No CommentsFor many of us, it doesn’t seem like that long ago when, if you wanted to buy something, you had to purchase it in person at a store or your nearest mall.
In recent years, however, consumers have overwhelmingly adopted online shopping into their lives, making Amazon a household name.
In fact, e-commerce’s share of total U.S. retail sales has increased 1-2% in market share each year:
- 16% in 2019
- 14% in 2018
- 13% in 2017
- 12% in 2016
- 11% in 2015
And online shopping is not slowing down.
Not only are consumers increasingly comfortable with the internet and its use as a commercial platform, they’re increasingly dependent on online shopping, too.
With the recent coronavirus outbreak, more Americans have turned to online retailers to meet their shopping needs and provide essential goods.
In a 2020 study by Goldman Sachs, 96% of small businesses in the U.S. said they have been affected by the COVID-19 outbreak, and many will be unable to stay in business beyond a few months.
Meanwhile, e-commerce retail giants like Amazon aren’t just surviving — they’re thriving.
In order to meet increased demand for essential products, Amazon limited receipt of non-essential goods into their fulfillment centers and hired an additional 100,000 workers.
If you are a brick-and-mortar retailer, now more than ever you should consider adding an online sales channel to your business. And the best way to get started is with Amazon.
This article details why Amazon is the best platform for brick-and-mortar businesses to start selling their products online and how to get your products on Amazon’s “digital shelves.”
Amazon decreases your business’ fragility
Simply put, businesses that adopt e-commerce strategies reduce their risk. They have diversified sales channels, different audiences, and the ability to modify how they market, merchandise, and fulfill their products for different consumers.
In fact, in a 2020 Jungle Scout survey of more than 1,000 Amazon sellers, more than half (56%) also sell products in a physical “brick and mortar” store or have done so in the past.
Many retailers or brands also rely more on their Amazon businesses than their physical stories; 12% of brick-and-mortar businesses selling on Amazon rely exclusively on their Amazon income.
Adding an Amazon increases your business’ reach
Of course, one of the biggest benefits to adding an online sales channel like Amazon to your business is the potential for an increased global reach.
Worldwide, Amazon has 112 million Amazon Prime subscribers spread across 15 different marketplaces. Amazon’s U.S. marketplace alone serves more than 2 billion unique visitors per month.
However, although the U.S. marketplace is the most popular, sellers who add Amazon to their sales strategy typically sell on at least two different Amazon marketplaces, so you can consider global expansion in the future as well.
Any brick-and-mortar retailer can sell products on Amazon
Amazon isn’t a glass slipper waiting for the perfect business; it works with many types of products, business models, and niches.
Among Amazon sellers with brick-and-mortar businesses, we learned that the most popular business models they used were:
- 70% private label
- 36% wholesale
- 26% reselling/arbitrage
- 11% dropshipping
- 11% handmade products
Note: Many sellers use more than one business model.
And while you can sell in any of dozens of Amazon product categories, the most common among brick-and-mortar-to-Amazon businesses are:
- Kitchen/Dining: 29%
- Sports/Outdoors: 24%
- Clothing/Shoes/Jewelry: 19%
- Toys/Games: 19%
- Beauty/Personal Care: 18%
It’s easier for existing businesses to get started on Amazon than it is for new businesses.
If you already have a business in place, on average, it’s easier for you to add Amazon as a new sales channel than it is for entrepreneurs without a product.
1. It costs less to add Amazon as a sales channel
The following data segments sellers with existing businesses and their startup costs versus the startup costs of all other Amazon sellers:
- 25% of sellers with existing businesses spent less than $500 to start selling on Amazon vs 17% of all other sellers
- 19% spent between $500 – $1000 vs 12% of all other sellers
- 21% spent between $1000 – $5000 vs 31% of all other sellers
- 26% spent between $5000 or more vs 37% of all other sellers
2. It takes less time to get up and running on Amazon
The following data segments sellers with existing businesses and the time it took to get their Amazon sales channels set up versus all other Amazon sellers:
- 46% of sellers with existing businesses took fewer than six weeks to get up and running vs 35% of all other sellers
- 10% spent six months or more vs 19% of all other sellers
3. It takes less time to turn a profit
The following data segments sellers by the time it took established businesses to turn a profit versus all other Amazon sellers:
- 32% took fewer than three months to generate a profit vs 22% of all other sellers
- 41% took three months to a year vs 45% all other sellers
- 11% took more than a year vs 16% all other sellers
4. You can invest as much time as your business demands
Adding Amazon to your existing business can be as simple as adding just a few more hours to your work week. Or you can make it an expansive operation.
Sellers who added Amazon as a sales channel to their existing business vary when it comes to how much time it takes for them to run the Amazon side of their business each week:
- 14% spend fewer than four hours per week
- 42% spend 4-20 hours per week
- 25% spend 21-40 hours per week
- 15% spend 41+ hours per week
How can brick-and-mortar retailers start selling on Amazon?
Much of what we at Jungle Scout provide new entrepreneurs are the education and data-driven insights they need to find profitable products to sell on Amazon.
When it comes to brick and mortar businesses, however, the products already exist. What you’re looking for at this phase are ways to expand your business on Amazon with new product opportunities, find new customers, and win on this new channel.
The key step is deciding how to fulfill your products on Amazon.
How to fulfill via Amazon or your own merchant-fulfilled network:
Fortunately, most brick-and-mortar retailers don’t even have to fulfill their own products that they sell online.
Instead, 84% of brick-and-mortar-to-Amazon retailers rely on Amazon’s Fulfillment-by-Amazon (FBA) to store, pick, and pack and ship products on their behalf.
Even still, these sellers have their fulfillment network to fulfill products when the need arises. Over half (55%) of brick-and-mortar sellers fulfill their own products — called Fulfillment by Merchant (FBM).
And this flexibility works both ways.
During the 2020 coronavirus outbreak, some non-essential businesses that lacked an online channel were unable to make sales.
Meanwhile, non-essential businesses that relied solely on Amazon FBA to fulfill their products missed out on sales, too, as Amazon stopped receiving non-essential products in their fulfillment centers.
Only businesses that use the Amazon portal, and have the ability to ship their own products, are prospering. (Not to mention, businesses using both FBA and FBM to fulfill their orders, on average, earn more income.)
Ready to get started?
In these uncertain times, investing just a little bit of time and capital to add Amazon as another sales channel for your business could mean the difference between struggling and survival, or it could open a massive new opportunity for you.
For more information on how to get started with Amazon, check out:
