It has been a month since Amazon launched its Amazon South Africa marketplace. The e-commerce giant came to South Africa with its vast catalogue of products, 310 million active users and 9,7 million sellers worldwide. This means that businesses across the country can benefit from selling on Amazon South Africa.
It is no surprise that Amazon South Africa has shaken things up for fellow e-commerce competitors Takealot, Makro and BobShop. However, there is a reason Amazon is the go-to platform for most sellers.
In our last post, we explained how to sell on Amazon South Africa and provided a detailed guide on the marketplace. Today, we want to take you through the advantages (and disadvantages) of selling on the Amazon South Africa marketplace.
Advantages of Selling on Amazon South Africa
Sales
One of the benefits of selling on Amazon is the audience reach. With over 300 million active users worldwide, selling on Amazon South Africa, means you can reach customers in different countries. This gives you more exposure for your business, and if you make your own products, it helps you create a global brand.
Profits
Another advantage of selling on Amazon South Africa is more money. Because Amazon has such a wide audience reach, selling on the platform gives you access to customers around the world and helps you grow your profits quickly. Because you now have a bigger audience, the likelihood of customer purchases also increases. More sales equals more profits.
You also gain credibility and trust because you are listed on Amazon (a trusted platform), which brings in more customers.
Low Marketing Costs
Marketing costs are low when selling on Amazon South Africa. You get to list your products on the most visited e-commerce marketplace which gives you access to billions of customers daily, but depending on your product and how saturated the market is, you can start making a profit without any marketing. Amazon is basically its own ‘search engine’, so it’s easy for customers to find your product(s) and purchase them. However, doing your own advertising will always be beneficial.
Stock and Shipping
Selling on Amazon South Africa also means you don’t always have to worry about shipping or storing your inventory. You can send your product(s) to Amazon and the company will ship them out for you, giving you access to the global shipping programme. The fulfilment by Amazon (FBA) programme assists sellers by storing, managing, and shipping their products. Sellers on Amazon South Africa automatically join the programme when signing up on the platform.
No one can argue that selling on Amazon South Africa has many benefits. From increased audience reach, low marketing costs, increased sales and profits to stock storage and shipping, Amazon is the ideal place for an online seller and a small business owner.
Disadvantages of Selling on Amazon South Africa
As much as Amazon seems appealing, we need to look at some of the disadvantages of being a seller on the online marketplace.
Competition
With over 2 million daily active sellers, the platform is full of entrepreneurs selling similar products and competition is tough. If many sellers are advertising the same products, Amazon decides which seller is the best fit. If you are not the best fit, your products will not be immediately visible to customers.
Sellers are ranked according to their Buy Box Score, so you need to aim to have a high score. To increase your score, you want to ensure that you have a customer feedback score of at least 90. Amazon will also consider the number of reviews (positive and negative) you have in relation to how long you have been selling. If you have been selling for a while, Amazon expects to see more reviews.
Seller Fees
In the SME South Africa Amazon South Africa guide, we outlined how much it would cost to become a seller on Amazon. The global retailer charges two different prices for its plans. If you don’t sell more than 40 units per month, Amazon charges a fee of R 10 per item. However, if you sell more than 40 units per month, a monthly fee of R 400 is charged. Referral fees are also included.
Fulfilment Fees
Although selling on Amazon comes with a wide audience reach, Amazon charges a fee for joining its fulfilment programmes. The FBA programme allows you to store your products at an Amazon warehouse and the company packs and ships the orders for you. The fulfilment fee starts at R 27 (excluding VAT) per unit and varies by the size of your product. The Amazon Easy Ship feature is unique to South Africa. In this programme, sellers pack and store the products and Amazon delivers them for you.
So, selling on Amazon is not easy but the advantages outweigh the disadvantages. The giant marketplace provides small businesses and entrepreneurs a chance to compete against bigger businesses, increase sales and reach and cut marketing costs.
Take advantage of the world’s largest online marketplace and become an Amazon South Africa seller today!
