Is selling on Amazon Ideal for B2B Businesses

Amazon has one of the largest customer bases that you will find online. But, you should also consider competitiveness when deciding on a platform to sell your goods on. No matter what niche you want to enter, you will already find numerous sellers in it that are investing big amounts to get reach which makes it challenging, especially for new sellers to join and get results early on. This might be the reason why most E-Commerce specialists are also focusing on using other leading B2B marketplaces in the USA as well. 

What factors are leading businesses to exit the Amazon?

There are numerous reasons why businesses are exiting Amazon and investing on building their brands. Following are a few common factors of all:

1. Limited Customer Information

As online marketplaces are becoming more saturated every day, having access to customer information and data plays a crucial role in creating effective campaigns. However, Amazon is not so lenient towards sharing customers’ data with third-party sellers. Surely, there are a few privacy concerns from buyers, but on the other hand, it also limits the potential of suppliers that use it.

This is the search data that Amazon does not share with third-party suppliers:

• Not Sharing Individual Customer details: It includes a limitation on access to buyer’s search history, payment methods, and purchase patterns. 
• No Access to Competitor Data: Sellers can not view the clicks, sales conversions, and other details about their competitors to set a benchmark for their performance.
• Zero Access to Organic Search Data: Amazon shares no data about what keywords buyers are using.

These limitations have a negative impact on optimizing strategy, especially for organic campaigns.

2. High Commission Charges on every sale

One of the biggest cons of selling on Amazon is the overhead expenses they have. Sellers have to pay a small commission rate on every sale they get on Amazon. At first glance, it seems to be quite reasonable but their commission percentage has increased a lot in the past few years. Considering that most buyers on Amazon are price-conscious it makes a bigger challenge for manufacturers and distributors to keep their prices on the lower end. 

Their charges keep varying from category to category and may even increase for specific events. Therefore, businesses that are traders not manufacturers would struggle the most. Especially the ones operating in price-sensitive product categories. These are a few commission charges Amazon sellers face:

• Referral Fee: This is a percentage of the selling price and also the biggest fee amount.
• Closing Fee: It is a fixed amount that is charged per unit sale
• Variable Closing Fee: These charges are applicable on limited product categories
• FBA Fees: Sellers only need to pay this amount if they are using Fulfillment by Amazon services.

These fees can be somewhere between 8-45% of the final product.

3. Rising Advertising Rates

Amazon generates most of its revenue through PPC campaigns sellers create on their platform. Over the years, they have changed their product catalog a lot and given most of the visibility to products that are paying for that space. 

On one side, getting your products ranked organically on relevant keywords is already quite challenging. Even if you achieve that, the CTR rate for organic search results is significantly lower than paid ads. Therefore, most experts recommend sellers to have a good budget for PPC when they enter Amazon. In contrast, if you are only relying on Amazon with organic reach, the success rate drops significantly. These are a few factors that Amazon sellers should know about Amazon’s PPC.

• CTR Comparison: Organically ranked products have lower CTR than paid products.
• Cannibalization: PPC ads do not cannibalize with products that rank organically.
• PPC Cost: According to professionals, PPC ads should cost under 2.5% of selling price

PPC rates on Amazon are rarely stable and mostly keep fluctuating. Therefore, it is recommended to have an experienced virtual assistant to optimize the paid advertisement strategy.

4. Strict Policies for Sellers

There is an endless number of sellers on Amazon and their focus is always to promote businesses that meet their eligibility criteria. Due to their strict regulations, sometimes even sellers that have a strong track record and good reviews get banned permanently. According to a survey, around 22% of sellers got their accounts suspended at least once. Once your store gets suspended, all of your authority and organic reach is gone and you would have to start right from the point zero. As it happens too frequently, sellers have started shifting their focus from Amazon to other B2B marketplaces that have better terms and conditions. 

These are a few policies that get most Amazon seller accounts suspended:

• Return Policies: Buyers can return products for various even and most of them would be at the seller’s expense.
• Account Suspension: Amazon does not share the reason for seller account suspension with the user which may lead to much confusion.
• Amazon as Competitor: Amazon itself sells numerous goods in different product categories which gives them an unfair advantage for third-party sellers.

Sometimes seller accounts even get suspended for activities that were not in control of the seller. 

5. Limitations

Despite the great growth potential Amazon has for sellers, it also has quite a lot of restrictions that may restrict your overall growth. For instance, you would always be relying on its algorithm to optimize your optimization strategy. As Amazon also handles most of the customer support by itself, you will not have much opportunity to interact with the end-consumer. This makes it difficult to build a recallable brand for buyers. 

Amazon’s algorithms also keep updating over time. Thus, you would have to keep yourself updated with all the ongoing trends and updated or else you will be left behind in this highly competitive market.

Some of the limitations that sellers face are mentioned below:

• Control over promotions: In most cases, Amazon’s algorithm dictates the product pricing and placement strategy rather than having your own.
• Payout Delays: It takes 14-90 days for sellers to receive the payment for the goods they sell.
• Negative Reviews: Receiving a few negative reviews can create a significant impact on product visibility on organic searches which would also be reflected on overall sales.

Even though there are ways to tackle these limitations, a major chunk of sellers lose a lot of their investment in the procedure and decide to quit.

Why Brand Building is Important?

Having a brand is a crucial element, especially for businesses looking to sustain in the market in the longer run. These are a few of the many reasons why every business needs to have a brand:

1. Customer Loyalty

Having a brand makes your business memorable for your potential customers. For example, if they buy a product from you once, and feel the need to place an order for another one, there is a high chance that they would again contact you. Having a brand is more like a promise of getting the same level of quality every time. Therefore, brands with well-built reputations get more repeated orders than sellers who do not invest in this segment. 

2. Builds Trust

Trust is the most influential factor in deciding whether to buy from a seller or not, especially in the B2B sector. The most common and effective way to build credibility is through building a reputable brand. Having a brand is more like a promise that you make to your clients. Running campaigns for leads surely brings a good number of sales, but getting inbound leads and large-sized orders is possible through great branding. 

3. Set your own Trading Terms

On marketplaces, you need to follow other’s guidelines and focus on their algorithm. Instead, once you have built a brand and people start searching for you, you can set your own price and have your own trading terms. Even if you get banned from one platform, you can switch to another knowing that clients are searching for you and eventually they will find you.

5 Smart Steps to Build Your Brand

If you have decided to get rid of saturated marketplaces and build your own brand, you can follow this 5 step guide to start your journey to transform from a business to a brand.

1. Launch your own Website

The first step to making a brand is to get a professional website. You can consider your website as a virtual storefront. You get complete freedom to design it the way you like as per your brand’s values, personality, and colors. The best part is that you will not be controlled by the marketplace’s algorithm to set a specific price, content, and more. Instead, you can try out other things to learn what your customers prefer to have. Most high-paying clients use Google when making a procurement decision and you can invest in SEO to get your website featured on relevant searches and avail the opportunity to grow your business at its full potential. 

2. Leverage Social Media

The buyer journey has changed a lot in the last few years. Despite whatever product category you are targeting, or you have the B2C or B2B model, your clients surely use social media and you can use that to build your brand and get high-quality leads from there. 

Firstly, you need to understand what social media platforms they are using, then start content that would like to interact with. You can also use paid campaigns to get a good reach on your selling journey. Try to start with 2-3 platforms early on and after a few months focus on social media portals that bring the most revenue. The biggest challenge here is to be consistent especially when you are not getting sales as it is easy to lose your motivation there. But, businesses that stay consistent are likely to get a good reach on their social media pages from people who are likely to be converted into customers.

3. Create Retargeting campaigns

Numerous people may visit your website in a day or interact with your social media posts, but not all of them are likely to buy from right away. The majority of purchase officers buy from brands whose content they have seen several times. That’s where the remarketing campaign comes in. 

Once you have data about a potential customer, you can use social media or email marketing strategies to show how your offered goods can solvae their problems. A well-optimized retargeting strategy usually has a good ROI and conversion rate.

4. Provide Exceptional Customer Service

No matter what product you are selling, you will always have some competitors and one of the best ways to stand out in a highly competitive market is through great customer service. It would help you increase your lead-to-conversion ratio along with customer satisfaction. Especially if you are in the B2B industry, buyers would surely ask a lot of questions before placing the final order. Many companies have dedicated departments of chat support to answer the client’s queries and help them buy the right product they need. Other than hiring humans, numerous businesses have also started using AI chat support to save on their overall budget.

5. Track and Optimize

When starting a marketing project for brand building, you are likely to invest in different directions. However, if you set up a profitable presence, you need to track all success metrics, and learn what works and what does not. Once you start tracking everything, only then you will understand what is going to work best for you. 

Invest more in platforms that bring the best revenue and never put all your investment on a single portal. It will create dependency on a single page. Instead, diversify it among multiple sites that your potential customers use.

Building Brand Vs Amazon

Amazon offers instant access to a massive directory of potential customers. However, the cost you will be paying for it is quite high. You would have to pay a commission per unit sale, limited control over pricing, focus on Amazon’s algorithm, invest in PPC, and a lot more. Even after doing everything right, once your account gets suspended for a slight mistake, they will not even tell you the real reason behind it and all the investment you put into that store would be gone.

On the flip side, a brand is not dependent on any platform. Instead, the potential clients would look for it. This may need a bigger investment, but once done businesses are likely to have better customer loyalty with customers whose needs align with what you are offering. It also gives you a lot more freedom in strategy-making and being creative with it. 

In short, Amazon can give you success in the short term, but you will always have several risks of getting your account suspended and will also be paying additional costs. Therefore, Brand Building is considered to be a lot more significant when it comes to the longer run as you will be saving on a lot of costs and building credibility on your company’s name.