When most eCommerce entrepreneurs get started in the Amazon Marketplace, they tend to have lofty ideals about what this sales channel can do in terms of branding. While there are many positive aspects of becoming a marketplace seller, there are also many issues that run counter to an optimal experience for business owners who intend to build their brand on Amazon.
As the world’s most active and massive online retailer, Amazon has always taken pride in delivering the most efficient direct-to-consumer experience for buyers. Unfortunately, this business model does not always translate into a positive experience for brands and sellers. Let’s take a look into some of Amazon’s business practices that may impact your brand negatively:
Basic Amazon Sales Practices
If you invest in Amazon stock or if you pay attention to financial news headlines, you may have heard about the paradox of the company being a retail behemoth unable to turn a profit. While it is true that Amazon was unprofitable for many years. That is no longer the case because the company’s practice of trying to sell at almost no margin is no offset by the percentage it can take from all marketplace sales.
Amazon believes in doing whatever it takes to create retail competition. Its first-party division, for example, is known to utilize powerful servers to search for prices across the internet so that it can offer the same products at even lower prices whenever possible. Amazon is also very keen on carrying major brands; some of these major brands have decided to stay away from Amazon only to learn that the online retailer has found an alternative way to stock their products, usually from third-party retailers, and sell them at cutthroat prices.
To a great extent, the sales practices applied by Amazon are present in the marketplace. The bottom line for the company is to be able to generate sales and continue growing one small profit at a time.
Unauthorized Sellers on the Amazon Marketplace
If you are a manufacturer or exclusive distributor in the Marketplace, Amazon would like to see your products priced very competitively, even if that means involving third-party sellers. When you list your products on Amazon, you are essentially inviting thousands of other sellers to carry your goods on their Marketplace stores; unless you enter the Brand Registry program, these third-party sellers will be free to ignore any minimum advertised price (MAP) policies that you may have set for branding purposes.
What About Amazon Brand Registry? Does That Help?
Even if you participate in Brand Registry, unauthorized sellers and drop shippers, which Amazon allows to operate on the Marketplace, have been known to circumvent restrictions. MAP policies are integral to developing your brand; if unauthorized sellers are violating the MAP policies you set for your products, price dilution and degradation will ensue.
Other Problems You Might Have as an eCommerce Seller
Another problem with unauthorized sellers, particularly drop shippers, is that they rarely provide customer service. The problem here is that the sneakiest drop shippers have ways to make Amazon deliveries appear as if they originated from your business, not from theirs. This means that you end up having to offer customer service for a sale you never made. Worst of all, if an unauthorized seller is offering one of your products at a significantly higher price, you will have to issue an expensive refund.
Negative Reviews from Unauthorized Seller Can Affect Your Business
To add insult to injury, you should keep in mind that Amazon reviews are a major aspect of the Amazon branding experience. Most negative reviews left by Amazon buyers are related to customer service more than to the products, and thus it makes sense to prevent unauthorized sellers from plying their dishonest trade.
The best way to protect your brand on Amazon is to prevent unauthorized sellers through active monitoring. Brandlox, a subscription service for eCommerce entrepreneurs who operate in the Amazon Marketplace offers real-time notifications of sales activity and identifies unauthorized third parties. Moreover, Brandlox can also generate cease-and-desist notices and even make test purchases to identify rogue sellers that hide behind a “doing business as” name.
To learn more about protecting your brand on Amazon, contact Brandlox today.