In a letter to shareholders, Amazon’s CEO Jeff Bezos made news by revealing that Amazon’s third-party sellers—for the first time ever—made up more than half of all units sold on Amazon in 2017. That year, more than 300,000 new small-to-medium-sized businesses joined Amazon Marketplace.
Amazon’s network of third-party sellers is a huge reason why the company is the top dog in eCommerce and major player in the retail industry as a whole. Bezos also noted that Amazon shipped more than 5 billion items worldwide with Prime in 2017, and 40 million items from SMBs on Prime Day 2017 alone.
If you’re considering selling on Amazon Marketplace—or already do—these numbers likely have you champing at the bit. There’s certainly a fantastic opportunity selling on Amazon. However, before you get back to it, make sure that you are protecting your brand reputation.
Plenty of brands have wondered if selling on Amazon is the right move. Could it hurt sales on your own webstore? Are other sellers undercutting your prices? Could consumer sentiment take a dip?
Let’s explore challenges present with selling on the Amazon Marketplace, and what you can do to protect your brand along the way.
Common Challenges Brands Face on Amazon
There are several common pitfalls that could give you problems when it comes to protecting your brand.
For starters is price. Say you only sell on your own website. You want to start selling on Amazon, but you know that the marketplace is hyper-competitive and often priced very aggressively. You worry that a too-low price on Amazon would hurt sales on your own website. (Furthermore, Amazon has its own U.S. Price Parity rule that requires sellers to match their Amazon price to their lowest price across all channels.)
Or, your brand is already present on Amazon, just not sold by you. Resellers may already be on there, and you’re worried that jumping into the mix could lead to a price war. This could damage your brand by devaluing your product with too-low prices. You may also be concerned about reducing your margin below your comfort level.
Worse, Amazon may be home to counterfeiters selling knock-offs of your brand, like the problem that drove Birkenstock away from the marketplace. Unauthorized sellers exist as well, selling expired, damaged or stolen goods. Amazon will absolutely stop counterfeiters and unauthorized sellers, but it’s up to the brand to notify Amazon of any issues. Consumers buying these products without knowing it could hurt your brand reputation.
What to do?
Find Your Best Price
The right price isn’t always the lowest price. Some of the most reputable brands, such as Apple, have higher prices than competitors. They can price that way for many reasons, but partly because the reputation they’ve developed over time in high-quality products. Consumers know what they are getting and are willing to pay for it.
Shoppers tend to associate higher prices with greater quality or value. On the contrary, lower-priced products may be seen as cheap. Therefore, you want to ensure your brand doesn’t get the reputation of low-quality and low-value by finding your best price, not your lowest price.
How can you do this? One option is psychological pricing. Prices that end in “nines,” like $19.99, are seen as more enticing than a round number like $20. Psychological pricing is also keeping original prices in plain view when marking down or promoting a product. If the new price is $19.99, but it was originally sold for $39.99, make sure the shopper can see that $39.99 price tag. They’ll associate the lower price with “great deal,” not “low quality.”
Another option is dynamic pricing. Dynamic prices fluctuate based on market factors. Learn your target audience and when and how they shop, then price accordingly. Higher traffic at a certain time? Raise prices. Lower traffic at night or on Mondays? Drop prices. Dynamic pricing plays directly into supply and demand to drive sales.
Another key to finding the best price is setting a minimum advertised price policy, or MAP.
Enforce MAP Policies
MAP policies are critical to protecting your brand on Amazon. Similar to MSRP, MAP is a minimum price you set across all your distributors. This prevents them from selling your product at any price they want, degrading your brand by shrinking margins and competing over the lowest possible price.
So, have MAP policies in place for each of your products. Start by:
- Setting a minimum advertised price
- Monitoring all channels and resellers for violations
- Enforcing your MAP violations as needed
Make sure your MAP policies are clear, with violations concisely stated. Also set rules on who retailers can sell to, such as another retailer, and outline penalties for violations. You can monitor MAP policies yourself, but many brands turn to third-party solutions to automate the monitoring process and ensure no MAP violations slip through.
Overall, MAP enforcement is a crucial part of protecting your brand on Amazon.
Defeat Counterfeiters and Stolen Goods
Naturally, you want your products sold on Amazon to actually be your products. Many brands have fought against counterfeit and stolen goods sold on Amazon. While the eCommerce giant will certainly remove any violators, it’s on you to report those sellers.
The problem with this, other than those sales not going to your business, is price wars. Counterfeiters and thieves can drop prices significantly because they don’t have to worry about margins. In Amazon’s competitive marketplace, all sellers will likely follow suit, including the legitimate ones. Before you know it, your product’s value is down along with your brand reputation.
First, register your brand on Amazon’s Brand Registry. This will provide Amazon more details about your business with which to monitor unauthorized sellers and catch violators.
Next, you should flag the seller with Amazon and send cease-and-desist letters, as a report from The Information outlined. If the problem continues, you can attempt to locate the stolen goods and track the serial numbers back to distributors.
Wiser CEO Andy Ballard contributed to The Information report. While it’s always tough to monitor a marketplace like Amazon’s for counterfeit or stolen goods, the effort is worth it.
“It’s always hard to identify stolen goods,” Ballard told The Information. “Sometimes I think they’re pushing a rock up the hill, but if you let the boulder fall down, it definitely crushes the house.”
Bottom line, monitor your products on Amazon before a smaller problem becomes a bigger one.
The number of sellers on the Amazon Marketplace is growing daily, alongside the number of shoppers and Prime members. It’s a good place to be for brands, and it presents opportunities when done right.
Make sure you are protected as you grow your brand presence on its marketplace. Wiser provides compliance, market intelligence, and optimization solutions for brands and retailers interested in capitalizing on all that Amazon has to offer.
About the Author:
Matt is the Content Marketing Manager at Wiser, the leading provider of actionable data for better decisions. You can connect with him via his LinkedIn.
Wiser is the leading provider of actionable data for better decisions. Wiser collects and analyzes online and in-store data with unmatched speed, scale, and accuracy.