Whether or not you sell to Amazon.com, your products are most likely listed on the platform. If you’re not actively managing your brand presence in the biggest ecommerce channel, then you could be doing real damage to your brand. How do you manage retailers who sell your products as 3rd party merchants? How do you maintain consistent branding and pricing?
Selling on Amazon.com’s platform is a huge potential opportunity for success but it’s also full of pitfalls that can hurt how customers and retailers view your brand. Your Amazon.com strategy has to be comprehensive to protect what you’ve spent so much time and money to build.
1. Allow any retailer to sell your product in the marketplace
Amazon doesn’t care who sells your products on their site but you should. While you might have some good retail partners selling your products on Amazon, you’re doing your brand a huge disservice by allowing almost anyone to sell on the platform. Price degradation is the biggest issue. Amazon matches prices from sellers and if your retailers are unrestrained, the selling prices will come tumbling down. You also need to know who’s selling on the platform. If you don’t know who they are, then you’ve effectively lost control of your distribution. Now, this may sound drastic, but implementing new retailer agreements taking Amazon into account is the first step. The goal is to have a short list of approved sellers who will help maintain your pricing and branding (more on that in sec). Resellers should be restricted from selling in online marketplaces unless authorized by you in writing. I know many of you probably want to know how to weed out those rogue merchants but that’s a much longer discussion for a different time.
2. Let online retailers control content and branding
Amazon allows vendors and merchants to contribute content for each product. Title, brand name, up to 5 bullet points, and a product description are all customers can read about an item. This may be the first time a potential customer is exposed to your brand. Why would you let a merchant control all of this? Most merchants contribute a minimal amount of content–maybe a bullet point or two and a very short description. Title structure is inconsistent and brand names are most often not the actual brand name. This gives customers very little to go on in terms of making a purchase decision. You need to have consistent content and branding policies for anyone who sells your products. It’s best to keep content in a PIM system so that you have the most up-to-date version on hand and ready for dissemination.
3. Don’t have an electronic catalog with UPCs available
When you decide to sell directly to Amazon, they require every product to have a UPC and a model number. Amazon uses these to match the products you’re setting up with products already sold on the platform. Very often, merchants will use different UPCs and model numbers in order to establish their own listings and reduce competition with Amazon and other merchants. This practice violates Amazon’s Seller rules, but is quite common. It’s not unheard of to find up to 10 listings for a single product. This causes reviews to be split up between all versions, lowering the product’s discoverability, and impedes Amazon from recognizing and merging listings into one detail page. As with product content, it’s important for everyone selling your product to use the correct UPCs and model numbers. Again, a PIM system is optimal.
4. Never update your product content or hidden keywords
If you’ve sold the same products on Amazon for years, your existing detail page content is probably getting stale and your hidden keywords are insufficient. We’ve seen this nearly everytime we’ve worked with an existing Amazon vendor. You can overhaul all of it and have Amazon upload it for free. You should assess your existing content at least once per year. You’re sure to find errors and/or opportunities for improvement. Customer behavior changes all the time and new competitors are entering Amazon every day. Any competitor worth its salt is going to put your brand name or product names in their hidden keywords, this will give them a boost in search. It’s vitally important to keep your content fresh to maintain or improve your discoverability and conversion.
5. Ignore customer feedback
There are two places to see customer feedback: Customer Reviews and Customer Q&A–both located on the detail page. The most important one of these is customer reviews. If a product doesn’t have reviews or if it has bad reviews, it’s not going to sell very well. The higher number of positive reviews, the better the product will sell. One big upside from reviews regardless of being good or bad is that you can glean extremely useful information from them. It’s a great way to learn about your customer and how they use your products. Vendors have found out about product flaws and fixed them due to reviews. They learn what customers like and dislike about products. They learn about competitor’s products. They learn about how products are used and adjust marketing efforts. The bottom line: don’t ignore customer reviews. The last thing you want to do is try to build a brand with a bunch of 1 and 2-star reviews. If you don’t have any reviews, start engaging your existing customer base to leave them on Amazon. Lastly, set the right expectation for the product with your content. Amazon sells amazing top-end products, and they sell low-end products. Your product content should set the right expectation in order to get a good review. Low-end products can have great reviews if they meet or exceed customer expectations.
6. Prioritize merchant pricing and inventory allocation over Amazon direct
Many vendors have tiered pricing based on sales velocity or order size. Amazon has the potential to be one of your top 3 retailers. So they should get top tier pricing. If you have online retailers with significantly lower costs, they can undercut Amazon’s price at will. You can’t build your business on Amazon if Amazon doesn’t sell your product profitably. There’s no incentive to participate in merchandising efforts or to even sell directly to Amazon if your online retailers have preferred pricing. Another drastic step is to examine and eliminate volume-based pricing. Amazon will order organically and stock up based on a forecast. Your sales volume will increase over time and Amazon will eventually be one of your most important channels. If you allocate inventory to merchants who sell on Amazon, over Amazon itself, you’re also defeating the purpose of directly selling to them. One of the biggest advantages of selling directly to Amazon is to have the “Ships and Sold by Amazon” message on the detail pages. There is a higher level of customer trust than with merchant offerings. In fact, vendors who move from selling as a merchant to selling direct can see a 2 – 3 times increase in sales simply from the addition of that “Ships and Sold” message. When a merchant “wins” the buy box–meaning they are the primary offer–your conversion, search relevance, and sales all suffer.
7. Ignore Amazon-provided forecasts and go out of stock
Amazon works best when you’re 100% in stock. Often that’s not possible due to a variety of factors but it should be something to strive for. 25-week forecasts are available in Vendor Central–do not ignore them. These forecasts are automated and adjust weekly. Refer to them regularly–especially in the late summer. Ideally you’ll be able to stock up in time for November/December when sales peak. Note that forecasts are just that and will have varying degrees of accuracy depending on product type, in-stock rates, and seasonality. Also, feel free to come up with your own forecast—it’s for your benefit anyway. Take what Amazon has and make adjustments based on your own sales history.
8. Use Amazon to get rid of excess inventory
While Amazon does have their “Lightning Deals” and “Deal of the Day”, it is not a flash sales site. It should not be a dumping ground for your overstocked products–that’s what Groupon and Woot are for. Amazon works best when you grow reviews, improve SEO, merchandise, and stay in stock. Your product rankings will improve over time and sales will grow. Using Amazon simply to get rid of inventory will hurt your brand image. Customers will see your products constantly discounted with inconsistent availability. This leads to a poor customer experience and a poor impression of your products and brand. They will essentially be trained to expect a bargain next time they run across your products on Amazon.
9. Ignore self-service merchandising opportunities
If you get POs every week from Amazon and sales grow 30% every year you’re treading water—just growing organically. Amazon offers vendors enhanced detail pages, brand stores, coupons, and search advertising. All of these services are designed to increase product discoverability and conversion, resulting in accelerated sales. They all have a small cost associated with them, but they’re definitely worth it. We’ve run hundreds of search ads and we highly recommend them. Think about it this way: most of your competitors aren’t merchandising at all or correctly. If you do, you can leapfrog their search rankings and improve your market share.
10. Don’t have an Amazon strategy (even if you don’t sell on Amazon)
Regardless of your opinion of Amazon, you need to consider Amazon’s effect on your brand and include them in an overall ecommerce strategy. If you take only one thing away from this article, it should be this: have an Amazon strategy. Even if you don’t plan to sell to Amazon and don’t want anyone to sell your products on Amazon, at least make that an official part of your overall ecommerce strategy and try to enforce it. Most companies should sell on Amazon, but that’s not a strategy–it’s just a tactic. You need to consider who will sell your products on Amazon, what content they should use, and how Amazon affects your other channels. Also, know what % of sales Amazon accounts for. It doesn’t matter if you don’t sell to them, you need to know. For example, if you sell to a merchant who sells on Amazon, your sales reports will show that merchant’s numbers, not Amazon’s. You’ll have no idea how big of a piece of your sales pie Amazon is. This can affect your inventory allocation, pricing, and marketing. Amazon could be in your top 3 and you might not even know it.