In the ever-changing world of e-commerce, navigating the world’s largest online marketplace can be confusing even for experienced Amazon sellers.
In episode two of our YouTube video series, Common Mistakes, we discuss another frustrating problem for Amazon sellers- being unsystematic with your distribution. To avoid distribution leakage you need to have a button up distribution and partners you can trust. We have recapped our CEO’s top 3 reasons why you should not be flagrant with distribution.
Battle for the Buy Box and Price Erosion
When a brand experiences distribution leakage, the leaked inventory almost always appears on Amazon. There is an entire industry built on “retail arbitrage” where sellers buy inventory from random distributors, liquidation sales, or even purchase from discount retailers on a regular basis. These entrepreneurs can cause major problems for brands. When there is a battle for the buy box, the price of the product often drops below MAP, which can cause a chain reaction and price erosion across other retail partners. Not holding the buy box also means your sponsored product ads are no longer being served, which will ultimately slow your brand growth on Amazon.
Risk of Negative Customer Experience
When another seller is selling your ASINs there is no guarantee that the product is new or authentic. Unfortunately, the wrong products, expired products, and counterfeit products are often sold to unsuspecting customers. This leads to negative customer experiences and negative reviews which can massively impact your brand’s sales and reputation. Once negative reviews are posted it is nearly impossible to get Amazon to remove them.
Inconsistent Branding and Conflicting Motives
Bad e-commerce images are a common occurrence on Amazon. When unauthorized and even sometimes authorized sellers list products, they will frequently copy and paste easily available images to the listing. These images are often terrible quality, and the listings show little regard for the customer’s user experience and your company’s branding.
As the brand owner putting time and effort into building brand equity, it is frustrating that these third party sellers can have a negative impact on your image. Amazon should be both a brand awareness and a sales channel. Even when you authorize a seller to list your products on Amazon, their motives are to move the product, not to build your brand. Therefore there will not be as much customer service care, and the advertising dollars will be extremely limited due to tighter margins.
How to Reel in Bad Distribution
Now that we have discussed the problems associated with bad distribution, let’s review the steps you can take to improve...
- Pick the right partners and be exclusive
- Do not sell to liquidation partners (it almost always appears on Amazon)
- Have unique identifiers for each distributor to identify leakage
- Identify sellers with your products and track if they are replenishing their inventory
- If eligible enroll in premium or professional beauty for a cost
Stay tuned for our next episode and blog recap of Common Mistakes by Envision Horizons.
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