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Why brands on Amazon should be willing to rock the boat with their retailers
November 24, 2021
For brands with brick-and-mortar resellers, ensuring you’re making the most of Amazon could mean having to make difficult decisions.
Of course, it’s a no-brainer for brands to want to maximise their presence on the Amazon marketplace. After all, Amazon is the largest online marketplace on the planet, and shoppers’ habits have continued to shift online.
But working out the logistics between bricks-and-mortar retailers and one of the world’s most popular online shopping destinations isn’t always straightforward.
Putting your customers first
It might seem like a common-sense approach to put the needs of customers above the needs of resellers, but for brands, this can sometimes be tricky to carry out.
Brands may have worked with their existing bricks-and-mortar resellers for a long time.
They could have been fundamental to the brand’s success, and you could have retailers bringing in huge profits for brands. Not to mention personal relationships that have been built up along the way.
So, it’s understandable why this is a boat many brands wouldn’t want to rock.
But for those that, of course, want to capitalise on the huge opportunities presented by Amazon, upsetting these resellers may well be inevitable.
In the end, it’s only to the detriment of brands’ growth if they don’t put the needs of their customers first.
What's your brand's Amazon distribution strategy?
Brands that are serious about selling on Amazon need to put into place a channel strategy that also encompasses their distribution strategy.
However, problems could arise if that brand already has bricks-and-mortar resellers selling its products on Amazon. With Amazon, the ‘more the merrier' approach doesn’t usually work for several reasons. It could seriously undermine a brand’s ability to grow its business on Amazon.
Amazon not only advise companies to take control of their brands on Amazon, they expect it. We’ll discuss this in more detail later in the article.
Have the guts to say no to your retailers
It’s always going to be a tricky conversation to have, but remember, what’s best for a brand on a long-term basis, isn’t necessarily what’s best for your individual retailers.
You must have the bigger picture in mind. So, get your strategy clear before taking action. There are two main approaches taken by brands when selling on Amazon:
Who usually takes this approach? Brands who want to keep the peace with its bricks-and-mortar resellers and avoid having to make tough decisions.
It’s a logical approach if a brand wants to spread the opportunity of selling on Amazon across a number of those retailers. Brands may be reluctant to stop an existing retailer from selling its products on Amazon. But it’s a conversation that will need to happen, as it could result in negative consequences to the brand and sales.
The competition on Amazon is furious, with multiple resellers recruited for multiple individual product listings. This in turn leads to intra-product retail price competition and will therefore drive down prices.
Low price is the main factor that defines which retailer’s offer will get added to a customer’s shopping cart (the “buy box” algorithm).
But for a brand to grow its Amazon sales while minimising this price erosion, generating high-converting traffic, and selling more than its competitors, a different approach is needed. On the Amazon marketplace, a brand is likely to encounter many more competitors than in any bricks-and-mortar channel. This means brands have to strategise how to present themselves clearly to shoppers while beating other brands vying for their attention.
The importance of SEO
Just 22% of shoppers are searching for brand-related items on Amazon - that means a staggering 78% of people who come to buy on the marketplace platform aren’t searching for branded products, and that includes yours.
You need to be smart when it comes to your search engine optimisation (SEO) to make sure your products are still found even if shoppers aren’t searching for your brand name. And, if you haven’t already, you need to start looking at using Fulfilled by Amazon (FBA) for products you want to rank well on the site.
This is because your brand’s products may be being retailed on Amazon by a reseller that makes the product Prime eligible - using the Fulfilment by Amazon program to fulfil orders. Consumers on Amazon have come to expect rapid, next day free delivery, and they choose the products that offer this.
Unless you follow suit and make sure your listing is in the running too, it could mean them - not your - listing performs much better in a shopper’s organic search results.
Advertising for results
For a brand to ensure they have visibility on the first page of Amazon’s search results for generic search terms, they might need to spend a health margin on Amazon advertising (or Amazon PPC).
They’ll need to make sure they are bidding a higher amount than their competitors to qualify for placement. The seller needs to have won the buy box for that item; the advertising becomes less effective without it.
Take these two scenarios into consideration:
A brand might have multiple sellers on a listing that is being rotated through the buy box by Amazon. However, there isn’t a seller who is spending enough on their ads to win out for the chosen keywords.
Alternatively, there could be a single seller who is spending a proportionally larger amount advertising your brand’s product, winning a top of search placement on Amazon.
This shows a disadvantage to allowing retailers on Amazon as the brand in the first example isn’t going to get as much paid search traffic as the brand in the second.
Do retailers care about a brand?
It would be unfair to say that retailers don’t care about your brand. However, it’s probably safe to say that they don’t care about your brand as much as you do. To make sure your brand succeeds on Amazon, you’ll need to make sure you tick the following boxes:
- Work hard on search terms to ensure high placement for product listings in organic search results.
- Look at adding high-quality and highly optimized listing content, which will, in turn, drive customer conversions.
- Make sure to have products in stock, otherwise, it could lose its Amazon sales rank.
Of course, resellers’ main interest is selling units, which are sometimes heavily discounted. It’s something they’re very good at. However, these retailers often don’t have the skills or the motivation to develop high-quality listing content.
High-quality content on Amazon is something brands should take advantage of. Brands can ensure their products stand out, and that their customers get the same brand experience on Amazon as they get elsewhere. A well-developed storefront and product listings should have the same feel and quality as your own website.
Resellers aren’t focused on just your brand. Most of them sell items across multiple brands, which means they’re not looking purely at the performance of individual brands, but more so on their own performance.
This then makes it incredibly difficult to rely on an external reseller to do everything you would want them to do to ensure your brand’s products are found and purchased on Amazon. Or that your brand is being presented in the right way.
Amazon targets brands, not resellers
In case you hadn’t noticed, Amazon does not really need to focus on looking after its sellers. This is because Amazon’s entire ethos is to put the customer first (check out the Amazon Flywheel). As long as there are happy consumers, the sellers will come.
Because Amazon absolutely focuses on the customer, it also wants the customer to get the cheapest prices and give the buyer the best possible experience. It’s probably why Amazon loves dealing directly with brands (and cutting out the middleman).
Only one organisation can ‘own’ a brand on Amazon, and that should be you. Not only does brand registration open up more tools for you on the platform, but it also means that you can present your brand in exactly the right way – giving customers a brilliant brand experience.
If you fail to take ownership of your brand, chances are, someone else will. There is a very real danger that a substandard shopping and brand experience will damage the image you’ve fought so hard to build.
Which distribution option makes the most sense for a brand?
The first thing to do is set up your own Amazon seller account and then register for the Amazon Brand Registry programme. This will enable you to take control of your brand.
Brands can then sell directly to Amazon customers while keeping in control of their brand messaging, pricing, selection, and inventory decisions.
Your brand’s ability to control pricing, selection, and inventory levels on Amazon (to adopt a customer-first approach) is maximized when you control the brand on Amazon.
Beware, some of your retailers may have already registered your brand on Amazon, so you may need to jump through some hoops to wrestle ownership back. But it will be worth it (proving you optimise your storefront and product listings).
Time to get tough
Brands should keep in mind that what’s best for their individual resellers isn’t necessarily what’s best for them and their long-term sales goals.
Sometimes that does mean saying ‘no’ to bricks-and-mortar resellers. However, always keep in mind that the long-term strategy will overrule the short-term awkwardness of having that conversation.
It’s also worth considering that strong brand messaging normally benefits all sellers, so there can be spill over benefits from controlling your brand on Amazon and increasing your overall sales. This occurs in the same way that a high-street brand might open a high-street store, whilst also selling via concessions and other retailers. Consumers recognise and become loyal to the brand, increasing sales for everyone.
In short, put your customers first, take control of your brand on Amazon, and grow your business.
As always, if you need any assistance with taking control of, and optimising, your brand on Amazon, please reach out to our team at the Optimizon Amazon Agency.