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What is Amazon's Place in the Retail Ecosystem?

Amazon has both its pros and cons — so is it the right move for your DTC strategy? Let’s look at how Amazon fits into the retail ecosystem and what it has to offer.

Fortress Brand Team | June 29th, 2022

Published in The Marketplace Playbook

Between Amazon’s market share and its ability to reach customers, it can either be a tool for your brand or a competitor. Whether or not you choose Amazon Marketplace as a part of your e-commerce strategy is a difficult decision with a number of factors in play. They provide effective ways to build customer relationships, but you’ll have to give up some of the control over the customer relationship to gain access to those customers. So what’s best for your brand? Let’s look at how Amazon Marketplace fits into a DTC business model and what it has to offer.

Benefits

Amazon provides unrivaled access to customers. Recent studies have shown that 66% of consumers start their product search on Amazon. 200 million unique monthly customers say they prefer to make their purchases at Amazon over any other store. Amazon also has a reputation for credibility and great service. In short, Amazon is where the customers are and in today’s retail environment it’s more important than ever to meet the customers where they shop.

Drawbacks

While Amazon represents a proven channel to connect with customers, it doesn’t come without costs, both monetary and control. Selling on Amazon Marketplace isn’t free. You’ll pay a percentage of every purchase. The amount varies depending on product category–but the average is around 15%. Plus, you’ll pay fees depending on the type of selling plan you choose. Other costs are related to maintaining certain standards dictated by Amazon including a high level of customer service and tailored product pages. You’ll also give up some amount of control. Amazon owns the customer relationship on Marketplace. You won’t have a direct customer relationship.

The Bottom Line

In the end, Amazon Marketplace can be an extremely useful channel in your marketing strategy, but it might not be the right strategy for every brand. While they offer an avenue to connect with millions of potential customers, that access comes with a cost. It can be a lot of work, so you should be sure you have the skillset or partner with the right service provider to handle everything from marketing to customer satisfaction. When deciding whether to include Amazon Marketplace in your marketing strategy, you need to evaluate the pros and cons in context with your brand and your future growth plans.


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