Main Points:
Are Having Multiple Sellers Good For You?
Race To The Bottom Pricing
Increase Ad Budget
Listing Control and Optimizing a Listing
Customer Service
Many brands rely on 3rd party sellers to sell their products on the Amazon Marketplace. Brands need to know how this will affect their sales, customer service, pricing and a brands value.
Simply, the more sellers their are the less control your brand will have!
Why Having Multiple Sellers Is A Negative For The Brand
Brands are always surprised to hear that having more sellers is actually a negative for their brand. Often when we talk to brands having more sellers on Amazon is great because they have more wholesale customers buying from them. The more sellers you have on Amazon does not increase your brands exposure to customers. This could not be further from the truth.Consider the following…
Product Demand Does Not Change Because You Have More Sellers
The more sellers your product has does not mean that more people will see the product. Demand for your product is determined completely by customers search actions on Amazon.
If having more sellers to sell my product won't help increase my sales on Amazon what does it do?
Race To The Bottom Pricing
The key to selling on Amazon is being in the “buy box” on a product listing. Being in the buy box creates competition amongst sellers which leads to the price racing to the bottom. With this race to the bottom it leads to MAP pricing being broken which will anger retail partners when customers realize that buying online is cheaper for the same product. If there are only one or two sellers for your products, sellers do not have a reason to continuously lower their price which leads to MAP violations. The benefit to the brand is that with larger margins sellers won’t be asking for larger wholesale discounts because of race to the bottom pricing.
Increased Ad Budget
The above charts show the difference of having a lot of sellers or just a few. Which one of these examples would sellers have more money available to spend on advertising your products? Certainly not having 15 sellers!
Increasing your brands market share on Amazon requires having fewer sellers who want to invest part of their profits into advertising your products to help your growth. If you have many sellers on Amazon that have to share the profits it leads to them not having enough money to put in ad campaigns that would lead to your brands growth. In this case your sales will remain steady or decrease, but would not be increasing sales and new customers.
Listing Control and Optimizing a Listing
Optimizing a product listing is important to your success on the Amazon marketplace. A product listing page influences your sales rank which determines where your product is displayed when a potential customer searches for a product. An optimized listing also helps convert potential customers into a customer.
When having many sellers on a product listing there is no real benefit for them to spend money and time to optimize a product listing. This is because they would have to share the profits with multiple sellers who did nothing to help the product grow. If the seller didn’t have to share the new profits with 10+ sellers, but just themselves or another seller there is an incentive for them to make it the best product listing possible. This extreme motivation helps because they know that they would be reaping the benefit of having more sales and larger profits which lead to more wholesale orders for you!
Customer Service
Many customers on Amazon do not know that when they buy a product on Amazon they are not buying it from Amazon or the brand themself but are buying from a 3rd party seller. This means that if a customer on Amazon has a bad customer service experience with a seller they will blame the brand!
If there are multiple sellers it is almost impossible to ensure that the customer will continuously have a great customer service experience. If customers have a bad customer experience on Amazon they will blame the brand themselves even though they were not dealing with the brand directly. With high selling products this can happen hundreds or thousands time a year which is not be great for your customer service reputation.
With a trusted and experienced seller you can be confident that your brand is being represented correctly and that customers will have a positive experience when purchasing your product.
Conclusion
So does having more sellers for your products on Amazon actually help your brand grow on Amazon? NO!
Brands who have a large number of sellers often experience issues with pricing, product listings, marketing and customer experience. Working with an exclusive or semi-exclusive seller is a much better plan for a brand that wants to experience growth in the Amazon marketplace.