Why Are We Not On Amazon (Anymore)?
One of the most common questions we get is “why are your shipping prices so high?” and the inevitable follow-up is, “why aren’t you on Amazon for free shipping?”
The explanation of our shipping fees is fairly simple: our rates are literally just what we get charged by our fulfillment service, and as we’re a small business there’s nothing we can do to fight the rates they give us without growing large enough to be able to negotiate for lower rates through volume. Shipping costs have been rising steadily over the years, as tracked by Shipbob (shown here):
Other companies are able to maintain a dozen warehouses scattered all over the USA which keeps shipping relatively inexpensive for the consumer, but of course those companies have to spend the money managing the logistics and inventory of a dozen warehouses, something that we’re not able to do, because, well, small business and all. We’re still just a team of 11 people who do everything from developing our flavors to marketing to producing the noodles, so we can’t really manage a dozen warehouses and all the trucking and logistics associated with that!
When you see “Free Shipping” and other flat rate shipping with products, then what’s often happening is that they’re simply incorporating the shipping cost into the product itself, and obfuscating the shipping cost there.
So that kind of sucks. But what about the second part of all this? What about Amazon?
Well... Amazon’s not actually free shipping.
There are two ways you can be listed on Amazon: either by selling through the Amazon Marketplace or by hopping on Fulfillment By Amazon, or FBA.
In order to be listed on the marketplace, Amazon takes 15% of sales off the top in addition to other minor fees here and there. This happens regardless of whether or not we’re using FBA, which means that we would have to charge 15% more just to break even there. So by using the Marketplace without using Fulfillment by Amazon means that we’re still paying the exact same shipping costs as before, so there’s no real change apart from us receiving 15% less revenue per order than selling on our own shop.
In fact, we actually did experiment with selling on the Amazon Marketplace for a bit to see what it’d be like. The funny thing about Amazon (and Facebook Shop, for that matter,) is that our product is novel enough that they have absolutely NO idea how to classify us. Both Amazon and Facebook both waffle between thinking we’re a supplement because of our nutritional value, and thinking we’re a food, and sometimes maybe also thinking we’re workout equipment (???). Subsequently this ended with us being removed from the Amazon Marketplace multiple times, and now they won’t answer our appeals.
So, y’know, that’s fun.
On the flip side, if we were to use FBA then we’d have to buy into Amazon’s fulfillment structure. Fulfillment is essentially where someone will check your order, put all the stuff you ordered into a box, print out the correct shipping label with your name and address, and hand it off to the delivery service to get delivered. This takes a huge amount of time so we also have a 3rd Party Logistics company, or 3PL, handle it for us. Both the 3PL we use and Fulfillment by Amazon cost about the same amount of money to use, with FBA being just slightly more expensive. However, the biggest difference between our logistics company and FBA is that our logistics company is just that-- a logistics company. It doesn’t also control the marketplace we sell out of.
If we were to move onto the Amazon Marketplace/FBA, we would have to:1. Move everything to Amazon’s structure
2. Pay 15% to Amazon
3. Basically hand brand control over to Amazon
Point number 3 is kind of the important one for us. If we begin selling out of Amazon with a higher price point, but with Amazon Prime and free shipping, then we don’t get to tell our story as well and show off our brand like we do with our current website. We just become another listing on Amazon, which might get us more direct revenue, but loses out on an important part of being able to say who we are.
(which, if you’re reading this, then thank you for your support <3 I’m always really happy when people tell us they read our rambling blog posts)
Not only would we not be able to tell our story as well, but the moment Amazon is our largest revenue stream is the moment when we’d lose control of our brand and pricing. Competing in the Amazon market doesn't let us tell our story and restricts us to the confines of the Amazon page, making us just another instant noodle listing.
That’s not a situation we ever want to be in. We very much prize our autonomy and flexibility in order to pursue our vision of what the future of food should be, and we don’t want to abandon that for the sake of increased revenue just because there’s “free” shipping involved.
Would we gain more customers? Yeah. Would those customers really understand who we are, or what we’re setting out to do if they’re just seeing a product on Amazon? Not really.
Anyway, that’s basically why we’re not on Amazon and why free shipping isn’t actually free! Hope that answered some questions, and feel free to post your comments on the blog and we can answer them!
Love the transparency as always :)