Why Wholesalers Should Sell On Amazon

Brand Control On Amazon

Your brands must be represented in the right way to protect the brand identity you have invested in building. When wholesalers sell on Amazon, they often fare quite poorly as they don’t have time to invest in good listings, good brand representation, and sales. This can adversely affect your brand, making it less desirable to more wholesalers and direct customers.

Failure to do this sees buyers going to your competitors -- certainly not good for you or your retailers. Let’s turn this around.

Growing Brand Market Share

Amazon has an army of buyers, searching for products like yours. Introducing a massive new stream of customers to your brand allows:

  •  Repeat purchases from your brand on and off Amazon.
  •  Growth of the brand footprint, which in turn helps all retailers off Amazon.
  •  Recognition of growth in brand names you operate.

In addition...

  • People find you on Amazon, then buy the brands off Amazon, helping retailers.
  • More retailers buy from you, as they discover your products.
  • You enjoy increased profitability, as Amazon sales are the high-profit/low-hanging fruit.
  • More wholesalers are drawn to other brands they see doing well on Amazon or selling directly.
  • Overall brand footprint increases, which actually BENEFITS retailers and business buyers.

More Secure And Self-Sufficient

  • During COVID there was a big move with wholesalers and manufacturers selling on Amazon. They needed a reliable direct-to-customer channel that they could control when their business buyers were not in a position to order.
  • By having this channel in place, you are less reliant on other businesses and can withstand market forces.

Higher Profitability And Turnover

  • Amazon sales, being direct-to-customer, command a higher margin than selling to retail.
  • Increased sales add substantially to the turnover and profitability of a company.
  • An Amazon-only business has a value of up to 4X net profit per year, increasing the company value.

More Stock Fluidity And Flexibility

  • Wholesalers will have slow-selling stock and stock backlogs, having a strong direct-to-customer channel, such as Amazon, allows wholesalers to sell off slow-selling stock, improving cash flow.

Brand Feedback And Innovation

  • Using data from their own Amazon sales, brands can see popular lines, reviews, and market feedback on their products, enabling innovation and improvement.
  • Using data from the general Amazon marketplace, manufacturers and wholesalers can see trending items and product areas to focus on -- with investment, growth, and innovation.
  • Using data from Amazon, businesses can see competitor movements and successes, and can replicate and improve their wins.

Using Amazon Business

  • Amazon Business allows sellers to sell directly to businesses with reduced rates. This is a good way to drive sales and  onboard new businesses to the wholesale program.

It’s The Norm Nowadays

Most brands will sell on Amazon and directly to customers. Without putting a % on it, I would struggle to find many wholesalers or brands that do not sell direct -- in some shape or form -- in today's climate.

Channels have opened up everywhere for direct-to-consumer sales -- and it has never been easier to buy online. Most companies have adapted to this some time ago, or are doing so now.

Take a look at your direct competitors; do they sell direct or on Amazon?

Who Would Be Annoyed?

In my experience, I have never seen retailers annoyed at wholesalers selling on Amazon. ASSUMING THEY ARE NOT UNDERCUTTING THEM. The way to alienate retailers is to undercut them on Amazon and take sales that way. Amazon is an EXTRA channel and as such, with pricing rules in place, brings extra sales and brand awareness for all parties.

The only retailer that would be potentially annoyed would be one that relied on Amazon as its primary sales channel. This means that without Amazon, they would be of no or little value to you as a wholesaler anyway. It means that they are relying on YOUR sales and brand to take advantage of a channel that you should own. Not a great loss.

Many brand owners and a lot of wholesalers will have firm agreements prohibiting them from selling on Amazon.

Risk-Averse Companies Can:

  • Sell Amazon exclusives, start a new brand, new barcodes, and rebrand for Amazon.
  • Not sell anything competing on Amazon; focus on niche lines (not advisable, as this misses a lot of cheap sales, but possible).
  • Allow retailers to have exclusivity on some product lines (again, not advisable unless they are skilled Amazon sellers or if, off-Amazon, they are very big sellers of those lines).
  • Create great listings, products, and promotions and give those sales to retailers to manage (I would never advise this, but one could build up a brand's sales and allow other sellers to benefit from the increased brand awareness).
  • Sell more bundles of products, merging together existing items that complement each other, going for higher basket values, and not directly competing for offers.

In business, there is always a risk with new actions. However, inaction is often the bigger risk. Times change and markets emerge -- and companies need to evolve to keep up with competitors.

Author

Robert Prime

Owner at MrPrime.com Amazon Ranking, Growth and Support Services. Co-owner of LoveReading network the U.K.'s largest book recommendation site. 22 years in eCommerce business. Forbes Business Council member.

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