A Brand Seller’s Guide to Amazon Business Strategy

Amazon's own and third-party sellers generated $120 billion in sales last year. The majority of sales came from third-party sellers.

Nowadays, there are very few brands that don’t sell on Amazon. Even if a brand doesn’t sell on Amazon itself, there will be other sellers selling on it. Rather than letting others enjoy the sales, it’s better to do it yourself.

So what measures should brands take and what problems should they prevent when selling on Amazon? Let’s analyze them one by one.

Sales Model

Brands can choose the VC or third-party seller model. VC only needs to sell wholesale to Amazon, and Amazon will be responsible for sales.

The most common problem brands encounter on Amazon is that some sellers do not work with the brand and sell products without permission.

For these sellers, brands cannot control pricing and inventory because you don’t know their identities, nor can you ensure that the seller’s behavior meets the standards of the brand’s other channels.

If consumers can always find cheaper products on Amazon, then there are certain problems with your brand's channels on Amazon.

How to Take Control of Your Brand’s Amazon Channel

The brands mentioned in this article are companies with registered trademarks. When dealing with unauthorized sellers, many brands think that they can scare them away as long as they have enough momentum.

While brands have legal counsel send cease-and-desist notices, they have not found a strategy to actually stop these sellers from selling.

These “gray market” sellers on Amazon are very experienced and have their own legal advisors. They are very good at using the “first sale doctrine” - that is, I have the right to buy the product and resell it.

The brand's response to the "first sale doctrine" is trademark law. With your own trademark, court decisions are more favorable to the brand. In addition, you also need to strengthen distribution control and declare that unauthorized sales of products will lead to legal action. Formulate a reasonable online distribution policy to prohibit retailers from wholesale products to unauthorized third parties.

The reality is that almost no brand can fully control distribution. As a brand, you care about sales and brand image, but distributors only focus on sales and do not consider the long-term value of the brand.

However, as long as the brand sets up sufficient barriers, "gray" sellers will not dare to "provoke" you easily. If the Amazon channel is guaranteed to be "clean" enough, the brand's pricing on this platform will become more stable and consistent with other channels.

Many people think that Amazon is a sales platform, but it is also an advertising platform. Amazon listings are indexed by Google very frequently, and are usually ranked first or second in the organic search rankings. The exposure is very high.

It is recommended that brands register with Amazon Brand Registry. This way, even if you do not sell on Amazon, you can control the presentation of brand content on Amazon, reduce the influence of unauthorized sellers on the content, and ensure that your Amazon content is of high quality and consistent with other channels.

The opportunities and challenges of selling on Amazon

Although Amazon is a large platform, brands need to be aware of a practical problem: sales of products will not take off immediately after they are put on the shelves. To increase sales, sellers need to consider how to increase exposure. Promotion and publicity are essential.

When brands consider selling on Amazon, they worry about cannibalizing sales from other channels, but few brands actually have a customer base as large as Amazon’s.

Selling on Amazon will only bring growth, and there is no need to worry about traffic. On the contrary, brands need to invest a lot of advertising to bring in good traffic when selling on their own websites.

The challenge is that competition on Amazon is fierce, and it depends on whether you choose to compete on Amazon or focus on your own website. Many brands choose to do both channels.

If a brand is hesitant about entering Amazon, it can choose to sell only one or two products to test the waters, and then launch more products to meet consumers' higher demands.

In addition, you need to have a clear understanding of your competitors on Amazon: they have mastered procurement techniques and can bypass patent and trademark issues to manufacture similar products.

If you don’t invest in promoting your product, consumers are likely to be attracted to your competitors.

Issues that brands need to be aware of

The worst thing a brand can do is pretend that the problem of unauthorized sellers on Amazon doesn’t exist. This will only make the problem worse and eventually affect your other sales channels.

The best way to do this is to assess how Amazon shoppers perceive your product and then think about how to make it cheaper.

Unless consumers have tremendous loyalty to your brand and people can only buy your product through your website or other tightly controlled channels, there’s always another seller who will make a cheaper, better version and rake in the cash on Amazon before the brand realizes.

The most suitable sales model for brands

The most ideal sales model for brands on Amazon is a mixture of VC and third parties. For example, some products are directly wholesaled to Amazon, while others are sold as third-party sellers.

The benefit of the hybrid model is that you can enjoy almost all the marketing tools provided by Amazon. Amazon provides different marketing tools for VCs and third parties. In this way, brands can drive traffic through a variety of different marketing methods.

The hybrid model provides brands with greater flexibility.

Summarize

The rise of Amazon has brought shocks to brands. But it will not disappear, so brands must start managing and controlling the Amazon channel as early as possible and use it as a sales and advertising platform.