Hot Take: Don’t Buy From Amazon

Let me tell you something you probably didn’t expect to hear…don’t buy from Amazon! 

Yes, Amazon is super convenient for everyday needs and personal expenses. You can find anything on the platform and often find quite the affordable items. Plus, with the speedy delivery and “1-Click Buy” convenience, it’s almost too good not to use, right?

Well, while this is very convenient for business owners and if managed correctly, can be fine, many times, Amazon and other “easy-to-use” online retailers are not managed appropriately in businesses. It creates a nightmare for bookkeepers (like us!) where when I asked them team if they had any “hot takes” to share with business owners about bookkeeping, this was one of their top complaints!

So we’ll share some reasons why Amazon is inconvenient for bookkeepers and how business owners can better manage their expenses on the platform.

Not Always the Best Price

Amazon’s allure often lies in its seemingly unbeatable prices and the ease of having items delivered swiftly. However, a closer examination reveals that these prices aren’t always the best available. Many small business owners have found that prices on Amazon can fluctuate significantly and are sometimes higher than those of specialized suppliers and local vendors. For businesses operating on tight margins, every dollar counts, and overpaying for supplies can erode profitability.

Convenience Can Be Painful

The convenience of Amazon is undeniable. With just one click at times, you can order a wide array of products and have them delivered within days. But this convenience can lead to complacency. It’s easy to fall into the habit of using Amazon as a one-stop-shop without considering whether it’s the best option for every purchase. Building relationships with local or specialized suppliers can lead to long-term benefits such as bulk discounts, customized solutions, and reliable customer service. Plus, you’re helping your local economy do better as opposed to some random factory in China!

Overbuying

One of the significant drawbacks of using Amazon for business purchases is the tendency to overbuy. The platform’s user-friendly interface and personalized recommendations can lead to impulse buying, resulting in unnecessary expenses. We’ve seen multiple cases where one business owner literally had someone on staff, that one of their primary purposes was to buy things from Amazon and Wayfair. Like, how much stuff are you buying on a regular basis!? We have multiple other clients where they could spend money on 10 different things at Amazon in a day and we’re sitting here wondering, “Really? You need all of this stuff??” For small businesses, this can create unforeseen cash flow problems and complicate inventory management. 

Backend Bookkeeping Issues

Additionally, for bookkeepers like us, managing these purchases on the backend can become a nightmare. Reconciling expenses, handling returns, and keeping track of various invoices from multiple vendors can consume valuable time and resources that could be better spent on core business activities. Amazon is not the clearest with their invoicing, so even though it says it’s $79 that you spent, it could be split between different products and aren’t always within the same, shipped package. So even for the business owner, it can be a challenge to communicate what we spent on Amazon with the bookkeeper.

Mixing Personal and Business Expenses

Another pitfall of using Amazon for business is the potential for mixing personal and business expenses. Again, since you can buy anything on Amazon, almost everyone uses it. In fact, you’ll find statistics that tout how 180 million people had an Amazon Prime membership, which is 75% of US consumers! With how prevalent it is utilized, if you aren’t careful, you can accidentally use the personal credit card for business expenses and vice versa. Now you’ve made it even more difficult for the bookkeeper to create the clearest picture possible on what is a business expense versus personal expense! 

How to Make Bookkeepers’ and Business Owners’ Lives Easier With Amazon

All hope is not lost and you don’t have to completely stop buying things from Amazon! The real message we want to share today is how you, as a responsible business owner, can improve the management of expenses on Amazon, and tie it smoothly with your bookkeeping.

  1. Explore Alternatives to Amazon
    1. Given the drawbacks we just explained, it’s worth exploring alternatives to Amazon for your business needs. Specialized suppliers, local vendors, and wholesale distributors often provide competitive pricing, tailored services, and better support. Building relationships with these suppliers can lead to better terms and more personalized service. Additionally, many of these vendors are equipped to handle business-specific requirements such as bulk orders, customized invoicing, and dedicated account management. They can also be much more forgiving in case things are financially challenging for you.
  2. Have Separate Amazon Accounts for Business and Personal
    1. This creates a clear split between both business and personal, to forever avoid this problem from happening!
  3. Specific Certain Things You Only Buy on Amazon
    1. For the sake of organization and simplicity, you could narrow your focus on Amazon purchases to just a couple of different expense categories. For instance, when in doubt about purchases on Amazon, if you simply know that anything you buy will be an “Office Expense,” then you could just categorize the total amount to this category and not worry about it potentially being a COGS with customers or marketing materials or other expenses!
  4. Review Expenses on a Regular Basis
    1. If you at least give yourself a timeout once per month, or even more frequently, you can catch all of the expenses through Amazon or Lowe’s or Home Depot or Wayfair, to make sure nothing goes crazy on these expenses. If you do this review with your bookkeeper, this also allows you to tell them the information right then and there for more speedy, accurate bookkeeping!
      1. Bonus Tip: If you don’t have a bookkeeper, reach out to our team today!
  5. Enforce a Self-Inflicted Budget
    1. It’s your business, so if you want to make sure you maintain the amount of cash flow you need to do a great job and actually profit, then put in place a self-inflicted budget. If you can only spend $1,000/month on Amazon, then you might be more proactive and careful about what you spend money on for office supplies.

While Amazon’s convenience is hard to ignore, it’s important for business owners to take a step back and evaluate whether it’s truly the best option for their needs. Overpaying, overbuying, impulse buying, and the challenges of mixing personal and business expenses are significant concerns that can impact a business’s bottom line. By exploring alternative suppliers and adopting a more disciplined approach to procurement, businesses can achieve better cost control, improved financial management, and ultimately, greater success.

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