How Brands Should Manage Their 3rd Party Sellers on Amazon

How brands should manage their 3rd party sellers on Amazon

Most brand owners see 3rd party sellers on Amazon as more of a threat than an opportunity. Unlike most brick and mortar retailers that typically through a tightly managed supply chain network to acquire branded products, anyone with an American bank account and a business entity can start selling in most product categories on the largest eCommerce website in the United States in less than thirty minutes.

The bad and the ugly of 3rd party sellers on Amazon

Third party sellers on Amazon often have a bad reputation on the brand side. The loudest complaints about them from brands tend to be that they are sources of:

  • MAP price violation
  • Counterfeiting
  • Product description confusion or poor quality product descriptions
  • Shipping incorrect products to customers
  • Trademark misuse in product descriptions
  • Product repackaging or relabeling
  • Unauthorized product bundling
  • Selling used, damaged, or expired products as new
  • Mislabeling products in the Amazon catalog

As the problems caused by third party sellers run amuck can be so severe, the perception on the brand side of eCommerce often misses the major benefits of working proactively with third party sellers who are good actors.

The benefits good 3rd party sellers can give brands

Third party sellers who obey the law and respect their contracts can bear a lot of the costs of reaching customers on Amazon:

  • They pay for their own Pay Per Click (PPC) advertising on Amazon
  • They absorb the costs of sales, discounts, and Lightning Deals
  • They handle customer service even when using Fulfillment by Amazon (FBA) on the shipping experience
  • They can create and edit product listings on Amazon under most conditions
  • They can work to build product reviews on your brand’s products on Amazon both actively (by doing a good j0b with customer service) and passively (just by moving more units of your products to Amazon shoppers)
  • They can ensure product availability even during shortages at other retailers or if there is a lag in production or shipment
  • They pay all of Amazon’s fees (reaching 30% of the purchase price or more in some cases)
  • Their sales increase the rankings of your product in Amazon’s search and best seller ranking systems (which in turn makes for greater brand visibility)

As you can see, third party sellers can do a ton of grunt work for your brand and absorb a lot of the costs and risks of running a retail business. Unlike focusing on growing sales on your own website, you don’t have to pay those third party sellers anything. The cost of making a sale on Amazon is also significantly lower than on almost any other website across a variety of categories because it is the most popular online retailer by a massive margin.

According to eMarketer, Amazon made up 43.5% of all online sales in the US in 2017. The closest website, eBay, made up just 6.8% of all online sales. Apple is the only brand in America with a website that makes over 0.5% of all US sales online. Unless your name is Tim Cook or you work for him, your brand will probably able to connect with more customers on Amazon.com than on your own website.

Taking control of your brand content on Amazon

The largest challenge facing many brands as it relates to Amazon is related to product catalog content. By default, Amazon allows anyone to create listings on Amazon and to put whatever they want in those listings. Once a listing has been created, it can be nearly impossible to attribute that creation to any particular person particularly if there are multiple sellers on the listing.

The most straightforward way for brands to get ahead of a massive problem in how their products are portrayed on Amazon is to enroll in the Amazon Brand Registry program and to proactively manage their content on Amazon for all products that they sell and have sold in the past.

What the Brand Registry program does is that it makes sure that trademark owners can secure the primary right to edit brand content related to their products and to prevent sellers from editing content related to those products. While this alone does not prevent people from selling a product on Amazon and does not prevent people from creating new listings under your brand, it does ensure that only your brand or sellers that you authorize can actually control the content for the existing listings.

If you need help enrolling in brand registry or managing your product catalog content on Amazon, be sure to send us a quick e-mail.

Getting third party sellers on your side

One of the most effective ways to get third party sellers on your side is to just send them an e-mail through their seller profile and scheduling a meeting. Often times, the first reaction of a brand’s representatives upon noticing that their products are for sale on Amazon is to call a lawyer and to send a threatening letter.

In many cases, you’ll discover that many third party sellers – particularly the ones who sell in volume – are already buying your product through authorized channels. In situations in which your brand has very restricted distribution limited to a small selection of retailers that don’t include Amazon, your approach will obviously need to be different, but for most brands that don’t follow that strategy, just getting information about how the third party seller acquires your products will tell you what the next best step is going to be.

Surveying third party sellers on Amazon and picking out some of them to get under contract so that you know how they’re buying products will get you most of the way to where your brand probably wants to be on Amazon. If your brand is managing the content and the third party sellers are maintaining good product quality, Amazon becomes more a source of opportunity than of problems for your brand.

Fighting counterfeiting on Amazon

Addressing counterfeiting on Amazon can be a serious and ongoing challenge for brands of all sizes and levels of sophistication. The full scope of what needs to be done to fight counterfeiting will be addressed in a future article.

Often times, counterfeit reports will come in from customers through product reviews and seller feedback reports. In some cases, Amazon itself will notify you of such reports, but in most cases the company is not proactive in how it polices sellers of counterfeits. In some cases, co-mingled inventory on Amazon can also mix counterfeits from criminals in with the products being sold by Amazon.com itself or by legitimate third party sellers who have enabled the comingled inventory option.

The process of dealing with an individual counterfeiter is to conduct a test purchase from that seller and then to send a detailed report to the IP infringement reporting page on Amazon.com.

Persistent counterfeiting from a range of sellers requires a more tailored approach and effectively preventing it requires a direct intervention from Amazon itself. Certain brands have been able to prevent third party sellers from selling products on their listing owing to counterfeiting concerns, but there is no repeatable system or fixed set of standards that a brand must meet in order to qualify for this special program at the time of this writing.

Selling on Amazon yourself

The most direct option for dealing with third party sellers on Amazon is to become one yourself. There are a couple primary ways to sell on Amazon: either selling products to Amazon.com itself as a vendor through Vendor Central or acting as a third party seller yourself through Seller Central.

As the brand, there’s a good chance that you will be able to beat every other competitor on price. There are also some advantages to focusing on certain elements of your catalog as a third party seller while allowing other sellers to absorb costs of selling on Amazon while you reap the benefits.

At Velocity Sellers, we specialize in working with brands that want to sell to customers on Amazon. Drop us a note today to set up your free consultation.