The Pros and Cons of Selling on Amazon for Retailers

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If you’ve ever been in a meeting where Amazon comes up, you’ll know the reaction it gets. Some people see it as a golden opportunity, others view it with deep suspicion. Both perspectives have merit.

I’ve experienced this firsthand. One of my previous employers had a complicated relationship with Amazon. One month we’d be told to shut down our Amazon channel because it was “cannibalising our core business,” the next we’d be asked to restart it because it was generating over £1 million in sales. Numbers like that are hard to ignore.

This back-and-forth approach to Amazon is more common than you might think. The challenge is that while businesses debate the merits, competitors are often already there, serving customers who might otherwise come to you.

The numbers don’t lie

Let’s start with some facts that might surprise you. 63% of UK consumers begin their product searches on Amazon. Not Google. Not your beautifully crafted website. 

Think about your own shopping habits for a moment. When you need something – anything from a phone charger to a birthday gift – where do you go first? It’s probably Amazon, even if you end up buying elsewhere.

With around 400 million visits per month to Amazon UK and approximately 26.9 million Prime subscribers expected in 2025, we’re talking about a marketplace that’s become essential for many consumers.

Is it right for my brand?

This is the key question every business needs to consider. Amazon isn’t suitable for every business. Much like deciding whether to sell through a major retailer, it depends on your product, your margins, and your brand positioning.

Premium brands often worry about being lost amongst thousands of other products. This is a valid concern. If you’re selling bespoke leather handbags at £500 each, Amazon might not be where your target customers expect to find you. However, if you’re selling practical products that people actively search for, Amazon could be an excellent channel.

I’ve seen wellness brands perform particularly well on Amazon because customers are searching for specific solutions. They’re not browsing for inspiration; they’re looking to solve a problem. Your organic turmeric supplements don’t need an elaborate brand story – they need to be found when someone searches for “turmeric tablets” late at night.

Can I clear excess stock?

Amazon can be brilliant for shifting stock that’s been gathering dust. I once cleared 2,000 units of old stock that had been sitting in the warehouse since Christmas. Within eight weeks, it was gone.

The beauty of Amazon is its sheer scale. Your niche product might sell one unit a month on your website, but on Amazon, you’re fishing in a much bigger pond and may find audiences you never knew existed.

Will I cannibalise sales?

This concern frequently comes up, particularly from finance teams who worry about the impact on existing sales channels.

Here’s the reality: if your customers are already shopping on Amazon (and statistically, they are), you’re not cannibalising anything. You’re simply following your customers to where they prefer to shop. The sale is likely to happen anyway – the question is whether you benefit from it or your competitor does.

Yes, some customers who would have bought from your website will now buy from Amazon. However, many more who would never have discovered your brand otherwise will find you through Amazon’s platform. It’s a trade-off that often works in your favour.

One approach I’ve seen work is pricing your products slightly higher on Amazon than on your own website. This helps offset the additional fees whilst testing customer behaviour. If customers still choose Amazon despite the higher price, it suggests they value the convenience and trust enough to pay more – sales you likely wouldn’t have captured otherwise. Be cautious with this strategy though, as significant price differences can cause you to lose the Buy Box (even on your own product) and damage customer trust.

Can I introduce my brand to new customers?

This is where Amazon’s strength becomes apparent. The platform provides access to a massive customer base that would be difficult and expensive to reach through other channels. Your product appears alongside established brands, which can lend credibility to newer businesses.

I’ve worked with small businesses that increased their monthly sales from 50 units to 500, largely because Amazon’s search algorithm began showing their products to relevant customers. The platform’s recommendation engine effectively provides free marketing that operates continuously.

But can I make a profit?

Absolutely, but you need to do your homework. Amazon’s fees typically range from 8-15% of your selling price, plus storage fees (using FBA), advertising costs (if used), and potential return handling. If you are shipping yourself (FBM), remember your picking costs, packaging, couriers and customer service costs in your calculations.

The trick is building these costs into your pricing strategy from the start. Don’t always default to matching your website prices on Amazon. Instead, consider Amazon as a premium channel that offers convenience and trust in exchange for higher fees.

I’ve seen businesses achieve 15-25% net margins on Amazon. The key is understanding your true costs and pricing accordingly.

The pros and cons of selling on Amazon

Pros:

• Massive audience reach (those 400 million monthly visits)
• Built-in trust and credibility
• Excellent logistics through FBA (Fulfillment by Amazon)
• Prime badge attracts customers
• Search algorithm can drive organic traffic
• Customer service handled by Amazon (if using FBA)

Cons:

• Fees can eat into margins
• Limited control over customer experience
• Risk of account suspension
• Intense competition
• Customer data belongs to Amazon
• Policy changes can impact your business overnight
• Time and expertise involved

What costs are involved in selling on Amazon?

Let’s examine the specific costs you’ll encounter. Amazon’s fee structure can be complex, but here are the main components:

Selling fees: 8-15% of your product price depending on category

FBA fees: Storage (approximately £0.75 per cubic foot per month) plus fulfilment (£2-4 per standard item)

Advertising: Budget £200 minimum monthly for PPC campaigns to get started

Professional seller account: £25 per month (waived if you sell fewer than 35 items monthly)

There are also indirect costs to consider: product photography, listing optimisation, inventory management, and your time. Overall, factor in around 20-30% of your selling price for total Amazon-related costs. If your usual margins are less than 50%, or your average selling price is less than £5, then I’d question whether it is right for you.

Who is Amazon good for and why?

Amazon works brilliantly for businesses selling:

• Products people actively search for
• Items under £100 (sweet spot for impulse purchases)
• Branded products with good margins
• Consumable goods that generate repeat purchases
• Seasonal products that benefit from Amazon’s massive traffic

It’s less suitable for:

• Ultra-premium luxury goods
• Products requiring extensive consultation
• Highly customised items
• Businesses with low margins
• Businesses with low selling prices (less than £5)

Selling on Amazon vs. your own site

This isn’t an either/or decision. Google is still used for broader searches, comparison shopping, and when consumers are researching what to buy. Your website builds brand equity and customer relationships. Amazon drives volume and discovery.

Think of Amazon as your shop window and your website as your showroom. Amazon gets eyeballs on your products; your website tells your story and builds loyalty.

Your website gives you control over the customer journey, data, and margins. Amazon gives you scale, credibility, and customers you’d never reach otherwise. The most successful businesses I’ve worked with use both channels strategically.

Should I sell on Amazon exclusively ?

No.

It’s tempting to focus solely on Amazon given its massive reach, but relying just on one sales channel is a gamble you shouldn’t take. Diversification is key. We saw this during the pandemic; businesses that only had physical storefronts faced immense challenges. And if a major retailer like Marks & Spencer had only sold online in recent months, they’d have been in a world of trouble. Spreading your bets across multiple platforms is just smart business.

I’ve personally seen Amazon accounts closed without warning and products delisted until more information is provided. If Amazon is your only source of income, such an event could be catastrophic. You can’t afford to take that risk.

So, here’s the professional nudge: diversify your sales channels. Make sure you have your own website and/or sell on other marketplaces such as eBay, OnBuy, or Etsy. This multi-channel approach provides a crucial safety net, ensuring your business can continue to thrive even if one platform experiences an issue. It’s about building a more resilient and sustainable business.

The verdict

Should you sell on Amazon? If you’re selling products that people actively search for, have reasonable margins, and want to reach more customers, then it’s worth serious consideration. However, approach it with realistic expectations.

Amazon isn’t a passive sales channel. It requires investment, strategic thinking, and ongoing optimisation. When executed properly, it can significantly grow your business and customer base.

The question isn’t whether Amazon is perfect – it’s whether you can afford to ignore the 63% of UK consumers who start their product searches on the platform.

The decision ultimately depends on your specific business circumstances, but the opportunity is substantial for those prepared to invest in doing it properly.