There is no doubt that Amazon has been leading the eCommerce industry for years. It’s almost unreasonable to have a business plan without considering starting with or expanding to Amazon.
US citizens prefer to shop online and Amazon, as the eCommerce giant, is undoubtedly their preferred choice. Based on NPR/Marist 2022 Poll, 69% or nearly seven in ten Americans say they have purchased an item online, and 92% of online shoppers say they have bought an item through Amazon.
“With this enormous amount of traffic, all you need is the right product, and your success is guaranteed.” This is a misconception many sellers have when starting to sell on Amazon. They expect a quick turnover, high profitability, and constant growth.
A company must have both financial success and growth to stay afloat and be attractive to investors and analysts. Profitability is necessary for the company to remain in business, but growth is necessary to ensure long-term sustainability.
What is Profitability?
A business’s net income is the amount left over after subtracting all the expenses related to the production and sale of its products. Profit is the “cash in the bank” that goes straight to the business owners or investors or is reinvested in the company. Earning a profit is the main objective of any business, and for a company that does not have investors or outside funding, it could be the only capital available.
Eventually, failure is inevitable without enough money to pay for operations and keep the business running. No business can last for an extended period without making a profit, although assessing a company’s current and future profitability is important for making decisions about the company.
While external financing can allow a company to stay afloat for a period of time, it is a liability in the end, not an asset.
What is Growth?
It is absolutely imperative to think about earning money right from the start of a business. Simultaneously, developing the market and sales is the best way to reach that aim of profitability. When the business has moved further than the beginning stage, the primary objective should be identifying potential growth opportunities.
Growth for a business is essentially an expansion, making the company bigger, increasing its market, and ultimately making it more profitable.
Though the present profitability of a company may be good, growth opportunities should always be explored since they offer opportunities for greater overall profitability and keeps analysts and potential or current investors interested in the company.
But like every other industry, when starting your business, you need to decide whether you’re aiming for instant profitability or growth. It takes a lot of resources, proper planning, and investment to sustain constant growth.
While it might be easier to grab already existing traffic, you still need to ensure that:
- Your products are visible and displayed to your customers
- Your product pages are well presented, so the traffic converts
- You have enough inventory to meet the demand
- Your prices are competitive in the marketplace
- Your brand message is displayed correctly
In May 2022, Amazon.com had approximately 2.4 billion combined desktop and mobile visits, up from 2.3 billion visits in April, as reported by Statista. Amazon has 9.7 million sellers worldwide, of which 1.9 million are actively selling on the marketplace.
To create a brand presence in this competitive marketplace, you need to invest in the following:
- Marketing / Ads
- Promotions
- Images / Videos
- Off Amazon Strategies
With all this information in mind, when launching your brand on Amazon, aiming firstly for growth will guarantee you a brand presence, brand awareness, traffic, loyal customers, and ultimately sales that, in the long run, will necessarily translate to profitability.
Your success on Amazon relies heavily on the following:
- Catalog
- You must ensure that your catalog is well established rather than focusing on its length and adding more products.
- Inventory Management
- Out-of-stock situations kill your momentum entirely, so ensure you plan accordingly. Don’t rely solely on Amazon’s recommendations to restock your inventory because the Amazon system doesn’t consider many factors such as seasonability, events, etc.
- On and Off Amazon Marketing Strategies
- Utilizing Amazon ads, editorial recommendations, and other Amazon marketing as well as your social media.
- External traffic is like a supplement to Amazon’s organic traffic.
- Utilizing Amazon ads, editorial recommendations, and other Amazon marketing as well as your social media.
Not sure where to start or how to build your brand on Amazon? Reach out to our team of experts at bellavix.com
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