Should brands sell on Amazon? The answer is YES and here are 7 reasons why.
There are multiple places where brands can sell their products. If you are a brand owner, the fact is you probably already sell to a number of stores and distributors. With the growth of Amazon it is becoming increasingly more important to take control of the way brands are perceived by the end user on the Amazon platforms. Over 50% of every dollar spent on a physical product online is spent on Amazon. That means 1 of every 2 of a brand's online customers are buying on Amazon and the way your company and products are portrayed there is very important.
The brand is one of the most important things companies own. Companies spend thousands of dollars to get the labels and packaging looking great, product photography done, and sales copy written. Companies are the best at selling their products because they are the most invested in them. Because Amazon is an "open" marketplace, any third party seller can contribute what THEY think is the best sales message to be displayed on the Amazon detail pages, and that's if they even care about the message at all. Would you let any third party seller change your website? The answer is a resounding "NO!" So why do so many brands allow it to be done on the Amazon Marketplaces? In fact some brands don't even know that their products are being sold on Amazon.
Check here to see if your brand's products are sold on Amazon.
Brands usually have a different view of competition than third party sellers. When there are two or more third party sellers selling on the same listing, competition becomes more about selling against the other sellers and less about selling against other products in the same category.
It is important for brands to have a plan in place to combat this narrow-minded thinking and focus on the bigger picture. In today's market brands need to "play to play" in order to succeed. Third party sellers almost never want to spend money on advertising or marketing when the traffic generated from their efforts goes to help the sale of a different third party seller.
Especially in the United States customers really enjoy value, which is defined by the highest quality for the lowest price. The goal is to get repeat customers, who will champion your brand. This can only be done with quality control. Because anyone can sell any products on Amazon, brands must be aware of who is selling their merchandise to ensure that the customer is getting what they paid for. In addition to having good relationships with any authorized third party sellers, Amazon's Brand Registry
program can help with this.
Most brands sell in many places, more than just on Amazon. They have distributors, wholesale accounts, and sell on their own websites. When pricing is not managed on Amazon platforms it can upset large accounts. Showrooming is the practice of visiting a store, examining a product, and buying it online at a lower price. Amazon is the first place customers check before they purchase in-store. Having Minimum Advertised Pricing policies (MAP) is essential to controlling pricing on Amazon and keeping an even playing field. How big of an impact would it be on a business to lose their biggest account because a third party seller was undercutting MAP?
What if a company sells directly to Amazon as well? They need to make sure Amazon is abiding by the same policies. An example of a company that really make this work is Sinupulse
. Every (authorized) re-seller, whether it be Amazon, Walmart, or a third party has a strict price that they cannot go under ($79.99 for their flagship product.) If MAP is broken the Sinupulse will stop selling to that re-seller.
Having predictable inventory levels is essential to running a profitable, cashflow positive business. There are literally thousands of "me too" third party sellers on Amazon looking for the next big opportunity or product to sell. Once a product starts selling really well on Amazon, these sellers take notice, and all of a sudden companies will be inundated with purchase orders and requests to sell that product. If a company sells to everyone without regard to who they are, inventories can quickly run out of stock, which creates back order headaches and make long-term customers unhappy. Then because these third party sellers want to move through their inventory, they compete against one another (see #2 above) and drop their price to win the buy box (see #4 above).
Lost sales due to counterfeiting has grown exponentially in the past couple fo years. The estimated losses due to counterfeiting of Clothing, Textile, Footwear, Cosmetics, Handbags, and Watches amounted to 98 Billion USD in 2018, which includes counterfeiting from offline as well as online mediums. It is such a problem that Amazon can no longer control it on their own and is asking help from brand owners to monitor their own products through the Transparency
7. THE BIG PICTURE
The more places a person sees a companies' products the more they are likely to buy. The Rule of 7 says that a prospective customer needs to hear a message at least 7 times before they start to take notice and/or buy. If anything, having control over that message on Amazon, which gets over 200 million unique visits per month, can be one of a brand's main touch points that adds to a company's overall marketing strategy.
Selling on Amazon is not hard if you know what you are doing and have the right strategy in place. If you are interested in learning more about how Brand Authority can help navigate the online jungle of Amazon, please reach out to us and request a free strategy session here.