Council Post: How To Balance Amazon And A DTC Site By Prioritizing Your Brand

Co-Founder and CEO of Elemerce.

When picking the best strategy to position your brand and its products, it’s about more than just sales numbers. The strategy you choose for your business should ultimately be the one that prioritizes your brand’s position in the market and its identity with consumers. That strategy, depending on your specific situation, could be an Amazon-only approach, a direct-to-consumer (DTC) site only, or a hybrid of Amazon and DTC sales channels.

The Pros And Cons Of Selling On Amazon

Some of the benefits offered by Amazon come from the sheer size of the buying audience. Listing a product on the site gives you instant access to customers who are aggressively targeted through Amazon’s search engine and recommendation algorithms. In addition to instant access to buyers, product listings are much easier to create and manage than with an e-commerce website.

Amazon supports promotional efforts with its built-in ad platform. As soon as your products are listed in Amazon’s catalog, you’ll have the option to run ad campaigns with a robust set of options for targeting potential buyers.

Amazon can help with logistics for products, allowing for warehousing and shipping services through Amazon’s fulfillment program. Using Fulfillment by Amazon (FBA), you can get free shipping, item storage, return processing and added customer support for what you sell on Amazon.

Amazon increases buyer trust and seller credibility. People are simply more comfortable shopping on Amazon than any other e-commerce site. The familiarity, security and ease of use that Amazon offers is passed right along to you as a seller. Your products will have the ability to generate reviews, and studies have shown that 7 out of 10 buyers will check Amazon for reviews before making a purchase online.

The first con is obvious: Amazon takes a cut (15% for most categories), which eats into profit margins. In order to access the Amazon seller audience, you give up a percentage of each sale to Amazon through referral fees.

It is worth noting that the terms of service for sellers are rather tricky to navigate. Amazon has very specific rules for how products can be sold, advertised, promoted and reviewed on the platform. Running afoul of these rules can result in a range of issues for the seller, from the limitation of selling privileges to being completely blacklisted from the site.

Perhaps the biggest downside to selling on Amazon has to do with marketing limitations. Purchase data is very limited on Amazon, and gathering what is available is no simple task. And sellers are, once again, limited with what they can do with such data; it is against the terms of service to use it to market directly to consumers. In the end, the customer belongs to Amazon, and the company goes to great lengths to keep it that way.

The Pros And Cons Of A Direct-To-Consumer Site

There are many benefits that come with having your own website to promote your brand and sell your products directly to the consumer. One of the most attractive pros is that you have complete control over your content. You can position your product catalog exactly how you want it, and you don’t have to compete with anyone. You’re allowed to do much more regarding testing when it comes to layouts, colors and fonts to see what entices a sale.

Though the cost of the website must be factored into the equation, profit margins can potentially be higher on a DTC website due to the absence of seller fees. Along with higher margins, a website is one of the most valuable tools your marketing team has when it comes to gathering data on your buying audience. A DTC site allows you to gain deep insights into buying behavior, triggers and deterrents from which you can build actionable strategies to optimize your sales funnel.

As you generate sales, you will be able to create a customer list for use in future marketing and branding efforts — something sales and marketing teams will very much appreciate.

Of course, there are challenges that come with building and managing a DTC site as well. The website must be built and maintained. And once that website is built, generating traffic and sales can require significantly more time and money compared to Amazon’s instant audience.

A branded website can take longer to establish trust and loyalty with a consumer — something that is nearly automatic on Amazon. Until you have proven your brand’s ability to deliver a quality product and good customer support, buyers may take additional convincing to purchase directly from you.

A Hybrid Strategy

Your strategy doesn’t have to be all Amazon or all DTC. There are ways of taking the best of both worlds through a synergistic approach. You can leverage the added content control of your own website to explain your products, use the ad platform of your choice to prospect for buyers and create landing pages that have been thoroughly tested for maximum sales potential. Once these buyers are interested in buying, you can send them to Amazon to complete the sale, which gives them the buying confidence and convenience that Amazon offers.

This strategy allows you to stay strong with your data-gathering efforts through on-site analytics. Instead of losing customers due to a lack of behavior tracking, you can continue to optimize your sales approach as you learn from data. 

Ultimately, neither selling on Amazon nor exclusively selling on a DTC website is a true e-commerce strategy. Each is only a part of a comprehensive strategy, and each has its strengths and weaknesses. Some of the best online brands I’ve worked with do both very well: They focus on meeting customers where they are and providing a friction-free and positive shopping experience.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?