Let’s face it: Your organisation has built lasting relationships with all kinds of retail partners over the years. Wholesalers, distributors, and retailers all count into your vast distribution network.
So of course, they all have their unique way of doing business with you. Some sell directly to consumers, others sell to smaller retailers. And some may even sell your brand in countries where you don’t want to conduct business in yourself.
As a result, your incentive models have turned complex, too. Retailers placing large bulk orders qualify for greater discounts, while smaller distribution partners may benefit from longer payment terms with you.
Whichever the case: some of these resellers will ultimately start selling your products on Amazon. They see the potential of your brand and they get the product directly from the source. So why wouldn’t they sell it on one of the largest online marketplaces in the world?
The Cost of Inaction
Most brand leaders don’t recognise the problem that comes with others selling their products on Amazon. After all, your brand still gets the sale, right?
Wrong.
By allowing others to sell your products on Amazon, you lose control over three critical components vital to your reputation as a brand:
- Pricing
- Content
- Inventory
This enables others to directly compete with you for Amazon’s Buy Box, leading to a downward spiral in price that hurts your brand positioning and may introduce further consequences for your own business with Amazon.
Just ask your sales team about the margin compensation requests they receive from Vendor Managers whenever your account falls below Amazon’s Net PPM target threshold.
But even if you don’t actively compete with resellers on Amazon, your brand may take a hit. That’s because many distribution partners will look first and foremost after their own business.
This means they will prioritise their speed-to-market by uploading outdated or incomplete content to your listings and not paying close attention to inventory levels. Which ultimately leads to an inconsistent customer experience, causing shoppers to consider other brands in the market.
It’s what I call the ‘Lost Buy Box Fallacy’ – you think you get the sale anyway. But at what cost?
