Today’s consumer brands fight as much for control of their distribution as they do to increase their sales. Gray marketers, counterfeit products, and poor catalog representation affect brands across all sorts of media. While sales through the Amazon channel may represent only a small portion of a brand’s overall business, many brands find themselves with a disproportionately higher number of headaches caused by activity on the Amazon marketplace. And with 55 percent 1 of consumers beginning their search on Amazon, over 63 million2 Prime members, and over $135B3 in sales in 2016, where and how their products show up on Amazon should be among the top questions for every brand. Without a solid understanding of how the Amazon ecosystem works, manufacturers usually struggle with the process of managing how their brands are represented in this channel.
So what are the Amazon circumstances facing brands?
- Amazon.com is an open marketplace. This means that, with only rare exception, anyone who has product in hand can become a seller on Amazon. It doesn’t matter if the product was sourced directly, indirectly or through gray market sources – if the product matches the online product description on Amazon (and isn’t counterfeit product), then virtually anyone can start selling that brand’s product. So, for all the efforts a brand may go through to control pricing and distribution in brick and mortar channels, product usually finds its way onto Amazon nonetheless. Sometimes it’s because the brand doesn’t have explicit policies about which retailers can sell on Amazon, so individual retailers choose themselves to sell the products on Amazon; sometimes the brand has an online reseller policy, but it doesn’t police that policy adequately; and sometimes the brand loses complete control of who has access to its product, and gray market sellers get involved in selling the product on Amazon. With Amazon being an open marketplace, it’s safe to assume that a brand of any general interest to consumers will eventually show up for sale on Amazon one way or another, whether or not the brand has any interest in being sold on Amazon.
- Amazon rarely gets involved in cleaning up a brand’s distribution issues. In fact, Amazon has directly stated that a brand’s distribution issues are for the brand to solve – not for Amazon. For all the frustration that a brand may have with figuring how its product was placed on Amazon, the brand is not likely to get any help from Amazon identifying the sellers, or tracking down where those sellers purchased their inventory.
- It’s easy for gray market sellers to hide their identities on Amazon. At least in the U.S. where there are no requirements for sellers to identify themselves to customers, a seller can use practically any display name to identify itself. Using an indistinguishable display name on Amazon, in conjunction with the use of Fulfillment by Amazon (FBA) services, an Amazon seller can obfuscate its identify from most any brand.
- Most Amazon sellers can create product listings on Amazon, meaning any random seller can influence how a brand’s product is represented on Amazon. Certainly most sellers don’t have the marketing assets, time or incentives to create fully optimized listings to represent a brand in a manner consistent with the efforts the brand has put into its message on other channels. To make matters worse, if the product sells well enough on Amazon, that content is usually indexed by Google’s search engine, where the brand may face this inferior product listing content competing for eyeballs with the brand’s own website content.
In light of these marketplace conditions, what should a brand do to ensure control of its own brand on this Amazon channel?
First and foremost, the brand needs to control how its content is represented. It doesn’t really matter if the brand wants to be sold on Amazon, because some of the product will show up somehow. We encourage brands, at a minimum, to set up a “shell” third-party account, load all of its catalog into this account, and secure the content using Amazon’s Brand Registry program, which enables brands to lock down their content so other Amazon sellers can’t misrepresent or under-represent the brands with their own contributions to the brands’ products which are listed on Amazon. With 310 million4 active customers on Amazon, a brand’s real estate on Amazon is just as important as its own website and its efforts to advertise and display product on television and through social media. Whether or not the brand sells on Amazon, its products are shown to customers on the marketplace and customers will form strong opinions and purchasing habits based on how poorly or well a product’s images, videos, or written content is optimized.
If the brand decides that it does want its products to be sold on Amazon, it is also well worth the effort to optimize the listings for SEO purposes – proper titles, product descriptions, bullet points, and high-quality images. It’s key to remember that many of the brand’s competitors are likely also available on the Amazon channel, so the brand’s efforts to build better listings will pay dividends against any competitor brand that isn’t making the investment to optimize the listings.
Next, the brand should develop an online reseller policy, complete with anti-diversion language. This document should be shared with all of the brand’s known distributors and resellers, for the purpose of communicating what the brand seeks to do with the Amazon channel (and any other relevant online channels). The brand may choose to grant permission to specific resellers to sell on the Amazon channel, or the brand may choose to make only itself an authorized reseller on Amazon. If the brand doesn’t make any decision about who can sell on Amazon, any number of resellers may experiment selling the brand on Amazon, often to the short-term and long-term detriment of the brand.
The brand may want to develop in-house expertise or hire external Amazon experts to oversee the its efforts around control over distribution, pricing and branding content. The rules, policies and procedures of the Amazon marketplace continue to evolve monthly, resulting in far too many brands having outdated views of how the Amazon marketplace works. Hence, those brands with a clear understanding can leverage this channel much more effectively than competitors. And just as importantly, the brands that learn to control the Amazon channel find that the number of complaints from resellers in other channels diminish, as they are able to establish pricing that is better aligned between the Amazon channel and its other channels.
Finally, the brand’s leadership team needs to take a serious position on the Amazon channel. Whether or not the channel contributes significant sales volume directly to the brand today, the Amazon channel is likely the cause of many challenges. The Chief Marketing Officer, the Director of Sales and the Director of E-commerce should all be aligned on how the Amazon channel fits into the brand’s overall sales and marketing efforts. Internal incentives should be aligned so the Director of Sales pays more attention to product that may be diverted by brick and mortar sellers to the Amazon channel, and more attention to promotional activities and pricing fluctuations in brick and mortar channels that may create retail arbitrage opportunities to move product onto Amazon. Meanwhile, the Director of E-commerce should pay more attention to poor product content on Amazon that misrepresents the brand’s overall efforts to position itself clearly to customers.
There is a simple adage to remember here: a brand with no “Amazon channel” strategy is a brand with no effective strategy.
Buy Box Experts is a managed services firm that helps companies control their brands and grow their margins on Amazon. The firm empowers brands with the tools needed to build effective Amazon channel strategies.