Practical Ecommerce: You have a relationship with Amazon.
James Thomson: I worked at Amazon for just under six decades, primarily on the third party side. I worked in numerous capacities, both handling one of those categories all of the way through really managing Amazon Services, that’s the platform through which many sellers decide to make their debut to Amazon.
Because I left Amazon, I’ve worked with a range of Amazon customers, helping them determine what their Amazon strategy would be. There’s a good deal of opportunity to create a fantastic company on Amazon, but there is also a great deal of land mines that will need to be managed.
PEC: Is Amazon for everybody? Should every ecommerce merchant sell on Amazon’s market?
Thomson: There are people that are straight up resellers, and then there are people who have their own brands. We will need to check out the world based on those two groups.
Amazon represents a market that is larger than another 12 online marketplaces combined. You have got more customers now starting their product search on Amazon than they do on Google. To get a pure play ecommerce website, there’s always that challenge of how many clients will begin on Amazon anyway and might never discover the website where a merchant is trying to market its own products.
For better or worse, you have got this enormous market where you’ve got 160 million active shoppers. You’ve got that question of how to distinguish the experience which you can provide on your own website once your competitors will use the Amazon marketplace also.
If you are a freelancer today, you’re selling someone else’s brands and odds are those brands are already showing up on Amazon. For all the customers that start their merchandise search on Amazon, it is going to be difficult for you to pull customers away.
Now if you are promoting your own brand, you are going to get to do a great deal of work to pull merchandise searches from Amazon and move them towards Google so that your products have visibility and your pure drama ecommerce website has visibility.
A good deal of sellers look at Amazon as a means to sell stale or surplus inventory, which is a fantastic way to integrate Amazon into your distribution version.
PEC: Can you imagine Amazon allowing customized products on its own market?
Thomson: Amazon is not very good at this now, primarily because Amazon’s catalogue is based from exceptional UPCs for unique products. When Amazon figures out technologically the best way to deal with that, I believe that that’s a place they’ll move into.
That having been said, Amazon’s market has succeeded primarily due to the progress of the Fulfillment by Amazon, the FBA program. It is going to be tricky to have custom products in FBA today.
I suspect we are at least a couple of years away from all those issues being solved.
PEC: One criticism of selling on Amazon is that it competes with a merchant’s need to construct a brand, which is important to a merchant’s long term success. Selling on Amazon and creating a reliance on revenue from Amazon does nothing to construct a long-term brand. Thoughts on that?
Thomson: I surely understand the perspective that a vendor on Amazon is experiencing a situation in which every sale is a transactional sale. Every client stays an Amazon customer, so the station becomes one where you get sales and you like those earnings, but you can not leverage those necessarily for future earnings, and even you’ve got a successful private label brand you’ve assembled and you do sell on Amazon, the fact is there’s 10 more private label brands such as that that will appear when your product begins to get excellent sales.
It’s a challenge — there is no question — believing that you could use Amazon primarily as a mechanism for generating prospective customers of your own for your own site. I don’t see plenty of vendors being successful doing this. I do, however, see Amazon as a place where sellers, as they continue to grow, and the operational intricacies they encounter with their own site, as people get more complicated, using Amazon as a place in order to do fulfillment, in order to do customer support, that’s surely a great thing.
PEC: Merchants that build a successful ecommerce website can often sell it to a larger company, or to a different merchant. Do you know of merchants that have sold their Amazon existence?
Thomson: The brief answer is yes. The big question here is what’s an Amazon seller really selling to another prospective buyer? Are you really buying access to brands which no one else could get their hands on? Those are tough questions to answer, and if you are thinking about potentially purchasing an Amazon vendor account, these questions need to be answered up front before you spend a cent.
Thomson: The Prosper Show, in February of next year, is focused primarily on assisting sellers divide their company into each of the significant operational procedures — inventory order management, forecasting, pricing, tax collection, opinions, all these types of issues. We complemented that with 10 former Amazon company leads who will be there together to help share their insights and their learnings and their advice.
This is an unusual sort of conference because it’s a continuing education event. It is in fact intended to be an event in which you roll your sleeves up, ask questions, and find out. You will walk away with a far greater comprehension of what it is going to take for a successful seller.
We also put together what is known as a starter kit. A variety of solution providers are working with us to provide nearly $10,000 of free applications and solutions to helping sellers to construct their business, drive their business forward in the right direction, and be in a much better position to be able to scale, and possibly outsource some of the nasty annoying elements of day-to-day operations.
Today, if merchants are interested in The Prosper Show and buy a ticket, they will find these applications and solutions included.
PEC: When and where is the conference?
Thomson: It is in the Salt Palace Convention Center, in Salt Lake City, Utah. It’ll be Monday and Tuesday, February 8th and 9th, 2016.
PEC: Anything else?
Thomson: The reality is if you are a pure play vendor, if you market on multiple or even single marketplaces, Amazon is here to stay and it is going to continue growing. It’s important for vendors to understand where Amazon fits into their overall business plan.