When brands reach a certain level of success they’re naturally going to end up in the Amazon marketplace. It may not even be the brand itself that makes the move, it could be a separate company like a wholesaler or other distributors listing their products on the platform (without the brand even knowing about it). This reality presents brands with choices. Do they keep doing things that way, or do they take more control in their Amazon presence and profits? What kind of benefits and drawbacks are involved? In this post we’ll take a detailed look at all of this in an effort to help you make the best decision for your brand.
What Are The Different Options For Selling On Amazon?
We have a lot of conversations with brands that sell to other distributors who then sell on Amazon. Alternatively, you can also sell directly to Amazon itself (sometimes referred to as selling first party, or 1P). Those brands are focused on getting the revenue right away when someone buys their product wholesale, and sometimes they’re worried about transitioning over to selling their products on Amazon and the investment required. For example, let’s say you’re a brand and you have a wholesale customer of yours that is selling your product on Amazon. They’re handling all of the process of selling it on Amazon. You don’t have to worry about it because you’ve already sold the product. The biggest thing you should be asking yourself is “what are we missing out on by not doing this ourselves?” Would it be better if you handled those Amazon sales yourself? Is it a good idea to cut those other sellers off, and if so, how do you do it?
How Can You Sell Your Product On Amazon?
Let’s break down the different ways that brands can sell their products on Amazon:
- Selling Direct To Amazon: This involves selling your product directly to Amazon. Amazon would buy your product wholesale, and then handle the listing and sales of the product entirely. These products will be listed on Amazon as “Sold By” and “Ships From” Amazon on their listing. This has become a less popular option in recent years as Amazon has deprioritized this business model in favor of third party sellers.
- Third Party Sellers: This is where you’re selling to a wholesale customer or distributor who is then reselling the products for you on Amazon. These products will be listed on Amazon as “Sold By: ABC Company” and “Fulfilled By Amazon”.
When you’re selling directly to Amazon as a distributor, or a wholesale customer, it’s an easier process for you as a brand, though it does mean less margins. They’re buying the product in bulk, you don’t have to handle the product again, and they’re assuming the risk of selling it and making their margins. When you’re selling the product yourself you own the entire supply chain from manufacturing to end sale. You’ll be losing out on those one-time hits of revenue via wholesale orders, but the advantage is you’ll be spreading the revenue out more by selling direct to customers and making more margin on each sale.
Pro Tip: One of the most important things to realize when you’re selling your product yourself is that you have much more control over how your product is presented on Amazon, both in terms of content, and the price the product is being sold at. Another important factor is the promotion of your product. How it is being advertised, and how you can make sure the dollars and investments you’re putting into advertising align with your goals. If you’re leaving that up to someone else you can’t be sure they’re even advertising your product and driving as many sales as they can on Amazon.
Bringing Amazon In-House
If you’re transitioning from selling direct to Amazon as a vendor to taking it over yourself it’s an easier process than you might think. What you’ll want to do is stop fulfilling those weekly Amazon purchase orders. During that same time you’ll be setting up your own Seller Central (if you haven’t already), getting your inventory in order, and getting everything set up and ready to go. It can take Amazon some time to sell through all of their inventory, but when they’ve done that you’re all set and you’ll be ready to take over that listing. To the customer, nothing will change, but from your perspective, you’ll now be selling the product directly.
If you’re transitioning from a third party distributor it becomes a bit more complicated process. There are things you’ll need to consider. What is your relationship with that distributor? Do you have other strategic alliances with them in terms of other channels that they sell your product through? Definitely take this into account, and have an open and honest conversation with them about this.
Pro Tip: Don’t let having a discussion like this with a distributor intimidate you. These wholesale and distributor customers know these things happen. It happens continually for them. It’s common for brands to come to these resellers and say they want to take over the direct sale to the customer. You may even find that they’re expecting it. Once you’ve had that conversation with your reseller(s) you’ll want to do the same thing we talked about when taking over from Amazon: set up your Seller Central account, get your inventory in order, and once your resellers have sold through their inventory you’ll be ready to take over the listing. If all goes smoothly, nothing will change for the end customer. It’s always important to remember that there is no “one-size-fits-all” approach. The best thing you can do is have a plan for what it’s going to look like in the beginning, and focus on the ideal outcome of taking over the sale of your products on Amazon. You may have to exercise some flexibility along the way to ultimately end up where you want, but with patience you’ll see the results you’re looking for.
Recent Changes For Brands On Amazon
Starting in the fall of 2020 Amazon began providing the names and addresses of third party sellers on the Amazon platform. Prior to that, you could have “Joe’s Plumbing Company” as a seller on Amazon reselling your products even though you have no idea who that business or individual was. There was no way to actually tie that info to a company that may have been buying from you and then reselling on Amazon. Now, Amazon puts that info on every seller’s page. You’ll be able to see the legal name of the entity that is selling the product along with their address. For example, this allows you to see that your product is being sold by ABC Distribution and that they’re located in Newark, New Jersey, which will help you identify who it is selling your product by cross referencing orders you’ve shipped to that company’s location. Displaying those two pieces of information has made it very helpful for brands to understand who is selling their products on Amazon, and even helps to track that to who is buying the product from them at wholesale. This information makes it so much easier for a brand to bring Amazon in-house if you’ve had third party sellers selling your product in the past.
What Does Success Look Like?
When done properly, it’s a really big win for brands to be able to take control of their products on Amazon. They have control over how their products are being presented and the content that’s displayed, the purchase price the product is sold at, and how their products are being advertised and promoted within the Amazon ecosystem. The biggest advantage, however, is that this will capture more margins for your brand by selling directly to the end consumer, and further controlling the relationship and experience you provide those customers.
Customer Success Story
Writing this post springs to mind a particular client of ours as a great example of how this looks in the real world. The client had a product that was being sold nationally in nearly all major grocery store chains. Their products were all over Amazon as well, but they were being handled by dozens of third party sellers. They had only one product, but there were at least 10 listings for it across Amazon due to varied quantity sizes (AKA, third party sellers sending in different bundle sizes to create a new listing for the same product), and duplicate listings. From a customer perspective, it was messy. The branding was inconsistent. Some listings had an old label on the bottle, some listings had the new label. Other listings had nutritional facts, while others did not. We felt that, for that brand, it was very important that they take over their Amazon channel. There were some steps that needed to be taken, and we set a plan in place for that to happen. It was a very methodical approach. It took months. It was not an overnight process by any means. Sometimes it takes time and patience to get to where you want to go.
What they had to do on their side was identify and cut off some of these third party resellers that were buying wholesale directly from them so they could no longer sell the products through Amazon.
On our end, we cleaned up all of the listings, combined listings and content, and made it a seamless process for the end customer to land on that main page with different product variations that showed different quantities. It made it easy from a customer standpoint to understand the value of the product and why they should purchase it.
There are still some unauthorized resellers out there selling the product, but they rarely make it into the buy box, so the brand isn’t too worried about them anymore because they have their own top-tier Amazon page. With the product listings all combined the reviews bubbled together and they have thousands of reviews on their main listing.
The end result? The brand doubled their margin from the Amazon channel because they took direct control of it.
If you’re looking to take control over your brand in the Amazon marketplace and maximize your margins and how your brand is represented, the tips and tricks we’ve outlined in this guide are a fantastic way to do just that. You’ll have complete control over your brand and its presentation, and that, in turn, will help lead to more conversions and profit.