Why Having One Seller Is A Risk?
Should You Handle This In House?
Why Limiting The Amount Of Sellers On Amazon Is Important
Is It Worth The Risk
What would happen if your only seller on Amazon received the following message from Amazon?
“Your Amazon.com Selling account has been suspended”
The Amazon Terms of Service are long and not always easy for sellers to comprehend. If you searched online you would find that Amazon accounts are suspended for products not matching the description in ads and for not providing customer service, as well as other reasons.
For example a seller of your product hires a new employee who is his friend. This friend used to be a seller on Amazon who used to have his own account two years ago. The seller has a great account with perfect seller metrics. When the friend was hired he was granted access to the company’s Amazon account. He used his personal email account that was linked to his old Amazon account. Once he logged into the company’s Amazon account both accounts were suspended. The company was able to appeal the suspension from Amazon and was granted their selling privilege 40 days later. 40 DAYS!!! During these 40 days there was ZERO sales on their account which affected all the brands they carried. It was a long 40 days not being able to sell in the Amazon marketplace which is often the #1 revenue generator for most companies.
Amazon suspends accounts until a solution is worked out. Getting Amazon to reinstate your account could take days or weeks, and in some cases accounts are permanently closed. Think about how you will be affected if your product is not being sold on Amazon because of the suspension of your only seller on Amazon.
Why Having One Seller Is A Risk?
1. Loss of Revenue Due to Lack of Amazon Sales
Obviously an account suspension means the loss of revenue to your company during the days or weeks it may take to reinstate your Amazon account.
2. Loss of Customers
If you have a repeat customer who has been loyal to your brand comes back to Amazon to place another order for your product, but sees that they can no longer order the product, they begin to ask, what happened?
Do they no longer make this?
Was something wrong with it?
Was it a bad product?
….Well I guess I will look for something similar. Imagine this happening for 40 days!
3. Loss of Revenue Due to Drop in Your Best Seller Rank
While an Amazon account is suspended, your products are automatically considered to be out of stock which could lower your Best Seller Rank (BSR) significantly. A lower BSR could cause lower sales and generate negative feedback. To raise your BSR you may need to spend a significant sum on Pay Per Click (PPC) to raise your BSR to the level that it was prior to the account suspension.
4. Management of Inventory
Each Amazon seller maintains stock for a listing. If you have a second seller selling your product and maintaining stock there is little risk of being out of stock of the product which could lower the BSR as previously mentioned. Also with only one seller you are required to send more inventory and maintain a higher level of inventory. This is necessary because when sales velocity continues to fluctuate you do not want to run out of inventory and miss out on sales. With Amazon storage fees continuing to increase for inventory storage the longer you have inventory stored at Amazon the more fees you will continuously be paying.
How do you minimize the risk of having this happen to you? Having a second seller helps you minimize the possibility of this happening.
Should you handle this in-house?
Why should we not consider or continue to sell on Amazon ourselves? Many companies underestimate the expense of having someone who is an Amazon expert working for them. For your company to have an Amazon expert working for you, you will need to learn how to sell on the Amazon platform, hire a consultant, or hire an employee for this platform. When learning or hiring a new Amazon expert that person will need to learn and constantly adjust the changes Amazon makes for these topics:
-Amazon PPC / Advertising
-Current Amazon Terms of Service
-Amazon product listing
Most companies do not realize the cost this has on their growing business. Not just the financial cost but more importantly the cost of time. Selling on Amazon is time consuming because of the moving parts that are required to maintain your product and brand at the highest level possible. While it is important to outsource tasks so you that you can focus on growing your brand. It is also important that when choosing sellers for Amazon that you have a limited number of sellers on Amazon.
Why Limiting the Amount of Sellers on Amazon is Important
Understanding the effects of how many 3rd party sellers on Amazon for your brand is important. The number of sellers has an impact on pricing, customer service and sales. We have experienced that the more sellers a brand has the less control they have over important things such as pricing constantly change, product content, customer service and advertising.
Brands that realize the negative effects of having many sellers and make the decision to limit the number of sellers leads to more control and a better experience for customers. Once you limit the number of sellers you will notice these benefits:
Your customers will have a consistent and higher level of customer service
Controlling the content (images, product info) on Amazon
You do not have to deal with sellers breaking MAP agreements
No longer dealing with multiple different people and companies
Is It Worth the Risk?
It is ultimately your decision if you use a single Amazon seller or act as your own Amazon seller. Having a single seller on your listing gives you no benefit. If you act as your own seller on Amazon you could earn more of a profit as long as your account doesn’t get suspended. Again, it is your decision on how much you want to risk, but remember the saying that “two is better than one”.