How Brands and Sellers Can Benefit From Amazon's Massive Growth
As Amazon is growing in tandem with the consumer shift toward an all-digital experience, savvy sellers can take advantage to position their brands better and make more sales.
Amazon is by far the largest e-commerce platform in the world with about 45% market share in the United States. It's one of the largest platforms of any type, offering sellers the opportunity to present their products to millions of people in countries around the world. That exposure has resulted in explosive results for businesses in various sectors, and it is not slowing down.
On the contrary, Amazon, and its marketplace specifically, have continued to see immense growth, thus making the platform even more valuable for any business looking to connect with customers and make sales.
Moreover, even beginners without business experience can start selling on Amazon. As a result, the assortment of products and quality of service are constantly improving due to increasing competition.
Shift to E-Commerce
Before this year, there was already a steady shift by customers and retailers alike to e-commerce, with even the most traditional businesses opening up digital channels to allow their customers to complete orders online. With all the happenings this year though, the shift to digital commerce has been accelerated and sellers on Amazon can now benefit from having a market that is now almost fully digital, with an e-commerce channel now considered the primary channel rather than the add-on it used to seem like before.
Related: 5 Myths About Selling on Amazon
If there is going to be a ranking of industries that have been the biggest beneficiaries of this year's health crisis, e-commerce would almost certainly top the list. The penetration rate of e-commerce currently sits at around 15 percent, but that number is expected to grow by more than 10% to around 25% by 2025, according to this report by MarketWatch. That would represent an increase of 67% over the course of just five years.
Lowered Barriers of Entry
The implication of the sustained shift to digital commerce is that there is now a lower barrier of entry into the retail space. As opposed to the recent past where businesses were still expected to have some physical presence in order to build consumer trust, being fully digital is now an asset in many cases. Dropshipping and other forms of retail business that have little or no physical presence are now more viable than ever and will likely continue to grow in profitability.
For those who use FBA (Fulfilled by Amazon program) while selling on Amazon, there is no need to deal with details such as order delivery, returns, and customer support. Amazon does it all for you.
The most important factor, and the biggest differentiator between those entrepreneurs who will succeed as sellers on Amazon and those who will not, will be the ability to identify the most profitable products to sell. Once the right products have been identified using a tool such as AMZ Scout, the next step will be to build a supply chain that will provide a substantial markup. This could be by contracting directly for the manufacture of the products or by buying wholesale.
The way that businesses are marketing their products is also changing, thanks to the growth of Amazon and other tech giants like Facebook. There is an increasing association of social media with e-commerce since websites like Facebook and Instagram introduced the ability for users to click "buy" buttons and make purchases as seamlessly as they would like or follow another user of the platform.
While a direct integration of Amazon stores to those platforms may not exist yet, the change in customer mindset is still likely to facilitate more customer sales via social media. As customers begin to become used to making purchases directly from social media, marketing to them on those platforms will become ever more crucial. The marketing will be increasingly easier as more people across the world become more familiar with Amazon and its marketplace, thus removing the friction that might ordinarily exist when users have to move from social media to make a purchase on Amazon.
On the whole, it is clear that the growth of e-commerce is not going to slow anytime soon, and that Amazon will likely continue to dominate, at least in the short and mid-term, making it crucial for sellers to optimize their business practices to take advantage of those factors. By selecting the right items in profitable niches and targeting the right customers, entrepreneurs of every type in various countries will be able to maximize the shift of consumer mindsets to an all-digital shopping experience.
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