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Why we abandoned Amazon and eBay

Posted by JAMIE SALVATORI on 3/26/2013
Why we abandoned Amazon and eBay

In business, you must always be on the lookout for so-called Black Swan events. This may seem a bit illogical, but the point is that everything you rely upon in business has the potential to completely upend or destroy your business.


Many years ago, my business sold a driver’s educational DVD that we had produced ourselves. We had first released it in the year 2000. It sold very well due to a single high-volume affiliate.


We had a great relationship with one affiliate. He earned a great commission, we sold a lot of DVDs, and everyone was happy. So, in 2006, we set out to update our production. By early 2008, it was ready to be released. We were both looking forward to higher conversion rates and greater profits.


And then all hell broke loose. His business was sued by a state government and he was forced to change his website substantially, causing sales of the DVD to plummet.


The moral of the story is obvious. Don’t rely on a single sales channel. This maxim can apply to most areas of your e-commerce business. Don’t rely on a single source of traffic. Don’t rely on a single supplier of mission critical items. And don’t rely on a single employee for any mission critical process (aka know how to do everything yourself in case they disappear one day unexpectedly).


This is precisely why we decided to stop selling on Amazon and eBay. I don’t think that Amazon or eBay will cease to exist, but it is inarguable that they exist solely for their own benefit. They do not exist for my benefit.


I see both Amazon and eBay as detrimental to any business interested in building its own brand. Amazon and eBay are interested in building Amazon and eBay. They have no interest in helping you build your business (no matter what they say).


At a moment’s notice, Amazon could make an operational change that would render your business completely obsolete. You could be selling soap and they could decide to purchase a soap retailer and eliminate all 3rd party soap listings. It’s not that far-fetched.


And what would happen to you if eBay decided to ban the sale of whatever you’re pushing? You’d be out of business the next day. So, why would you bother investing in and building a business based upon the whims of another entity that, frankly, has zero vested interest in your specific success? If you disappear, they probably wouldn’t notice. But if they disappear, you’re screwed. That’s not a partnership. That’s a recipe for disaster.


You may scoff at my fears (and most people did at the thought of a black swan), so here’s another reason to completely abandon all 3rd party sales channels: repeat business.


The bottom line is that businesses can only exist upon repeat business. You cannot create repeat business on Amazon and eBay because all of the branding is designed to reinforce their sales channel and not your store. Sure, you can try gimmicks on eBay like hand-written notes stuffed inside the box, but that’s not going to scale beyond a few dozen orders a day. It also can’t compete against the fact that the customer remembers making their purchase on eBay and not your seller store.


Therefore, you are reduced to always having to compete on price (which is what the owner of the sales channel wants!). You cannot survive competing solely on price because it doesn’t give you a chance to utilize any of your strengths in marketing, merchandising, or customer service. So, don’t bother with it! It isn’t worth it in the long run.


Nearly all of my posts preach building your own brand. I realize I must sound like a broken record, but any good idea is worth repeating. You cannot build your brand if you’re piggy-backing onto Amazon or eBay. They are a crutch and should be avoided.


Obviously, Amazon and eBay “solve” your biggest problem: traffic. But they also prevent you from building your most important asset: traffic.


If you’re serious about building your brand, you must leave eBay and Amazon behind. You’ll be far happier once you do. When you first start, your direct traffic will be a small percentage of overall traffic and it will be depressing. So, you’ll have to pay for most of your traffic, but eventually, you’ll start to earn a following. This is invigorating. They actually remembered my website name!


Plus, direct traffic is a million times better than “free” traffic from SEO because it can’t disappear due to an algorithm change.


Even if you have a “side” Amazon or eBay store, I recommend shutting them down for a laser-like focus on your domain. The time and effort spent operating these 3rd party stores is a huge opportunity cost. You’d be far better served funneling that time toward building your own brand.


Investing in your brand is effectively investing in yourself. I’d rather invest in myself than an Amazon, eBay, Facebook, Etsy, Pinterest, or the-latest-trend-in-3rd-party-stores store.

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