By John Pellinghelli, Co-Founder, Metric Digital
Amazon makes a lot of money for a lot of companies.
$177 billion dollars, according to recent projections. Not bad. It’s certainly more money than the revenue generated on most ecommerce websites.
But your company is not the only stallion in their digital stable.
Whatever products you sell, odds are, those products are also going to be listed on Amazon by a variety of third party sellers. Independent vendors. Some authorized, some not. Of which there are thousands and thousands.
Amazon is a marketplace. It’s not a tool to help you specifically make more money.
If that last sentence gave you a headache, you’re not alone. As a performance marketing agency who specializes in ecommerce brands of all sizes, we’ve had to medicate that headache many times.
Whatever kind of retail business you run, you will probably have to deal with third party resellers selling your products at some point. Every company who sells on Amazon is struggling with the issue.
Today we’re going to offer insight, strategy and tactics to make sure that your headache doesn’t turn into a heartbreak.
Educate yourself on the big picture
Because of the nature of Amazon as a marketplace, if you are a wholesaler and somebody else sells your products, then there’s nothing keeping them from selling those products in Amazon. And that can affect you negatively.
For example, let’s say you sell wholesale shoes in another country where pricing is lower. What’s to stop people from buy the shoes in that country, turning around and selling them on Amazon into a different country, raising the prices, and actually make a ton of money off of you? Nothing. Yikes.
Now, it is possible for you to negotiate with Amazon to get them to take such vendors down, but you need to be selling on Amazon to be able to do that in the first place. It’s the chicken and egg problem. And so, unless you have a pure direct to consumer model, your company has an inherent vulnerability to being sold on Amazon. Know that going forward.
Protect yourself with strategic pricing
We recently discovered that one of our jewelry clients was being severely undercut by third party resellers who were offering lower prices. Our strategy was to create a marketing program where buying through that brand was the same price (or cheaper) than the resellers. We chose not to bid on certain pieces of jewelry that were beyond a specific price point. And that way, when customers searched, the client’s brand only showed its lower priced accessories.
Are you struggling with this same issue at your company? Try setting up your campaigns in a way where the customer’s search discovery process, i.e., when they are first introduced to your brand, is always under a certain price. Set custom labels that tier products by prices, exclude as many skus as you need to, and you’ll be sure to keep dubious third party retailers from stealing your customers by offering cheaper rates.
Take your control wherever you can get it
The theme of all these strategies is credibility. Third party vendors notwithstanding, it’s still critical to control your presence on Amazon in every outpost that is within your control. And if you sell wholesale, then there’s a good chance your retailers already have your product up on Amazon. In which case, you’ll need to be there, controlling your brand wherever you can.
We recommend creating A+ Pages. This premium option allows you to showcase your product by adding video content, larger images, more comprehensive comparison charts, interactive displays, and more. Barbara at Channel Advisor wrote an in depth article on how to do so. And also explore Enhanced Brand Content (EBC). Tara Johnson also explores this in depth in her blog post. Check those resources out for more detailed info.
That brings up another case study. We once had a fashion retailer client who wanted to know how to approach control if you do not sell wholesale. Good question. If that’s the case for your brand, or if you have agreements with your retailers that they’re not allowed to sell your product on Amazon, then be sure to sit down with your team weigh the decision to sell on Amazon heavily. Knowing that once you go to Amazon, you give up an amount of control (just how much is a sliding scale of whether you’re just selling there on Seller Central, using FBA, or a full on wholesale Vendor).
Personally, Metric Digital has prioritized Amazon as a focus channel alongside Search and Social and we view it as extremely important. We work with several of our clients on both Paid Amazon & operational management, and have seen outstanding results. But every company is different, and so, there is no perfect answer for you.
Create a credible brand experience
Oscar Wilde once wrote that the only thing worse than being talked about was not being talked about. Meaning, maybe having third party retailers selling your products isn’t the worst thing that could ever happen to your business. Think of the reverse situation. What if your products were barely even findable at all? What if you only sold on Amazon as your sole distribution platform? This happens to companies often. And in our opinion, customers will perceive these brands as not credible.
The assumption is, “Amazon is their only channel? Well then, this must be some questionable drop shipping company who just wants to make a quick buck.”
Point being, you need to create a credible brand experience across the board. Reminding customers every step of the way why they shop with you. That’s what keeps them in the funnel and influences them to pick you, not the third party vendors.
How do you build that credibility? There are myriad ways to do so. Product views, leading with strong unique selling propositions, getting your brand listed on Google, Facebook or some other major public facing channel, and so on. We’re going to be addressing those issues in some upcoming posts.
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Regardless of your business strategy, what matters for now is one simple fact.
Amazon is growing faster than almost any other company in the world. Maybe ever.
But the threat of thirty party sellers doesn’t have to be a headache. Or a heartbreak.
It’s merely opportunity for your company to double down on your pricing strategy and brand credibility, and build a foundation for scale.