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This small business founder won't sell on Amazon. Here's what she does instead.
Many emerging brands sell and advertise on Amazon to boost sales and attract new customers. But Kate Assaraf, founder of hair care brand Dip, says she has no plans to take that path. She's one of a chorus of small business owners who find selling on Amazon challenging. Amazon owes part of its success as a retailer to small businesses selling their wares on its website.
But Kate Assaraf, the founder of hair care brand Dip, said she's resolved not to sell her products there. Dip might seem like the ideal brand to benefit from the millions of shoppers that Amazon attracts — not to mention all the Prime members, who make up 75% of US shoppers. The brand's shampoos, conditioners, and body washes come in bar form, start at $14 each, and are meant to appeal to people who want to avoid personal care goods packaged in lots of plastic.
But Assaraf is skeptical of the retail giant.
For one thing, she said, there are all the costs of selling on its website, from the fees all sellers pay to optional ones such as advertising. All those fees add up for a business just getting its footing, Assaraf said.
"Amazon is an aggregator of wealth," she told Business Insider in an interview.
For another, there are the risks to smaller businesses — and society — that Assaraf says Amazon presents. She pointed to the retail giant's track record of exercising power over specific markets, often at the expense of small, local retailers and companies, as a challenge for emerging brands like hers.
Instead, Assaraf said, she's taking other, if slower, avenues to grow her brand and reach customers. For example, Assaraf said she distributes Dip's products through local stores, particularly those focused on selling zero-waste goods, and visits sites around the country to pitch her products to business owners. Lest customers be tempted to search for replacements when they're almost out, the boxes for Dip's bars include a QR code that directs them to the nearest store where they can buy more.
Shoppers can also order for delivery directly through Dip's website.
"There's something to be said about redirecting people in a community to shop in the stores in their community," she said. They're "integral to education and just keeping money circulating within your town."
Assaraf isn't alone in her skepticism of Amazon as a way to grow her company. Related stories Millennials' favorite companies are growing up or dying out. Small business owners who have started selling on Amazon have said the fees and other costs have made it tough to actually make money, even if their products get more exposure than they would on other websites. Even sellers who have found success on Amazon say it involves finding out which products sell best on the platform, including which ones provide the greatest return on advertising spending.
Plus, "sometimes, your savings buying through Amazon are not even that strong" for the purchaser, Assaraf said. An Amazon spokesperson told BI that the company is "investing more than ever in supporting" small businesses that sell through its website. The spokesperson also pointed to various incentives for new sellers, such as discounts on Amazon's fulfillment options and money back on sales of brands that register with Amazon.
For brands focused on sustainability, Amazon also offers a Sustainability Solutions Hub, including data and guidance that can help brands highlight earth-friendly products on Amazon, the spokesperson added. Roughly 60% of the sales on Amazon's website come from independent sellers, "most of which are small and medium-sized businesses," the spokesperson said.
Meantime, Dip works with ambassadors who represent the brand on social media, Assaraf said — but only if they are devoted users. "Please do not apply if you aren't already a customer of Dip," its website reads. Many forms of advertising and acquiring new customers, including ads on Amazon, have become prohibitively expensive for new brands, Assaraf said. "Attention's the new currency, and the cost of cost of getting any of that is very high."
