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Saturday, October 10, 2015

To Amazon or Not to Amazon

I'm just gonna start this by telling you that I have been an Amazon seller since 1994 - over 20 years. I think it's safe to say that makes me an expert on selling through the Amazon platform.

This is the story of my experience with Amazon.

 I owned a used bookstore for over 25 years. After a few years of struggling along what I noticed was that if I was going to be able to make a living from my store, I was going to have to figure out how to reach more customers - brilliant, right? As I was researching how to get into the mail order side of my business I came across Amazon. They were launching a new division. They were going to allow used book dealers to post their merchandise on the Amazon website. My husband thought I should try it putting my books on the site. As scary as it was I made the decision to try it, if it didn't work out in a couple of months I would pull out and try something else.

It was a bit complicated to get started, there were many emails with instructions and such, I was by no means a computer expert but with my husbands help, muddled along, got our database together, figured out FTP and uploaded it one afternoon. Then, we waited... what happened was completely unexpected and overwhelming. Within minutes we started to get orders. Lots of orders.... so many orders that before the end of the first day, we had to put our store -  'on vacation' so that we could process the orders that had come in and order shipping supplies!

Yes, it was expensive - we paid $39.99 per month for the site plus 15% of sales. For a little bitty bookstore just starting out that was a pretty big hit to the budget. But the old adage, "it takes money to make money," is absolutely true. Selling on Amazon more than tripled our business immediately. In less than 10 years it helped make our store the largest used bookstore in the Shenandoah Valley of Virginia. We grew to more than 3000 square feet with over 50,000 books on the sales floor. We were selling over 6000 books every month, making over $250,000 a year in sales! The biggest problem we had was keeping up with demand. The important thing to understand is that  this never would have happened without Amazon.

Fast forward to today. I sold the store three years ago and moved out of state.  I've been a jewelry artist for over ten years and I wanted to focus on growing that business. It's a struggle - I'm the entire business, manufacturing, marketing, sales, shipping, bookkeeping, social media department etc...  For anyone running a business you know that it can be an all consuming venture. It's not a reliable income, it can be very much feast or famine. So, like any business you realize that if you're going to sell enough to make a living you have to reach more people. In the art business that generally means doing shows - Argh! what a pain!! A two day show means a minimum of four days work and a lot of expenses. Displays, packing, travel, hotels, meals, set up and sitting on site for usually two long days hawking your wares. There are no guarantees that it's going to pay off. I can tell you horror stories all day long about friends who shelled out hundreds of dollars in fees to sit at a show for two days and came away not even covering the expenses!

Or, you try to find galleries or shops to take your work wholesale or on consignment. Most of the time this situation is expensive - average consignment commissions are 70% artist - 30% gallery. Wholesale is worse, most retailers want to give you 60% of your asking price to purchase your work. So we all became Etsy sellers because we could work from our studios, reach thousands of customers, the fees weren't as bad as the galleries or nearly as much work as shows... great, right?

It worked pretty well for awhile - but before we knew what was happening Etsy began to implode. Pretty soon the people who were visiting your site weren't buyers... they were other sellers looking for better ideas to boost their own lagging sales. Then Etsy made some business decisions that may have worked out well for them, but not so great for the rest of us - and once again, the handcrafters began looking for a new platform.

What you'll find is that it's pretty slim pickins' if you want to sell on someone else's platform. Sure, there are lots of them but they don't come close to the powerhouse of Amazon. Here's how it breaks down according to an article in PC World: Etsy is the largest platform with 875,000 registered merchants, a number that is steadily dropping. Finding out how much the average seller is making is much more difficult but if you read the forums on Etsy it's a pretty sad state of affairs. Hundreds of merchants are listing but a very small percentage of them are doing more than covering the cost of their supplies and many of them don't even make that.

If you combine the total of the next four biggest platforms, Bonanza, DaWanda, Zibbet and iCraft you'll only have a total of 173,000 registered merchants with pretty much the same results that the merchants on Etsy are having. If you're a US seller, only Bonanza is based in the US and selling through European platforms creates it's own headaches. Nevermind you say, you'll go it alone - set up your own website and learn SEO, RSS and all the rest of the techno alphabet soup!

Everyone has a website, Facebook, Twitter, a blog, Instagram - you work really hard to make these platforms look professional - it's hard, we're not computer wizards - we're artists! But we struggle along trying to understand all the technobabble because, who can afford to pay $500 to an expert to develop and maintain a website? Does this help? Are you making a living from your craft? Probably not, according to the Bureau of Labor Statistics the average income for a crafter is less than $30,000 a year. I don't know anyplace where you can get by on that kind of income.

So, let's talk about Amazon - yes, Amazon has fees - so does every other platform out there. if you fairly compare features Amazon is not the most expensive. The professional level on Shopify is $79.00 per month plus fees and they have no where near the branded power of Amazon. I had a Shopify site for several months - made a total of two sales - dismal.

 Everyone shops on Amazon - it's easy, convenient, secure, fast and has everything - it's right in your living room. You have to understand and appreciate the value of what you are paying for - think of all the time and money you spend trying to get your work in front of people who are willing to pay you for it. Did any other crafters or artisans garner a prime time story on a national news channel (CNN) when their website launched? Amazon already has all the technical know-how, security, infrastructure, and marketing skills; but best of all, Amazon already has your customers, millions of them! That's what great about Amazon - they are marketing geniuses and they have more money than you're ever gonna have for promotion. If you could double or triple your business wouldn't that be worth $39.99 a month?

But what about that small print you say? Yup, Amazon has lawyers - they write up those agreements to protect Amazon. So does Etsy and Ebay and every other platform out there. But seriously, if you believe that Amazon wants to steal your products and sell them for themselves you're delusional and should definitely look into other options. Amazon already has a great business model, they allow other people to sell their merchandise through the Amazon website - they've been doing it for over 20 years. It works for both parties - and you know what they say..."if it ain't broke, don't fix it."

You have to make up your mind - are you trying to make your art your business or, is this a hobby or a part time venture? If you're trying to make a living then you have to think like a business owner and use the left side of your brain instead of your heart to make decisions concerning your business. If you  just love to craft and don't want to be buried in your projects then stick to the church bazaar and yard sale circuit.
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