Thought Leaders in E-Commerce: Ethan McAfee, CEO of Amify (Part 2)

Sramana Mitra: How big a role does the backend fulfillment play in this particular case study that we are discussing. Does Amazon fulfillment also kick in gear in this kind of a situation?

Ethan McAfee: To be successful in selling online or on Amazon, you really need to use what’s called Fulfillment by Amazon, which is Amazon’s fulfillment network. What that involves is a brand sending their products to multiple Amazon warehouses across the country.

The brand would still own those products, but they’re stored in Amazon warehouses. Customers would then come to the Amazon website and purchase the product. Amazon would then send the customer that product on behalf of the brand.

The reason why this is so successful is it allows the products to be Amazon Prime-eligible. They have easy returns and one to two day shipping. Amazon can provide these shipping services for much less than owning your own warehouse.

That’s because Amazon is the largest shipper of products in the United States. They get good deals on their shipping rate and they pass it on to their vendors.

Sramana Mitra: This is not a criticism; this is an observation. Your perspective is highly-biased in favor of Amazon. What is the case for a merchant like the one that we’re talking about to have an e-commerce website on Shopify or Bigcommerce? What about other channels like eBay?

Ethan McAfee: The main strategy of most brands is to create their own Shopify website. That makes tons of sense because customers would naturally go to a brand’s own website and purchase. That makes a lot of sense for the vast majority of brands. What we’re now seeing is more and more of them want to have both Shopify and Amazon presence.

Sramana Mitra: That is exactly what I’m probing. Your logic says that it takes a lot of money to drive traffic to the Shopify website. That traffic comes naturally into Amazon looking for stuff. As long as it gets good search results on the Amazon website, the traffic acquisition cost is a lot lower.

If I were a small business, what is the case for my not shutting this Shopify website and going full blast on Amazon? Or keeping a basic Shopify site but not really investing money in driving traffic onto that site?

Ethan McAfee: I think it’s very costly to drive traffic to the Shopify website. People are going to go to fender.com because they know Fender Guitars. If you’re a small brand, it’s difficult to drive traffic and set up a whole logistics network yourself.

What we’re seeing is these smaller brands, oftentimes, will just have a very simple website that, at the bottom, says, “Click here to buy our products on Amazon.” That saves them a lot of time and effort building up their e-commerce abilities and structure.

When I think about myself, I’d rather buy products on Amazon because I already have my credit card set up there. I already have Amazon two-day shipping. It’s usually free.

When I go to some small merchant Shopify website, I have to reenter my credit card information. I have to pay $8 for shipping and handling. It’s an extra layer that a lot of vendors are avoiding by directing traffic to their product pages on Amazon.

This segment is part 2 in the series : Thought Leaders in E-Commerce: Ethan McAfee, CEO of Amify
1 2 3 4 5