Amazon for manufacturers: how to sell direct without undercutting your trade customers

Most manufacturers and wholesalers we speak to are not asking whether Amazon works. They can see it does. They are asking how to sell there without upsetting the distributors and trade accounts that pay the bills today. This guide answers that question: what causes channel conflict, what UK competition law lets you do about reseller prices, how to control your listings, and how to roll out in phases so the cash and the relationships survive.

Why your products are on Amazon whether you chose it or not

If you sell through wholesalers, distributors or retailers, some of them almost certainly list your products on Amazon already. That is their right: once they have bought genuine stock, they can resell it. The question is not whether your brand is on Amazon, but who controls how it looks there and at what price.

In the accounts we take on from manufacturers, the pattern is familiar. Several resellers share one product page, nobody owns the images or the description, prices drift down as they compete for the sale, and the brand looks cheaper on Amazon than it does anywhere else. None of the resellers has a reason to invest in better content or advertising, because any sale it creates can go to a competitor on the same listing.

Selling direct, under your own brand account, is usually the fastest way to fix that. Done badly, it is also the fastest way to lose a distributor.

Amazon is an extra channel. In my experience, retailers are not annoyed by a manufacturer selling on Amazon. They are annoyed by a manufacturer undercutting them there.

Channel conflict: what upsets distributors, and what doesn’t

The conflict is almost always about price, so most of the fixes are about price and range.

• Do not undercut your trade customers. Set your Amazon price at or above the price your retailers typically charge. You collect the retail margin as well as the manufacturing margin, so you rarely need to be the cheapest.
• Differentiate the range, not the price. Give Amazon its own pack sizes, multipacks and bundles, each with its own barcode, that your trade customers do not stock. A 4-pack or a starter kit cannot be compared line for line with a single unit on a retailer’s shelf.
• Keep a “do not list” list. Agree internally which products stay with trade partners, for example a range that one key account depends on.
• Tell your key accounts first. Explain what you will sell direct, at what price level, and why it grows the brand for everyone. Silence is what turns a channel decision into a relationship problem.

There is one Amazon rule to plan around. Amazon’s fair pricing policy says that setting a price “significantly higher than recent prices offered on or off Amazon” harms customer trust, and that Amazon may respond by removing the Buy Box, removing the offer or, in serious cases, suspending the account⁸. Our guide to the Amazon Buy Box explains how the Featured Offer is chosen. So you cannot simply list the same single unit on Amazon at a much higher price than your retailers charge online and expect it to win the sale. That is another reason to give Amazon distinct pack sizes rather than a premium-priced copy of the trade range.

What UK competition law lets you do about reseller prices

This is where many manufacturers, and many agencies, go wrong. Old sales pages, including some of ours, talked about “enforcing MAP pricing” on resellers. In the UK that is a legal risk, not a strategy.

The Competition and Markets Authority (CMA) defines resale price maintenance (RPM) as a supplier requiring a retailer not to resell its products below a specified price, and says RPM can be imposed indirectly, “for example through restricting the prices retailers can advertise products at"¹. Its guidance lists three indirect forms: limiting how far a reseller can discount, preventing or limiting the advertising of lower prices online (“minimum advertised price policies”), and linking a reseller’s price to what other retailers charge¹. In its guidance on the vertical block exemption, the CMA states that “MAPs will therefore be treated by the CMA as an indirect means of applying RPM"², and its open letter warns that suppliers and retailers can both face serious consequences⁴.

The CMA’s own examples include a £1.5 million fine for Dar Lighting for preventing online discounts, and a £278,945 fine for GAK, a musical instrument reseller, for agreeing with Yamaha not to discount online¹.

The CMA describes selective distribution, supplying only retailers that meet set criteria, as a legitimate arrangement that does not usually raise concerns in its own right, as long as it is not used to fix prices¹. Its block exemption guidance lists “a direct or indirect ban on the use of online marketplaces” among the online-sales restrictions that can benefit from the exemption². That exemption only applies when neither the supplier’s nor the buyer’s market share exceeds 30% of the relevant market³, and when the agreement contains no hardcore restrictions such as RPM.

Controlling who sells your brand on Amazon

Brand Registry is the foundation. To enrol in the UK you need your brand name or logo permanently on the product or packaging, and a pending or registered trademark from the trademark office of a country with an Amazon store⁵. It gives you more control over your product pages, brand-building tools such as A+ Content, Brand Stores and Sponsored Brands, and the protection tools below⁵. Our Brand Registry guide covers enrolment step by step.

Report a Violation lets you detect and report suspected infringement of your intellectual property⁵.

Transparency puts a unique code on every unit you make. Once a product passes Amazon’s operational review at 98% accuracy, every unit must carry a valid code, and Amazon requires all sellers to provide your brand’s codes before units can be listed or shipped, whether fulfilled by Amazon or by the seller⁶. In the UK you can connect your existing serial codes instead of printing Amazon’s⁶. It also blocks units made for other countries’ stores and materially different versions⁶, which helps if grey imports undercut your UK range. Our guide to Amazon Transparency and Project Zero covers costs and eligibility.

Project Zero lets eligible brands remove counterfeit listings themselves, immediately. Amazon is explicit that the tool “should only be used to remove counterfeit listings”, and users must keep an accuracy rate of at least 99%⁷.

What none of these tools does is remove a reseller who is selling your genuine, unaltered products. In our experience, Amazon treats that as a commercial matter between you and your distribution chain. The levers that work are upstream: which businesses you supply, the marketplace terms in your distribution agreements (within the limits above), and giving Amazon shoppers an offer from you, with packs and content resellers cannot copy.

Vendor or Seller: decide per product

Manufacturers often get a Vendor Central invitation, and it can be the right route for some lines. The key point for channel conflict is that on Vendor Central Amazon sets the retail price; on Seller Central you do. If a product is also sold by trade customers at a carefully managed price, keeping it on Seller Central keeps the price decision with you. We have set out the full per-product comparison, with worked examples, in Vendor Central vs Seller Central, so we will not repeat it here. If you take the invitation, our guide to Vendor Central UK covers purchase orders, the terms you negotiate and the chargebacks to watch.

Build the catalogue for Amazon, not from the price list

A trade price list is organised for buyers who order by the case. Amazon shoppers browse, compare and buy in small quantities, so the catalogue needs reshaping.

Variation families. Amazon’s UK rules say the products in a family must be the same brand and product type and “functionally identical”, differing only in aspects such as colour or size. Only manufacturer-created multipacks are valid “item package quantity” variations, and families with more than 4,000 child products are not displayed on the product page⁹. As the manufacturer, you can create pack-size variations that resellers cannot.

Multipacks and case packs for order value. If customers usually buy several units, selling them one at a time multiplies fees, picks and parcels. Here is the effect for a product that shoppers typically buy in fours.

The referral rate, VAT treatment and 2% digital services fee follow Amazon’s UK fee schedule¹⁰; the fulfilment fees and costs are illustrative. The same four units leave £3.05 more, about 27% more profit, while the shopper pays 13% less than four singles and Amazon handles one parcel instead of four. Check your own fee bands, because some UK categories now charge lower referral rates on cheaper items¹⁰.

One rule to respect: Amazon’s fair pricing policy lists “selling multiple units of a product for more per unit than that of a single unit” as a practice that harms customer trust⁸. Price every multipack below the single-unit price per unit.

Prioritise the catalogue. In large catalogues we give full content, A+ and advertising to the products that already sell, usually a small share of the range, and make sure the long tail has accurate titles, attributes and images. Business buyers are often a large share of a manufacturer’s Amazon demand, so set up business pricing and quantity tiers early; our guide to selling on Amazon Business covers how¹⁴.

FBA, Seller Fulfilled Prime or your own warehouse

Many manufacturing warehouses are built to ship pallets to trade customers, not single parcels to homes. That makes the fulfilment decision more important than it is for a typical online brand.

• Fulfilment by Amazon (FBA). You send stock in bulk; Amazon’s fee covers storage, picking, packing, shipping and customer service. Multi-Channel Fulfilment lets Amazon also fulfil orders from your own website and other channels from the same stock¹¹.
• Seller Fulfilled Prime. You keep the Prime badge while shipping from your own UK warehouse, but the bar is high: over 99% of orders shipped on time, a cancellation rate below 0.5%, Amazon Buy Shipping on at least 98% of orders, supported carriers, Amazon’s returns policy and a trial period before the badge appears¹².
• Your own fulfilment without Prime. Workable for bulky, slow-moving or made-to-order lines, usually at a lower conversion rate.

The common answer in the accounts we run is a mix: FBA for the fast movers and multipacks, own fulfilment for bulky or slow lines, reviewed every quarter. Our inventory management playbook covers stock levels and replenishment.

Working capital: the part your finance director will ask about

Selling direct changes the cash cycle. Instead of shipping a pallet and invoicing a distributor, you fund stock sitting in Amazon’s network, pay fees out of each sale, and spend on advertising before you see a return. Amazon’s standard reserve policy releases a seller’s funds seven days after delivery¹³, so the gap is mostly the time stock waits to sell, not the time Amazon takes to pay.

Two habits keep this under control. First, judge each product on profit after Amazon’s fees and advertising, not on revenue; our guide to break-even ACoS shows the method, and the Profit X-Ray runs it on your own figures. Second, grow the range in phases, funding the next phase from the products that have already proved themselves.

A phased plan

Each phase ends with a review of profit per product, reseller pricing and feedback from trade customers. If one of those turns bad, slow down before moving on. Our launch guide covers the first 90 days of a new product in more detail.

The manufacturers that do well on Amazon treat it as a channel with its own range, its own prices and its own cash plan, not as another outlet for the trade price list. Get those three right, keep your distributors informed, and the direct channel tends to support the wholesale business rather than compete with it.