Dangers of the Amazon and FBA Business Model

New post from The eCommerceFuel Blog:

Amazon and the eCommerce merchant. It's a Shakespearean tale where love and hate is often a blurred line. There's no doubt that for many merchants, Amazon is a huge source of revenue for their product. But there's also plenty of pitfalls when you decide to sell on Amazon. To kick off our month-long series about all things Amazon, we've got a reality check about the potential problems with selling on Amazon. While it presents many opportunities for increasing your products' reach, it's important to be aware of the company's policies that have undermined many eCommerce businesses. Subscribe: iTunes | Stitcher (With your host Andrew Youderian of eCommerceFuel.com and Bill D'Alessandro of Rebel CEO) Andrew: Hey guys, Andrew here and a quick note before we get into that official theme music. Today is going to kick off a four part month-long series on Amazon. If you're in eCommerce, which you probably are, obviously that's a huge aspect of what we're doing these days. So over the next month we'll be covering all sorts of different topics Amazon-related, and I want to kick off this series with just an episode just to make you think a little bit more carefully about some of the things you should be considering from a downfall perspective on Amazon. Obviously a lot of opportunity there, but given when we're focusing on it and given the fact that some people make Amazon sound like, you know, just a money machine, I wanted to kind of have a reality check to launch us into this series. So hope it's useful, hope you make a bunch of money on Amazon, and hope you enjoy. Thanks. Welcome to the eCommerceFuel podcast, the show dedicated to helping high six and seven figure entrepreneurs build amazing online companies and incredible lives. I'm your host and fellow eCommerce entrepreneur, Andrew Youderian. Hey guys, it's Andrew here and welcome to the eCommerceFuel podcast. Thanks so much for tuning in today. Today, talking about the dangers of Amazon and the FBA business model. You know, Amazon is the talked-about game in eCommerce these days. Big courses coming out, you know money seemingly just falling freely from the skies, it's incredible, right? It's like the old, old days of AdWords when they were three cents a click. There's no downside! But there definitely are some pitfalls that we want to talk about today as a reality check, hat tip to David Heacock for the inspiration and some of the finer points on this episode. Thank you, David. And joining me to really dive into it, a man who knows a ton about Amazon, Mr. Bill D'Alessandro. Bill, welcome sir. Bill: Yup! Glad to be here. This is the topic I love to talk about. Andrew: Yeah, it's interesting, and you've been on, like I said, I mean you've been on Amazon for years. I have very little experience with it. It'll be interesting to kind of take the opposite approach of what I think has been a lot of ra-ra-ra cheering over the last, you know, two years or so. Bill: Yeah, and some of it well-deserved, but not without potential other sides of the coin. Beware the Hijacked Niches Andrew: Bill, I think the biggest thing that stands out as a potential danger of going onto Amazon is that building your core business on Amazon is, ultimately, is going to lead to heartbreak. A lot of people, I'm not sure if they realize, Amazon is not your friend at all. They've got a long track record of hijacking niches, of selling directly out from under merchants, and if you don't own the platform off Amazon somewhere, you're gonna get hosed eventually. Bill: Yeah, I think talk to anybody who used to sell any of the products now covered under the Amazon Basics program. You know, all the cables, all the SD cards, you know Amazon is more than willing to private-label their own stuff and compete with you directly, you know, obviously at much lower cost and with preferential algorithmic ra...