Becoming an Amazon Seller or Amazon Vendor is not easy – this is something companies learn as soon as they list their first product. Handling everything from building a brand presence to growing revenue is tough to do as a one-man-band.
Although there are several options to consider when it comes to managing your Amazon business, the two most popular are
- Working with an Amazon Consultancy Agency
- Building your in-house team of Amazon experts.
Some choose the DIY approach while others consider handing off the tasks to experts and spend money rather than investing time. Because of attractive benefits like security and cost-effectiveness, many of them choose to build a team of experts. I think this is a perfectly fine option as long as sellers are aware of the pros and cons of doing so.
Pros & Cons of an In-house Amazon Team:
- In depth knowledge of your own products
- In depth knowledge of your business operations
- Additional Costs – healthcare, benefits, cost to hire and fire an employee
- Who handles the Amazon account (sales or marketing or IT)? There needs to be a combined knowledge of all of all 3 of these
- An ex-Amazon employee doesn’t mean they have the knowledge on the outside of Amazon to make your Amazon business successful
- No Networking or Relationship with Amazon
- Lack of Experience and Skills
- Keep up with Amazon policy changes and new programs within Amazon
- Lack of Amazon Advertising Experts
Pros & Cons of an Amazon Agency:
- Relationships with Amazon within various teams (Luxury Beauty, Professional Beauty, Marketing, etc)
- Access to Beta Programs available at Amazon
- Vested Interest to grow sales because both sides benefit (revenue sharing)
- Experience across multiple long term clients allows best practices to be shared with your company
- Understanding of Amazon Marketing Services
- Understanding and Certification within the Amazon Advertising Platform (Sponsored Products, Sponsored Brands, DSP, Video Ads)
- Understanding and Certification in Amazon Attribution
- Has a team of Amazon Advertising Specialists
- In depth knowledge about all of your products (good agencies learn about your products)
- In depth knowledge of business operations (good agencies learn about your business and become an extension of your business)
- Expensive upfront doesn’t always mean good – look at doing a revenue sharing contract where both parties benefit
Pro #1: Losing The Sense Of Involvement
Agencies are external and generally prefer to keep their knowledge and expertise to themselves, so the company is not able to develop a skill set they require to survive and thrive on Amazon. Good agencies should be educating their clients (companies) on what is going on with their Amazon account.
If the company decides to leave the agency, then all the knowledge of building and increasing Amazon sales is also lost. While building your own in-house team will help you to retain the experience with you if that in-house team actually has the knowledge from the beginning.
Pro #2: Building An In-house Team Might Be Cost-Effective
This is the most obvious and the common benefit because of which most of the companies choose to build an in-house team. Mostly everyone has thought that why not hire just one person (an ex-Amazon employee in most cases but these have never been on the outside of Amazon) to handle their Amazon store instead of hiring a team of experienced and professional consultants.
If you are actually hiring just one or two people to handle your Amazon store, then you might save some dollars. But do you really think it is possible for one person to excel in so many areas? And that leads us to our first con.
Con #1: Well, The Costs Of In-house Team Are Not That Less
Unless you hire one individual who is capable of doing everything from on-page optimization and PPC management to case handling, customer service and inventory forecasting, the cost of building an in-house team can break your bank.
Even if you think that hiring 2-3 experts will get the work done, remember you will have to employ a manager to oversee those individuals. And that’s not all. For running a profitable business in a dynamic environment like Amazon, you should have access to top-notch tools and believe me; these tools cost a pretty penny. They aren’t a “one and done” cost either.
By comparing these costs with the cost of hiring an agency, you will get a clearer idea of which option is better in terms of a financial standpoint.
Con #2: The Tedious Hiring & Training Process
Recruiting, training and skill developing in employees are all necessary activities that take a toll on your time, mental energy and budget. A study has shown that the average cost for a business to add a new employee is $4,129 and that is just the cost of bringing them to your door. And after all this hassle, there is no guarantee that they will stay with you forever. Even if one of your skilled in-house Amazon team members leaves, you will have to start all over again.
On the other hand, by partnering with an agency, you will be free from the tedious process and the cost of building internal capacity because the agency does that for you.
Con #3: Not Every Seller Has Strong Relations With Amazon But An Agency Might Have
No matter how huge you are, you will need Amazon’s help at some (or rather many) points of time. So it goes without saying that having a “close relation” with Amazon will provide you an unfair advantage over the others.
A good agency will know how to deal with Amazon and how to get the work done. What might take days for you to complete, they might get it done within just a few hours. Because of the time they have spent working in the Amazon industry, they have a large network and valuable contact bank to take care of everything.
Does your current agency or internal staff know how to answer this question - What is provision for receivables?
Con #4: They Are Far Ahead In Experience & Skills
Your in-house team works only in your seller or vendor account and that is why their knowledge is obviously going to limited. While the plethora of clients helps the agency experience the many aspects of selling on Amazon that comes with managing different accounts on several platforms (seller and vendor) and marketplaces.
It’s rare for an agency to encounter a problem they have never seen before because the cross-pollinated experience of working with various clients gives them the ability to tackle anything and everything. Any problem you are dealing with now is already faced and solved by the agencies somewhere else. They also adapt to changes quickly and a good team can even forecast Amazon’s move and prepare your Amazon store for that.
You should also read: How to Choose an Amazon Consultant Agency: 25 Questions to Ask
The take on this topic might look biased, but this is what happens is reality. If you are selling a product or two, then building a small in-house team is feasible, but if you are running a large retail operation on Amazon, then hiring an expert team is the best solution for you. However, regardless of who you choose, it is essential to build a strong and long-lasting relationship and have complete transparency with them.