AskPat 98 Episode Transcript
Pat Flynn: Hey, what’s up everybody? Pat Flynn here and welcome to Episode 98 of AskPat. Super stoked to hear. Of course I’m always here to help you by answering your online business questions five days a week.
Now if you’d like to get started online, you haven’t started anything yet, and you want the basics, head on over to my free Getting Started guide at AskPat.com/start. That’ll take you to page on my main site, that’s SmartPassiveIncome.com. It will give you a bunch of information that you’re going to need to figure out what is best for you. So again, AskPat.com/start. Thank you so much. Now let’s get today’s question from Greg.
Greg: Hi Pat. If you’re selling your products on your site, what’s the difference between having an online store and selling with Amazon? Seems like they’re two approaches to the same thing. Thank you.
Pat Flynn: Greg, thank you so much for your question. And, you know I heard a few sirens in the background there. I hope you and everybody else around you are safe, although this was obviously recorded a long time ago. And still, I hope you’re safe though.
Anyway to get to your question, which is a great question because what’s the best answer? Do you sell on your own site or do you sell on an Amazon platform? And I can’t give you an answer, Greg. I can’t give anybody their true answer right now, because that’s going to be something that you’re going to have to test and figure out on your own. It’s on a case by case, brand by brand basis. And what is best for you may not be best for somebody else. But what I can do is go over the pros and cons of each, the pros and cons of selling on your own site versus selling on Amazon.
Now I will say, the sort of stat that kinda blows my mind about Amazon is the fact that they have, and there’s probably more than this now because this is just the last time I heard, was this number, 300 million. There’s 300 million registered buyers on Amazon. Now those are key words there, “registered buyers.” Because you know there’s millions of people searching on Google every day, of course. But a lot of those people are searching for free information or just random stuff, right? But on Amazon, people go there to buy. There are 300 million people who are registered, who have their credit cards entered into Amazon who could potentially buy with one click. I mean that is so incredibly powerful. And the buying process is completely familiar. It’s the number one retailer, it’s something that people do all the time. And if you’re selling your stuff on Amazon and you know, it’s a product they need, they’re going through a trusted service, a buying process that they’re familiar with and they’re likely to complete that purchase. You know that buying experience is something they’ve done over and over again. So that could work to your benefit as opposed to on your site, you know, using a random cart that they’re not familiar with. Again a random cart that they’re not familiar with and a payment process. Who knows if it’s secure or not? Obviously, if you go through Amazon it is, for the most part at least.
Another benefit of selling on Amazon is the cross promotion. That’s one of the best things that Amazon does to help sellers of anything, is the cross promotion they do. And you’ve probably seen this before. When you are about to buy something you might see something below that product that says, “People who purchase this also purchased that”. Or perhaps you have bought something on Amazon and you get a email a few days later with products related to that product that you just purchased. They have an incredibly smart algorithm based on just tons of data to know what will give them the most chance of showing you something that you would buy. It’s pretty incredible. And that cross promotion of course can work in your favor as a seller.
Also Amazon is a search engine. And like we compared to Google earlier, this is a search engine where people are looking to buy. They are typing things in to Amazon to buy. And there are SEO, you know, Search Engine Optimization strategies, within Amazon that you could take advantage of. I know a number of people who are doing really well ranking for certain keywords, selling books and selling products and certain things, and certain categories on Amazon. And they’re doing incredibly well. And also, pages on Amazon, you’ve probably seen before, rank really high in Google search as well. So that could work to your favor too.
And of course there’s social proof there, not just in being on Amazon, but the reviews. A lot of people, I don’t know about you, but I look at the reviews every time I’m about to buy something on Amazon. And I have not bought something based on bad reviews. So if you have a product that’s valuable, whether it’s a book or a digital good or some other—or a physical product, whatever the case may be, if there are a lot of people who are saying good things about it, chances are when people come over to your page and are looking to potentially buy that product as well, they’re going to go over into the reviews and if they’re good, they’re likely to buy. If they’re bad they’re likely not to buy.
So those are things that Amazon has definitely working in its favor and can work in your favor that you just can’t get on your own site. You’re not going to have 300 million registered buyers who have purchased something from your site before. You’re not going to have the ability to do some incredibly-genius cross promotions with other products from other people. Maybe a little bit through affiliate marketing, but not anything like Amazon can do in their algorithms. And of course you’re starting from scratch, or almost from scratch, when it comes to trying to get your products to rank for those keywords related to that product as opposed to how it is on Amazon.
And of course, social proof as well. It’s a lot easier to take advantage of the social proof on Amazon where there are registered buyers and people are registered and leave testimonials. You know, people trust those more than what might seem like a random testimonial on your website, which could be made up, which may not be true. So those are the disadvantages of not using Amazon, or the advantages of using Amazon.
However, let’s talk about selling on your own site for a little bit. This is something that I’ve done myself as well. Of course I’ve sold on Amazon too, both through the Fulfillment by Amazon program, I’m just dabbling a little bit in that, which is pretty cool actually. If you actually go to Episode 99 of the Smart Passive Income podcast which you could get to at SmartPassiveIncome.com/session99, you’ll hear almost an entire hour discussion about the Fulfillment by Amazon program, Jessica and Cliff Larrew, who are making over six figures going to stores in their cities and nearby cities buying stuff, physical products, and then shipping them to Amazon, and then selling those things on Amazon. Amazon takes care of the fulfillment. That’s why it’s called Fulfillment by Amazon, or Amazon FBA. So check that out, SmartPassiveIncome.com/session99 if you’re interested in that.
Just all this to say I’ve done the Amazon thing before but I’ve also sold on my own site as well. I know there are advantages to selling on your own site. You can do a little bit more with the pricing. You know, you could charge a lot more. You know, if you’re on Amazon and you’re charging significantly more than your competitors it’s going to be obvious, and you’re not going to sell as many items. However, if you’re on your own site and you build trust and authority with your audience you have the ability, especially if you’re providing a ton of value, to charge a hefty price for something if it’s obviously worth it. But you have the ability to make more profit selling off your own site; of course you’re not sharing profit like you would be with Amazon.
Amazon does take a chunk, of course, every time. And it’s different depending on what you’re selling and what the price points are. But if you’re selling on your own site, besides the cart cost and maybe the charge for PayPal processing fees or credit card processing fees, you’re going to take a bigger chunk of that profit home with you. In addition, you’re able to add bonuses and create bundles and have a little bit more freedom when it comes to the entire package that you’re delivering for your audience, and also what that experience is like. You know, yes it’s a little bit more familiar coming from Amazon, but you’re able to better control that experience, and maybe give a little bit more and surprise people along the way if you’re selling on your own site.
There are certain things, of course, that you can sell on your own site that you can’t do through Amazon, like subscription services or membership sites with recurring payments and things like that. At least I don’t believe that’s the case. But it’s a lot easier to do that on your own site, and create a membership site where you can then put people into a forum or into a community and download digital goods in the membership site behind a login and password area. All those things are possible on your own site and much easier to do.
And yes, you could use Amazon, this is probably going to start sounding a little confusing, but Amazon actually has their own payment processor, which you could use on your own site. You’re not putting your products on Amazon but you’re actually using their payment system. If you’ve ever done a Kickstarter campaign or have pledged to a Kickstarter campaign you’ll see that you actually paying through Amazon for Kickstarter, whatever you bagged on Kickstarter. So that’s just a sort of side note. But again let’s get back to benefits of using your own site.
Another thing that is a benefit of using your own site is you can keep your customers on your own site in your brand. You know, when people purchase on Amazon, they’re on Amazon. Right? And then Amazon sort of takes over control of where they go and what they do and what emails they get. But if you’re selling stuff on your own site you could control that user experience and you could send emails, follow up emails, you can have control of that list. And I think that’s a big thing, is having control of that email list, that list of customers and buyers and knowing exactly who they are, being able to ping them, being able to send them updates if possible, you know, just keeping them happy, which is something that’s really important to do, which is much harder to do with Amazon I think, you know, at a least in terms of gaining access to that email list of buyers rather quickly.
You also have control of the sales page and you’re able to add more things, more videos, more you know, décor or anything that might be required to show people that your product is something worth buying. You’re also able to better control analytics and understand exactly what’s happening at each and every point of the buying process on your own site. And this is a big one, you get to control the affiliate program. And you get to not rely on—you know if you’re going to encourage other people to sell the product for you it’s much easier and more beneficial for you and also for people who are going to become affiliates for your product to have it run off your own site as well. You know, the Amazon affiliate program, which is called Amazon Associates, they don’t pay very much. And a lot of states aren’t allowed to do that. You can’t sign up in a number of different states to become an Amazon associate. But think about it. If you are trying to get people to sell your product for you, a sales force if you will, to market this product that you have to people you would never have reached otherwise because you’re tapping into these connections, I mean, it’s not very beneficial for them to sign up for Amazon Associates, if they can, of course, and then sell your product. Which, maybe it’s a hundred bucks, maybe your product is a hundred bucks. I mean, they would only get up to $8 if it’s 8 percent, which doesn’t happen right away. You’d typically start out at 5- 6 percent as an affiliate. So people are only making $5 every time they sell a $100 product for you. You can’t control how much they’re getting. But if you have your own affiliate program you could up that commission for them, and you’re going to be more likely to reach a bigger audience that way, and get an audience of buyers, and grow your list, and be able to sell them something maybe down the road. So that’s something to think about as well.
You know, just to finish up there, a couple things to think about. I mean, generally speaking, if you are looking to grow, you know this is of course—I mean, again this isn’t 100 percent all the way through. But if you’re looking to grow your audience, to get new eyes on your brand, and you might not have the ability to get involved with a lot of people for an affiliate program quite yet, I think Amazon is the way to go. Amazon is a great way to gain exposure, especially if you do a good job with search engine optimization on Amazon and the cross promotions start working for you. And you know, of course there’s the rankings over there as well. That’s another advantage of Amazon: If you’re able to rank highly in some of the categories your product will start to sell itself just because of that exposure you get. I mean it doesn’t matter how many products you sell on your own site, it’s going to always be sold on your own site and there’s no real rankings where you’re going to get additional exposure if you sell more of your own product typically off of your own site. But on Amazon you can get ranked, it’s going to work definitely in your favor, which is why I say if you’re looking to grow and expand your brand, especially if you’re selling lower priced items, then Amazon might be the way to go. However, if you want to make more profit, selling on your own site might be the best. However, if you’re just starting out it’s going to difficult, because I feel the best way to sell on your own site is to build your audience, gain the trust, tap into their needs, wants, pains, and issues, and then provide the solutions for them in the way that they want it. And that’s how you can make the most money, I believe.
So, little bit longer answer today, but it was a great question, which is why I wanted to just talk as much as I could about it. Greg, thank you so much for the question. An AskPat t-shirt is going to be headed your way.
For those of you listening, if you have a question you’d like potentially featured here on the show just head on over to AskPat.com. And again, if you are just getting started in this business of online business head on over to AskPat.com/start and you’ll get some information that’ll help you get started on the right foot, completely free.
Thank you so much for your time today. And of course I want to end with a quote like I always do. And this quote is actually a Japanese proverb, so I don’t know who said it, but it comes from Japan. And this quote is, “Vision without action is a daydream. Action without vision is a nightmare”.
Thanks so much. I’ll see you next episode of AskPat.
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