It’s been said “it’s a jungle out there.” And the fact that we have a business entity named “Amazon” somehow fits right in when it comes to commerce in today’s world.

Are you one of those doing business with Amazon? Or wanting to do business with Amazon? Selling on Amazon is not only might be a viable option for selling your goods but, in this day and age, almost a necessity.

How do I decide whether to take the plunge and sell on Amazon?

Firstly, it is encouraged by Amazon itself. They have a subscription portal with testimonials and all you need to get started on the website.  However, as with any business decision, consider a few things before you sign on the (digital) dotted line:

  • Consider that it is but one channel of distribution. Don’t put all of your eggs in one basket.
  • Does your product fit with Amazon? That is, while Amazon is looking for variety in its offering, does your product really fit being sold through this channel?
  • Understand your inventory. Do you have the inventory to keep up with their demand? That is, can your supply chain keep pace with Amazon’s?
  • Have a profit goal. Like with any other venture, there is a learning curve and with it a curve to profitability.
  • Be clear on the cost of doing business. Like any other channel, there is a cost of doing business (it isn’t free). Know and understand all of the costs and how they fit with your total cost model.
  • Know the risks. What’s at stake in doing business on Amazon?
  • Do you have the time to manage this channel?

After you’ve gathered all of these data, then you will be in a better position to decide if Amazon is for you.  And once you take the plunge, consider the time and effort it will take to monitor this (now important) channel of distribution.  Like anything else in your supply chain, you need to monitor it.

If you would like to learn more about doing business on Amazon from an accounting strategy perspective, give us a call or write to us. TFO Solutions is dedicated to helping entrepreneurs and business owners with their finances from the back office to the boardroom.


*photos courtesy of Unsplash; Amazon logo and references are trademarked items of Amazon, Inc.