Why Amazon Brand Building business?
When it comes to e-commerce, we have plenty of investment opportunities and a few major decisions you have to make.
First, we must clarify that the significant difference in e-commerce models lies in the supply chain system.
The primary supply chain systems are dropshipping, arbitrage, white label, wholesale & private label. This is where your first major decision is made.
Working in the e-commerce industry since 2015, I have tried all these models. Each of these has its own pros and cons. Depending on your investment and goals, you can choose one or the other.
Which e-commerce model should you invest in?
You can categorize different selling models on Amazon into two categories
1. Reselling(Dropshipping, arbitrage, wholesale)
2. Brand building(White label and private label)
1. Reselling
Benefits: Quick cash flow, lower initial investment, low barrier to entry.
Challenges: Not sustainable over a long period of time, too much hustle, operations-based business with no automation, no asset building.
Dropshipping can’t be done on any of the major marketplaces, your account will be suspended with funds being stuck there. Even with your own website, the dropshipping model doesn’t work due to bad customer experience overall. The consumer has now been educated and trained to expect excellent quality, quick delivery, and support.
Arbitrage is still working on major marketplaces, but it’s taking its last breaths. The profit margin is extremely low, which makes it not worth it at all. Arbitrage has a high chance of getting your account suspended as well on most major marketplaces including Amazon.
Wholesale is the best option here especially good people who are in the same country where they are selling. You will need to attend trade shows, and build a network to get brand approval from top brands in order to make it worthwhile for you in the long run. Your account will be safe in most cases as you will have written brand approvals.
2. Brand building
Benefits: Asset building, automation, brand awareness, great customer experience, sustainable & consistent growth.
Challenges: High initial investment, high barrier to entry, in-depth R&D at all levels, excellent expertise required.
Brand building is challenging, it’s a proper business. You can think of it as a startup, where you will have to go through all the investment stages such as bleeding, breaking even, profitability, and scalability.
The reason I prefer brand building is that in the long run, you are building an asset for yourself. You can sell this asset just like real estate. With the passage of time as your brand establishes, it keeps getting more profitable, its net-worth keeps increasing.
You have your own products that have been tried and tested, plus the delivery system is under your control as you have the inventory with you. This makes sure that you are able to provide an excellent customer experience.
As brand awareness increases, you can expect higher profit margins for your products.
You can market and scale your brand to multiple countries, marketplaces, websites, and social media platforms.
Then you have automation in this business as your supply chain is getting stronger, and your primary job will be to do inventory forecasting and bring in sales.
Why start with Amazon?
After choosing your preferred e-commerce models from above, the second major decision is choosing where to start selling.
Marketplaces like Amazon, websites, & social media marketplaces are a few major ones. Most of the time all of these work together. For example, you can sell a product on all these different platforms. That’s the best approach, but you have to start from one and make it your primary platform for increased focus and growth.
Choosing the right platform to start with makes a massive difference in the growth trajectory and value of your business.
We prefer Amazon as our main marketplace and that’s where we start. The reason is simple, an established brand on Amazon is worth significantly more compared to any other platform.
Once your brand is going well on Amazon, you can scale it to other marketplaces as well. This increases your brand value, and brand presence and you start getting sales from different channels. Compared to Amazon you can get higher profit margins with your own website as well.
I understand that all of this might be overwhelming for you, however, learning this is important before you invest in any of these models.
For us at earneo, the decision is crystal clear. It’s BRAND BUILDING on AMAZON.
At earneo, we provide turn-key services to help you launch your brand on Amazon from scratch.
Book a discovery call now to learn more from our experts.
