Recently, many large retailers have been ditching Amazon as a sales channel for their products. Birkenstock is one of the most recent to leave the retail giant as they cite ‘Unacceptable Business Practices’. This is the beginning of a much larger list of many name brand retailers who refuse to sell product on Amazon.
Amazon has an extremely low tolerance when it comes to selling products on their marketplace; it is either ‘their way’ or ‘the highway’. This means that if you miss a few shipments, send product to Amazon incorrectly or even make a silly typo when listing your product…BOOM!…you could get banned. This is especially difficult for smaller retailers who rely heavily on Amazon as a major sales channel. Make sure that you understand how Amazon lists your products and wants your products shipped either into FBA (Fulfillment by Amazon) or to the customer.
Birkenstock was just one of several companies that have had counterfeit products reach the Amazon Marketplace and they have had a difficult time stopping this. Amazon allows multiple sellers to sell the same brand while they do not have the proper safety checks in place to stop the counterfeiters. Having counterfeit products can be damaging to your brand, especially if customers think they are getting an authentic version, but end up with some cheap knock off. When customers receive knock offs, they are more inclined to write a negative review about your company rather than the actual seller who sold the knock off.
Amazon will Compete
Think that you have found the next hot item to list on Amazon? Maybe so, but it will be very short lived when Amazon runs through all of their analytics and sees that your products are selling, because they will begin to purchase the same products themselves and compete. Amazon has the purchasing power to undercut the market on price and quickly push you off to the side. This can be extremely frustrating and make it difficult to maintain a decent margin.
Analytics by Amazon
We touched on it briefly above, but Amazon does have all of the analytical data from their website. They know the products that are selling, they own the customer data and understand the customer buying trends. This means that they can use this information, not only compete with you, but also market to customers who purchased your products. Amazon has a way of making it extremely difficult for companies to build their own brand through the Amazon website.
Amazon is an excellent market place to sell products, but it should not be a significant part of your business. Focusing on building your brand through other sales channels outside of Amazon will lead to greater long term success.
Mike DeFabis is Vice President of Fulfillment/Warehousing Sales at Integrated Distribution Services, Inc.