This transcript was generated from the episode audio and may contain minor errors.
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The Fulfillment by Amazon program is massive. At last count, there were more than two million vendors, two million vendors, the majority of which are small businesses and side hustlers who use Amazon's platform to reach consumers. There are a lot of benefits to this program. It makes a lot of things pretty simple, easy, turnkey. And we have featured a lot of stories in the archives of listeners just like you who have used this program to great success.
Now, all that's pretty awesome, right? But what is the downside? Well, surprisingly, Jeff Bezos does not actually wake up every day and think, how can I give away every advantage I have? And today's caller has an important question that highlights one of the big downsides, which is if you use FBA, that's Fulfillment by Amazon, how do you go about building your platform? 'Cause you always hear that advice too.
You hear about, you should build your platform, you should own your customers. But Amazon actually controls the entire customer service process and doesn't even let you know who's buying. So if you are a third-party seller on Amazon, one of those two million vendors, you actually know very little about your customers. Is there anything that can be done about that? How do you build your platform if you're selling on Amazon?
That is the question. The full version from our listener and my answer is coming right up. [Music]
Hey Chris, this is Carly. I hear a lot about how it's important to build your platform instead of relying on third-party networks since they can always change the rules or even disappear. But I'm planning to sell on Amazon, which of course has the widest possible distribution and makes a lot of things easy.
I like them for that reason and the whole business model I'm looking at depends on selling with Amazon. But it also seems hard to collect email addresses of customers and market to them on an ongoing basis when Amazon is doing the selling. Is there a way around this? How can I build my platform while selling on the world's largest marketplace? Thanks for your help.
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All right, so Carly has identified some conflicting advice here. Well spotted, Carly. You're absolutely right that I talk a lot about building your platform. Probably anybody else you read or listen to talks about the importance of wherever possible, owning the customer relationship and getting email addresses, being able to communicate with them directly. And then you also hear about the fulfillment by Amazon model, which for a lot of people, anybody selling something, e-commerce, and you wanna reach a lot of people, it's really hard to beat the fulfillment by Amazon model because they have access to such a huge customer base.
They have also streamlined the process of e-commerce so much and they're making a lot of things easy for sellers. So that's great, but it's really difficult to combine the two, it's tough. It's possible, but it's tough. For all the benefits that Amazon offers sellers, sharing the customer data is not one of them. And if I was betting, I'd say it probably won't be any time in the future.
Owning and managing the customer relationship is something that Jeff Bezos does think about quite a lot, at least by all accounts, and whether he thinks about it or not, it is a pretty core value of Amazon. So overall, I would say this is probably the primary negative of using the FBA model. Now, what can you do? Well, I said it's possible, it's just tough. You can try to connect with customers after the purchase.
They have to come to you. You can't go to them. But if you buy things from Amazon merchants these days, you often get a card or note included in the package. And this note introduces the merchant. It offers customer support, which also subtly encourages you to contact them if you need help, instead of just going to Amazon and leaving a bad review.
It sometimes also provides an incentive to register the product and join an email list. So that is one common tactic that sellers use. But as I said, it's not ideal because the conversion rate is pretty low. Speaking for myself, I order a lot of stuff and I almost never follow through with things like that, even when I love the product or even when I have a problem with the product. So whether I love it or hate it, I very rarely will actually do that registration.
It's just one of the things you have to understand about this particular business model. So when you're making your list, consider this, but also consider all the advantages and go from there. Carly, good luck. Everyone else out there, I am cheering you on. Let me know what you're working on.
Let me know about your projects, your ideas. sidehustleschool.com/questions, I'll continue to feature these throughout the rest of the year, along with stories, case studies, updates from other listeners as they launch and grow their projects. That's it for today. My name is Chris Guillebeau. You're listening to "Side Hustle School." [Music]
From the Onward Project.
