One of the biggest fears brands have about Amazon is loss of control. Not being able to control their retail prices, product listings or who sells their products. Many brands turn down working with Amazon as a vendor because they can’t control their prices and decide to create a seller relationship instead.
This is all well and good if the brand doesn’t distribute the product elsewhere and is the only seller, but is that the answer for brands with a wide distribution? Many brands believe that Amazon is the firestarter and perhaps to some extent they are by the sheer fact they changed the retail dynamics.
But is Amazon really the root cause of companies losing control of their brands?
Whilst Amazon created price transparency and a competitive landscape, exposing those ‘overpriced’ retailers and those ‘discounted’ retailers, competition has always existed. In the bricks and mortar days, retailers would still discount hoping the brand would never find out and retailers would still sell products above the suggested retail price, hoping the customer could not compare, ‘what you can’t see won’t hurt’, approach.
Now it can be seen, it does hurt. It is very much a daily pain for brands. These sellers are no longer hiding in their shops, they have seen how to drive incremental sales outside of their store and all want a piece of it. Not to forget the emerging online retailers. As a result multiple authorized and unauthorized sellers are listing brand’s products on Amazon and are engaging in price wars in order to compete for the buy box.
How brands can regain control of their listings:
Brands cannot get Amazon to stop sellers listing their products or get Amazon to agree to MAP. This means brands need to tackle what they can control, which is their own distribution; who they are selling to, where the products are being sold, how the brand is being represented and what the products are selling for.
1. Tight control over all distribution channels
Brands need to have control of all their distribution channels, whether they are selling to distributors, retailers or direct to consumer. They need to know where their stock is being sold and to who. When brands sell to multiple distributors, this can be the hardest to control. They don’t always see where the product is being sold, once in the hands of the distributor and the brand message isn’t always passed on to the retailer. If a brand deals directly with the retailer, this is a lot easier to control as they have a direct dialogue and know exactly who is ordering their product. Direct to consumer, gives brands full control.
2. Implement a distribution agreement
Not all brands can sell direct to consumer, especially those brands that have established a large business selling through distributors. In these cases, the brands need to define selling policies to their distributors and retailers, which tell them what they can and can’t do when selling their brand.
These policies can be laid out in a distribution agreement that all distributors and retailers have to sign in order to have access to the brand. If they don’t sign, they can’t place any orders. Within the distribution agreement the brand can let their customers know where they can and can’t sell their products, for example, in their stores but not on Amazon without approval. They can stipulate that only content and imagery provided by the brand can be used and that their MAP pricing must be adhered to.
When introducing a distribution agreement, the brand must also be realistic with their demands. If they want a retailer to use only their content and images, it needs to be in a format that is easy to access and download. If they want distributors and retailers to agree to MAP they need to enforce the policy and police their pricing.
Brands must be willing to stick to their word and if their distributors or retailers are not respecting the distribution agreement, cut their supply. If they don’t, their distributors and retailers won’t take the agreement seriously.
Aside from the task of enforcing such agreements, brands with a large dependency on their distributors may get push back. Distributors are often reluctant to sign these types of agreements, partly because it requires them having to manage the retailers they sell to and involves a lot more work. Plus they don’t want to have to give the brands 100% visibility of their customer base.
3. Monitor distribution channels
Identifying distributors and retailers that are not respecting your distribution agreement is not easy. It requires ongoing management and a lot of resource to monitor and take action. It is exceptionally difficult with Amazon, with new sellers emerging daily, sellers disguising themselves under an unknown name and prices changing by the second.
To identify disguised sellers, brands can purchase their products directly from these sellers. Whilst, FBA makes it easier for sellers to disguise themselves even on the packing slips, brands should attach serial numbers to their items to identify the source of supply and request as part of the distribution agreement that all approved retailers selling on Amazon use Amazon barcodes and do not commingle their inventory with others.
Brands should also be enrolled in the Amazon Brand Registry if they have a registered trademark for their brand. This will help protect them against any possible intellectual property rights violations and give them more authority over their product listings. The process is simple, as long as the brand being registered, is the same as the brand name on the trademark and on the product and retail packaging.
To help businesses monitor the selling activity of their products on Amazon, there are ways brands can automatically manage this:
Sellics offers brands tools that gives them visibility of what sellers are selling their products and at what price and whether they are competing to win the buy box. These tools will help brands identify unauthorised sellers and sellers breaking MAP.
By reducing the number of sellers, keeping them authorised and enforcing MAP, the brand should see less buy box wars and instead see the retail prices on their products rise, including Amazon’s prices. Remember Amazon’s objective is to be competitive to offer their customers an excellent shopping experience. Competitive does not mean undercutting and losing money, it means being in line with the competition. If brands can control Amazon’s competition, they will find Amazon to be a lot less aggressive and life on Amazon a lot calmer.