Aug 15 , 2020
Why would traditional businesses want to enter the Amazon Marketplace and what are the challenges that have in entering? Both of these questions are intertwined so we will share about them together.
WHY SHOULD YOUR ESTABLISHED COMPANY ENTER THE ONLINE MARKETPLACE?
Multiple Income Streams (Sales)
Let's take a look at why these more established businesses are selling on Amazon like never before, and what that means for the opportunity for you to work with Marknology.
WHY PARTNER WITH MARKNOLOGY?
Marknology specializes in the branding space on Amazon. We spend our time working closely with brands, wholesalers, and private labels. We have lots of conversations about what it means to come to Amazon. We've worked with local companies like Spanish Gardens which is an 80 year old company that’s coming to ecommerce for the first time. We understand what it means for a company like Murdock Manufacturing that’s been in a B2B world for over 100 years. We understand what it means for a local brand like Faultless that’s never before been off of the Walmart or Target retail shelves and now is coming to ecommerce.
We've helped all these companies navigate their journey onto Amazon, and there are different challenges that come with that.
CHALLENGES FOR ENTERING THE AMAZON MARKETPLACE
The hardest conversations we have with B2B and Retail Businesses that are new to e-commerce are about thinking differently than they have before.
The easiest conversation for me is with the owner or someone that has the power to truly change the way things are done in their company. That’s because we often need to change an entire mindset within the company. I think one of the most harmful things is continuing to do things the way they have been done before while expecting different results.
For a lot of brands, it’s overwhelming to think about something like social media and online brand presence. It can be difficult to understand everything that goes into developing a website and ecommerce, a blog, email campaigns and Amazon. So, we come in and say, “Let’s solve these problems for you!” Amazon sales are responsible for 50% of online sales, so it's the biggest element that should be tackled first.
One of the main reasons for being on the Amazon marketplace is branding control. If you are not there, someone else (reseller, wholesaler, illegal seller) can be there selling and representing your brand. They might have outdated pictures of products, outdated packaging posts, or copy that’s not as complete as you'd like it to be. You have no
control over the impression that they're making on your potential customers.
These are some of the questions I’m asking brands that don’t know what's going on with their products in Amazon.
Are you talking to your brands customers who purchase on Amazon?
Do you think your resellers are advertising using your brand name?
Are they reaching out to the customers that had a bad experience and making it into an awesome experience?
The only way to know what your customers are experiencing on Amazon is to have brand control yourself.
We believe that a lot of brands have pushed the easy button when it comes to Amazon.
They're shipping a product in bulk to a reseller that’s going to put their product on Amazon and manage the whole process.
Or perhaps they sold and signed a contract with Amazon 5 or 6 years ago.
Or they previously had a wholesale relationship where Amazon was selling direct, and now they are trying to get it back in house so we can gain more control, talk to our customers, and enjoy that extra margin that comes with selling direct.
We have so many brands that we are working through these situations with now.
Brands wanted an easy outlet before Amazon was big, and now they are coming back and having to clean up. What does cleaning it up mean? Let's say you have 50 resellers for a product—how do we get it down to a manageable number? Maybe we don't want to have any resellers at all, or maybe you'll just have three resellers. Do you have an e-commerce agreement set up with them? These are the things that B2B businesses are having to face when it comes to Amazon, whether they are tackling it by themselves or working with an Amazon brand management agency. The worst thing is not doing anything at all because they are frozen not knowing what to do. It comes down to tackling these questions piece by piece.
You need to develop a long term game plan. We can’t just immediately come in to kick out every reseller off of Amazon or immediately implement map pricing because we have one trademark that allows us to do that. The starting point is thinking about where we want to be on the Amazon platform a year from now, two years from now, and what do we need to start doing right now to get us there.
For a lot of people, the first thing to do is set up ecommerce agreements for resellers. If you haven’t done it yet, you should think about it. If you don't know how to get started, we recommend hiring a brand management agency, like Marknology, to help you enforce map pricing for resellers or send a message to those who should not be reselling your product. We get a call from clients at least once a week saying, “I just found my product on Amazon Canada and it shouldn't be there—what do I do?”“
If we are trying to police reselling, we're thinking about cleaning up who is already there,
what brand gating can you do, and developing agreements that can keep unwanted resellers from easily being able to bring your brand on the platform.
Minimum Advertised Price (MAP PRICING)
A lot of people think that Brand Registry 2.0, which helps provide accurate representation of trademark brands on Amazon while also combating counterfeit, will let you control MAP pricing. It doesn't work that way. It does gives you control over YOUR listings, allowing you to control your photos and control your content, but MAP pricing is something you have to enforce outside of Amazon. Brands use MAP pricing so that resellers must agree not to sell below a certain price in order to keep the value of the items high.
This is something you need to regulate with the reseller outside of Amazon, and quit sending them products if they are not listening to your rules. There is no reason to continue working with people who won't keep your brand at the same standard that you do.
Counterfeit on Amazon
A lot of B2B businesses are talking to us about counterfeit, or about Amazon copying their product. They are in fear of being counterfeited from China. There are counterfeit programs on Amazon if you're really are worried about someone copying your item, and if you have a patent you don’t have to worry. We can exercise that though brand registry, but if you're seeing counterfeits, there are different programs, like the transparency program, where you can get a serial barcode on your products. Then someone would have to scan this transparency code in order to ship it.
According to Amazon, “The transparency program helps brand owners protect their business from counterfeit product or unauthorized sellers.”
If you are working with an Amazon expert, you can really learn how to move forward and be protected at the same time.
Once you've fixed an oversaturation of resellers, the next step is brand gating.
Brand gating used to only be available to really large brands like Nike. If you don't have permission to sell those products, you weren't allowed to sell them. A lot of resellers talk about how to get your brands ungated so you can sell and resell them. But for brands and manufacturers, it’s a way to protect your brand from people selling your product when you wish they wouldn’t.
Let’s say you get your resellers all cleaned up, it’s just you selling on Amazon, and you are not sharing buyers with anyone, but you want to keep people away from using additional resources, sneaking their way in and selling you products.
You can jump through some hoops, send out some forms and get your brand in the position to have Amazon gate your brand, if you are a large enough brand and have a good enough reason. This is a great way of protecting your brand. It really is a
conglomeration of all these things that allow you to do so.
If you’ve been in a B2B relationship with your business, you know you are often selling at a wholesale rate. You are selling at 50% margin; you are used to that and you’ve built a business around it. However, Amazon is a place where we cut out a lot of the middle people and go directly to the customer. As a result, you might be getting an 85% margin if you are shipping yourself, or a 75% margin if you are using FBA. How many of us would be happy with just a 10% margin increase across our business?
At the end of the day, increasing your margin is simply a matter of changing the way we are selling and making more money.
That is why many traditional sellers are coming to Amazon. There is money to be made by improving margins, sharpening brand presentation and providing excellent customer service. The point of having a brand is being able to share your message across multiple platforms.
Our agency is here to help brands and manufacturers navigate all these difficult questions and allay the fears that come in selling on Amazon.
If your customer base is on Amazon and you are not there, they are buying from someone else. If you are a business that hasn't been on Amazon before or you are nervous about getting in, we are here to help.
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