Soon, they will not want or need anyone except manufacturers. It is clear that this is not the end of it, like a bird resting on the back of a gator … one day, there will be no more birds.
So start building your presence elsewhere. Have an ecommerce site that provides an excellent user experience. Get a strategic digital marketing program going with SEO and paid ads.
I recommend 5% to 10% of revenue be diverted to SEO right now. It may take a year or more before you start seeing significant results. But do it anyway.
Will you beat Amazon? No.
It’s a hard fact of life that Amazon will almost always outrank you in the search results. If you start now, however, you will be better positioned to survive if and when Amazon makes a decision that means it’s no longer a viable revenue stream for your business.
If you want to ensure that your site stands on its own and avoid tying your product exclusively to Amazon, I invite you to contact us for a free consultation today.
Amazon has emerged as a colossal marketplace, tempting businesses with its vast customer base and logistical prowess. While Amazon undoubtedly offers unparalleled reach, it’s crucial to explore the risks associated with relying exclusively on this platform for your business.
- Overdependence on a Single Channel:
Relying solely on Amazon means putting all your eggs in one basket. Any changes in Amazon’s policies or algorithm updates can significantly impact your business, potentially leading to sudden declines in sales.
- Limited Brand Control:
Amazon’s platform design prioritizes its branding over yours. As a result, your brand identity can get lost amidst a sea of competing products, making it challenging to stand out and build a unique brand image.
- Fee Structure and Competition:
Amazon charges various fees, including referral fees and fulfillment fees. These can eat into your profit margins, especially in highly competitive niches where price wars are common.
- Vulnerability to Suspension:
Amazon’s stringent policies can lead to account suspension, often triggered by negative reviews or policy violations. Such suspensions can disrupt your operations and result in lost revenue.
- Limited Customer Data Access:
Amazon retains control over customer data, limiting your ability to build direct customer relationships. This makes it difficult to execute targeted marketing campaigns and upsell products.
Consider diversifying your sales channels to protect your business from these risks while adhering to Amazon policies and investing in customer databases.
- Assess your current reliance on Amazon as a sales platform.
- Evaluate the potential risks and challenges specific to your business niche.
- Explore alternative sales channels, such as your website, other online marketplaces, or physical stores if applicable.
- Develop a robust brand presence outside Amazon through social media, content marketing, and email marketing.
- Optimize your pricing strategy to maintain healthy profit margins.
- Familiarize yourself with Amazon’s policies and ensure strict compliance.
- Monitor customer feedback and address negative reviews promptly.
- Build your customer database through opt-in mechanisms on your website and other platforms.
- Implement targeted marketing campaigns to engage and upsell to your customers.
- Continuously monitor and adapt your strategy to changing market dynamics.
- Consider leveraging Amazon as one of several sales channels rather than the sole platform.
- Maintain an emergency fund to cushion any financial setbacks.
- Develop a crisis management plan in case of account suspension or other unforeseen challenges.
- Seek legal counsel or consult with e-commerce experts if needed.
- Regularly track and analyze your sales and performance metrics.
- Stay informed about industry trends and updates in e-commerce.
- Continuously optimize your product listings and improve your customer service.
- Network with other e-commerce entrepreneurs to gain insights and support.
- Diversify your product offerings if possible to mitigate dependence on a single product.
- Stay adaptable and open to evolving your business strategy as circumstances change.
This article was updated on December 22, 2023.