In this Ask Hoz session, I talk about how to diversify from Amazon as a private label seller and why you should consider doing that at all.
It’s all about protecting your business and being aware of a couple of key points that are rather easy to miss or forget about.
In fact, I would go as far as saying that many Amazon FBA sellers don’t pay enough attention to diversifying their business.
But here’s the thing: anybody that sells on Amazon knows of that fear that we all have, that when things get too good somebody may just come along and pull the carpet right from under our feet.
That’s probably a healthy worry to have in business, and it’s important to think about this fear and the root cause of it.
The reality is we don’t own the Amazon marketplace. We’re just playing in there. They make the rules, we don’t. And they could change those rules at any point, to our detriment.
Moreover, they could just close your account if they wanted to and there isn’t much you can really do.
Amazon is known for many things, but giving second chances is not one of them.
Now, of course, we all like to think that they’d have a legitimate reason for just closing an account – they’re not going to just do that. Although, if you spend some time going through the Amazon Seller forum, that appears to be the case sometimes.
Whilst we only have the seller’s side of the story, which they may be writing in their favour (of course) you nonetheless get a sense of a not very forgiving nature from the big A.
At the end of the day, it doesn’t really matter what we think. The fact is that something can happen that is maybe out of your control and your account could be affected. If this happens, then you could be in for some hard times.
That ‘something’ could be a damaged product shipment that you send into FBA without checking (many sellers have their product sent into FBA directly by their supplier) resulting in tons of refunds and your seller rating taking a hit.
That’s actually one reason why I always have my products shipped to me. I inspect everything before I send it into Amazon. It’s just one less thing to worry about.
Yes, it’s super convenient to have your product maker send the product straight into Amazon FBA, of course it is. The last thing I want to do is have boxes everywhere and my nose deep inside them, but I think it’s a necessary part of this business – unless you’re prepared to pay a middleman like an agency or a warehouse to actually carry out inspections before they send your shipments into Amazon.
Either way, let’s agree that things can happen that are out of your control and that could affect your account negatively.
This lack of control on the seller’s part when it comes to the fate of the account is the main reason to diversify from Amazon. It is in fact the root cause of the fear.
Protecting your physical products business is (or should be) your responsibility as a brand owner, and that invariably means extending the reach of your brand beyond Amazon.Diversifying from Amazon FBA should be a must-do task in the evolution of your brand. It's about self-survival.Click To Tweet
Now let me point out that one mistake that many people do is to think about their business as if it’s an Amazon business.
People actually do say I have an Amazon business. That includes me. Although I’m aware of the fact that it isn’t, it’s usually easier to say that by way of explaining to somebody one of the things that I do.
But some sellers do believe this is the case, and this is a lethal way to think about your business because it makes the assumption that the business is dependent on the marketplace, which then makes it impossible to diversify from Amazon.
The reality is that you do not have an Amazon business. You are a physical products brand and you happen to sell on Amazon.
Amazon is just a marketplace. It’s no different in terms of being a marketplace than eBay.
The important thing is to have that separation in your mind. You are a business entity and you are participating in the Amazon Marketplace.
Your product may only be available from the Amazon Marketplace and there’s nothing wrong with that, but that separation exists and it has to be clear in your mind.
In fact, that separation becomes very obvious if your account gets shut down.
When that separation is clear, if Amazon shuts down an account, that does not mean that the business owner is now out of business.
Unless the business owner happens to believe that they have an Amazon business (you see now why this is lethal).
In practice, it could actually mean that your business is ‘over’, especially if it was dependent on Amazon (another reason to diversify from Amazon).
But on paper, that business owner still has a business: a physical product business. It’s just that the marketplace where he or she was selling that product is now not available, for whatever reason.
In practice, if you get caught with your pants down and your account gets shut down or it takes a hit, and Amazon is your only revenue stream, then that may well hurt more than it should do.
It’s pretty clear then why diversifying your business is necessary in order to protect your brand as well as your entire business.
The sooner you do this, the better.
How to Diversify From Amazon to Protect Your Brand
In essence, you need to set up your brand so that it can make sales independently of the Amazon marketplace.
Your brand is an asset, so it must be treated as an asset.
You need at the very least a website. When you sell product on Amazon, some customers are likely to search for your brand online.
Finding your brand online can have many positive effects. Finding your brand online creates trust, which may lead to repeat customers and more sales in Amazon, which in turn can result in a better rank, which can lead to more exposure, which translates to more sales, and so on.
Conversely, not having an online presence can have the exact opposite effect.
Allthough you can set up a one page website, I don’t recommend using a free service unless you can remove any branding that isn’t yours and use your own domain name.
But in order to truly diversify, you need the ability to take payment on your website. Only then can you truly think of your business as having a potential reach beyond the Amazon marketplace.
There are many platforms online, but the one I recommend for most sellers is Shopify.
You can check my free guide on how to set up an online store here.
Shopify is a done-for-you online store, hosted and maintained for you. This is the main reason why I recommend it.
There are other systems, but the last thing I suggest is becoming knee-deep learning how to set up new things and detracting from your business. With this platform, there’s no real setup on your part, other than clicking a theme and adding a few settings here and there.
You just pay a few dollars a month for them to host your store, but this is a business cost. It’s insurance. It’s part of the busines model.
Even if you don’t market your online store and you just continue to make sales on Amazon, having your plan B in place is priceless when it comes to peace of mind and it gives you the ability to move fast should you ever need to.
You can very quickly send traffic to your store by running a Facebook ad, so traffic is never the problem. Conversion is, but that’s a different conversation.
If you sell a product on Amazon that generates repeat sales, then having your online store ready to make sales as soon as you turn on an ad is vital for those repeat customers who may search for you online if you suddenly disappear from the Amazon marketplace.
Watch the video at the top of this page for some tips on how to target the ideal customer for your product. Essentially, as long as you know the demographic of your product (let’s say for example it’s 30 to 50 year old females) you can start running your Facebook ad campaigns relatively cheap to target those people.
Some of the people who see your ad may actually be Amazon customers of your product. Seeing your product (in your ad) will be an instant connection for them and potentially some sales for you.
You can of course run ads to your store pages even while you sell on Amazon. If your products are slightly cheaper on your online store, you may start to generate sales on your store from those Amazon customers who bought your product in the past, because they already know your brand.
As an Amazon seller, having a plan B means having the ability to generate product sales somewhere else other than Amazon. And that means having an online store.
You can always generate traffic to your store via paid advertising, but even if you choose not to, having an online store ready to go is money and time well spent, because it gives you the ability to switch on the traffic and potentially keep your business going should the worst happen (i.e. if your Amazon account gets shut down).
Not having that ability means you’re wholly dependent on Amazon – a marketplace that you don’t control. This is putting the fate of your business in Amazon’s hands. It’s madness.
Lastly, even if your store is not making sales, those few dollars that you pay every month for your store are brand protection. They are insurance – it means that your plan B is actually live and ready to go any moment.
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