Amazon Consultants

Part
01
of two
Part
01

Amazon Risks

Introduction

Despite a thorough and exhaustive search on credible avenues of information, our research team was unable to provide a detailed analysis of the risks associated with the sustainability of businesses who sell exclusively or almost exclusively on the Amazon marketplace. We could not arrive at a conclusion whether this business model is considered risky or sustainable and conducive to growth for the business based on the scarcely available information. However, we were able to unearth some risks associated with selling on the Amazon marketplace. Some major risks include complicated procedures and increasing fees, highly competitive selling environment, and the risk of inventory being deemed unsaleable or restricted at any point in time. We have presented a high-level overview of these risks in the findings section.

Findings

risk of inventory being deemed unsaleable or restricted at any point in time

  • Amazon works closely with large and established manufacturers and brands. If a manufacturer decides that they don't want third-party sellers listing their products on Amazon, they can have Amazon deem their products unsaleable or restricted at any time.

Complicated procedures and increasing fees

  • Amazon fees are nearly one-third of the sale price of the item, in addition to the monthly fee of $39.99, and the warehouse storage fees.
  • Amazon intermittently offers to lower the fee they charge on each sale, provided the seller drops his product sales price. These limited-time offers are not really profitable but can help sellers sell through slow-moving inventory.
  • Through its own lending group, Amazon also offers loans to sellers with good metrics. Sellers cannot request loans, they can only take advantage of a loan if Amazon decides to offer one. In addition to this, the loan amount is based on the seller's sales history.

Amazon Sellers Only Get Their Money Every Two Weeks

  • When a seller sells an item on Amazon, the payment is made by direct deposit to the seller's checking account every 14 days. Only sellers with a legacy account have the option to request payments as often as every 24 hours.

Building a Positive Feedback Profile on Amazon is a time-consuming process

  • Statistically, only one out of 30 buyers leave feedback on Amazon as compared to eBay where one out of every three buyers leave feedback. This means an Amazon seller needs to sell a lot of products to build up his feedback.

Higher competition

  • The marketplace is becoming increasingly competitive with the emergence of many sellers using re-pricing software to automatically alter their prices to stay competitive.
  • The re-pricing software is designed in such a way that as soon as one seller out-prices another, it sets off all other sellers' re-pricers, and a downward pricing spiral starts.

Your research team applied the following strategy

We commenced our research by scouring for the requested information on websites of Gartner, Forrester, IDC, McKinsey, Frost & Sullivan with the hope to find any research on the risks associated with selling exclusively on the Amazon marketplace. However, this research strategy was not successful because it did not yield the required results.
Upon further investigation, we could locate a report on Amazon marketplace strategy by Goat Consulting. Nevertheless, this report did not provide the perspective of an analyst review as it was published in collaboration with Amazon.
As an alternative research approach, we tried for searching the requested information on market research agencies websites with the hope to get any paywalled reports on this topic. However, this research strategy also proved futile because this topic was not covered by any research agency such as MarketsandMarkets, Transparency Research, etc.
Furthermore, we decided to broaden our search avenues to websites of other providers of e-commerce web stores such as Big Commerce and Volusion with the hope that being competitors to Amazon, these e-commerce web store providers might reveal some cons of Amazon market place which might not be otherwise readily available.
Finally, we ventured into combing through online publications such as blogs, articles by prominent authors associated with the same field of business. We ensured due diligence by individually checking the author bios to confirm their credibility. For example, we have referred to an article written by an author, speaker, and founder of Internet Income Coach, where he shares his latest tips, tricks, and strategies for starting and growing an online business. In addition to the above research strategies we also referred to business magazines such as Forbes, Inc., Entrepreneur for the requested information.

Part
02
of two
Part
02

Amazon Consultants

Seven consultants who are considered experts in guiding businesses who sell on the Amazon Marketplace include Tanner Rankin, Awesome Dynamic, Zanoma, Propellant Media, Nuanced Media, Amazowl, and Amazon Consulting Experts.

1. Tanner Rankin

  • Tanner Rankin's company name is Source Approach.
  • This link is to the company's site.
  • Tanner has 10 years of Amazon consulting experience, plus as a speaker, author, and "founder of The Source Approach." Over those years, he has worked with startups, retailers, and brands with regard to their Amazon sales efforts.
  • We chose Tanner Rankin as an expert Amazon consultant because (1) he has 10 years of experience doing so, (2) his company is an award-winning consultancy, and (3) he has made appearances on several prominent media outlets, including Entrepreneur, Forbes, The Business Journals, and MSNBC among others.

2. Awesome Dynamic

3. Zanoma

4. Propellant Media

  • This link is to the company's website.
  • The company's experience includes providing consulting to companies featured on the television show Shark Tank, Amazon SEO , optimization for Amazon listing, sponsored Amazon advertisements, optimization for conversion rate, competitor analysis, keyword rankings, Fulfilled by Amazon management, keyword research, strategies for review acquisition, "seller central dashboard training," and "global market expansion" for the E.U. and North America.
  • We chose Propellant Media as an expert Amazon consultant because of the successful results that the company has achieved selling on Amazon. For example, Propellant consulted a startup featured on Shark Tank and helped that startup increase its number of page views on Amazon by more than 50%, increase its revenue 60%, and the "average cost of sale was only 13%" which translated to a 35% cost reduction.
  • Additionally, Propellant "develop[s] and manag[es its] own products on Amazon." The company's products have achieved "first-page rankings for multiple keywords," a 15% "average conversation rate (from page views to sales)," and the company makes $3 for each $1 it "spend[s] on advertising."

5. Nuanced Media

  • This link is to the company's website.
  • The company's experience stems from its "team of Amazon Consulting Experts [who] ha[ve] over 20 years of combined Amazon, broader e-commerce, and digital marketing experience." The company further states that its "experts . . . have worked both inside and outside the world of Amazon Seller Performance."
  • The company implements a process-driven approach to its consulting services for Amazon sellers. To that end, the company "consistently analyz[es] accounts to provide the best results for brands interested in taking a long-term approach to their Amazon strategy and goals."
  • We chose Nuanced Media as an expert Amazon consultant because of the successful financial results it has helped its clients achieve. The company states that its "experience has produced over $150,000,000 in e-commerce sales and over 50,000,000 products sold on . . . Amazon."

6. Amazowl

  • This link is to the company's website.
  • With regard to the company's experience, the company describes itself as "the global Amazon service solution provider for brands." The company has "develop[ed] solid relationships with Amazon’s internal teams" and consistently conducts research to stay informed about Amazon developments. Further, the company also holds "in-depth internal staff training to ensure that . . . [its] Amazon expertise remains both sharp and proven."
  • The company's consulting experience for sellers also includes Amazon SEO, PPC (sponsored products), "enhanced brand content," and brand gating.
  • We chose Amazowl as an expert Amazon consultant because it "work[s] with some of the world's largest and best brands." A few examples of those brands are O'Neill, HSI Professional, and Qalo.

7. Amazon Consulting Experts

  • This link is to the company's website.
  • The company describes its experience as "the world’s most comprehensive service for current and potential future online sellers." The company has been in the business of Amazon consulting since 2009.
  • The company's consulting experience includes "extensive one-on-one strategy sessions with clients all over the world covering merchandising, bookkeeping, shipping, pricing, warehousing and everything in between." The company's founder also has significant television experience, as he has appeared on numerous, prominent media outlets such as Forbes, NBC, and ABC among many others.
  • The company has also been recognized as a "Premier [Amazon] Consulting Partner."
  • We chose Amazon Consulting Experts as an expert Amazon consultant because it's CEO is "in the top 1% of Amazon sellers worldwide with annual sales over $20 [million]" and his company has achieved successful financial results for its clients. For example, the company states that typically, clients increase their revenue tenfold and some have even achieved over one hundred times their previous sales growth.

YOUR RESEARCH TEAM APPLIED THE FOLLOWING STRATEGY:

To find seven consultants who are considered experts/leaders/successful in terms of helping businesses who sell on the Amazon Marketplace, we first looked for people/companies who provide Amazon consulting services in the U.S. individually. We then reviewed their websites for information about whether those people/companies are experts/leaders/successful in their work. Based on that information that we reviewed from those websites, we only included people/companies who are indeed experts/leaders/successful per the reasons explained above.

Sources
Sources

From Part 01
Quotes
  • "Challenges: Has some barriers to entry Payouts limited to every two weeks (in most cases) Highly competitive selling environment Difficult to get an abundance of positive feedback Risk of inventory being deemed unsellable or restricted at any point in time Complicated procedures and increasing fees May require the use of several third-party software tools to be competitive with other sellers"
Quotes
  • "Con: Unscrupulous sellers can steal your listings Con: Amazon is greedy Con: Amazon owns the customer relationship Con: SMBs still responsible for customer care and feeding Con: Forewarned is forearmed "
Quotes
  • "Amazon sets the rules of its own marketplace. If a seller is competing head-to-head with Amazon on a product, it’s not likely the seller will get many sales, given that Amazon Retail has the Buy Box advantage. Amazon Retail also has sophisticated pricing software which allows it to lower prices to match prices already lowered by competing sellers. Amazon Retail is content not making any money (or even losing money) on a sale so it is not likely that a competing seller will either get the sale from Amazon Retail or make any margin from the sale. Bottom Line: Competing directly on the same listings that Amazon Retail offers is not likely to be an effective business model long-term."
  • "When a seller on Amazon gets orders, it does not own the customer relationship. Each sale is viewed as a one-time transaction, and sellers aren’t allowed to market or re-market to these customers after the sale. So while sellers may have sophisticated CRM capabilities for their non-Amazon channels, almost all of that expertise and technology is irrelevant for customers generated through the Amazon marketplace."
Quotes
  • "The "Buy Box" is the box on a product detail page where customers can begin the purchasing process by adding items to their shopping carts. It's a coveted position chosen by Amazon, and can mean lots of sales. Competitive pricing, competitive offers, a history as an Amazon merchant and more seller reviews can all help you get a position in the Buy Box."
  • "Fulfillment by Amazon is a program where you send your items for sale to one of the many Amazon fulfillment centers to be stocked. Customers buy those products from you, and Amazon will ship them. It differs from dropshipping in that you must provide the items to Amazon for sale - Amazon will not provide products for you. These are the types of merchants that perform particularly well on Amazon: Merchants selling unique-to-them products. Merchants who sell hobby or niche products. Merchants selling refurbished or used products."