In 2021, Hype NJ sold over $500K on Amazon. Today, that number is $0. Here is why:
I would like to preface this by saying no, the number isn’t really $0, but it is an insignificant figure when compared to our revenue on outside platforms.
Today, over 35% of all eCommerce sales are done through Amazon.com, and nearly 58% of Amazon’s revenue is done through 3rd party sellers. With over 200 million Prime members, Amazon provides small businesses with unparalleled access to millions of customers.
In 2021, Hype NJ took advantage of this opportunity, quickly scaling to over $500K in revenue. This quick growth was exciting, and provided Hype NJ with another sales channel--one that would quickly outperform others in terms of revenue. I began to spend most of my time focusing on our growth on Amazon--at the time it seemed foolish not to.
Despite the booming top line growth and the allure of reaching Amazon’s vast customer base, the platform's operational complexities began to cast a shadow over our initial success. Amazon's consumer-centric approach, while commendable for shoppers, often places a disproportionate burden on third-party sellers like us. The platform's highly lenient return policy, which can extend well beyond the 30-day mark to satisfy customers, repeatedly resulted in sales that were not profitable. Behind all this is a 3rd party seller like Hype NJ taking the hit. Not only did I have to pay shipping to get the product to the customer, I am now responsible for the shipping back to me. Not to mention that once the product is returned back to me, it is oftentimes in unsellable condition. While Amazon boasts their customer service--they do so at the expense of sellers. Every seller has their own “can you believe Amazon story.” Amazon has been notoriously focused on their retail customers. Amazon has had little regard for their 3rd party sellers--often bullying them because they can. We are all small businesses who find it increasingly difficult to ignore Amazon’s reach. My recommendation to all is try Amazon but play close attention to profitability and most importantly returns.
Beyond the logistical headaches, Amazon's commission fees—which are among the highest in the industry—further compounded our challenges. While Amazon's ecosystem is unparalleled for driving top-line growth, the net profitability for sellers can tell a different story. After weighing the costs, including both tangible and intangible factors, the decision became clear: Hype NJ needed to pivot away from Amazon.
This decision was not made lightly. Moving away from a platform that contributes over a third of all eCommerce sales was daunting. However, being a high school student with limited time, I had to prioritize efficiency.
Today, many of the people I coach through my coaching program come to me with commendable revenue numbers from their Amazon dashboard. However, when you look at their profitability, their business is not doing as well as they once thought. I always tell my clients to place close attention to profitability, returns, and the quality of the remaining inventory.
Today, Hype NJ sells on five different platforms.
