Understanding the dynamics of selling on Amazon is very important and understanding how the number of 3P sellers for your brand can impact sales, brand equity, customer service and pricing.
The more number of sellers, the less control you have over your brand in terms of pricing, content, promotions, advertising, and customer service.
The Downside of Having Multiple Sellers
Spreading your brand too thinly in the Amazon Marketplace with a lot of sellers can be dangerous. You get to have your hands full monitoring your 3P sellers instead of focusing more on the growth of your brand.
More sellers mean more exposure? Not really, here are some reasons why.
Consumer Demand is not dictated by the Number of Sellers
Amazon is nothing more than a consumer product search engine, and the number of sellers of your brand has no impact on the number of times a given search term(s) is typed into Amazon’s search box.
Instead, demand is driven entirely by consumer’s search actions.
This is what actually happens…the demand is spread amongst all of the sellers, with no one winner. However, in an attempt to capture more sales, the different sellers acting in their own interest start to compete aggressively.
Racing to the Bottom on Pricing
The more sellers competing for the buy box, the faster these sellers start racing to the bottom on price, violating MAP policies and negatively affecting your offline retailer partners in the process.
With one or two sellers, there is no need to compete for the buy box, and therefore, no reason to deviate from MAP pricing, which means bigger profit margins because they won’t be asking for wholesale discounts to compete in a price-lowering chase.
Fewer Sellers Means More Focus on Ad Spend
If you want to increase your product’s market share, ensure you have as few sellers as possible and ensure that the ones you do have are committed to investing a portion of their profits into advertising your product.
Having too many sellers guarantee that each seller will not have enough profit to justify creating ad campaigns – and your product’s market share will stagnate, or possibly even decrease.
No Listing Ownership / Optimization
The quality of your Amazon product listings influence how well your products rank in Amazon’s search results and determine how potential buyers are converted to customers once they reach your product pages.
With multiple sellers on any of your product listings, not one seller has the responsibility to take ‘ownership’ of optimizing your product listings or invest in time and resources to optimize product listings to its fullest.
In other words, by having just one seller who owns the buy box, that one seller is every bit as motivated as you are to do everything possible to maximize sales.
No Control of Brand Promotions
If you have multiple sellers on each product listing, it would be daunting to manage and monitor your promotions during holidays or special occasions, such as New Year, Black Friday, Valentine’s Day, etc.
With multiple sellers, it’s becomes more difficult to control what sellers are going to do and are less likely to coordinate with each other, resulting in a complete lack of any cohesive promotional strategy.
With just one seller on each of your products listings, product promotions can be strategically planned. Then when it comes time to run the promotion, the mutually created plan is executed and results are measured; thereby giving you the much-needed data to make better decisions about future promotions.
Customer Experience is At Risk
When consumers purchase your products on Amazon and they have a problem or a question, they are going to contact the seller via email.
It is critical to remember is that these consumers won’t necessarily realize they aren’t communicating with your brand, so if the customer service they receive is below expectations, they are going to blame the brand, not the seller.
With multiple sellers on a product listing, it will be nearly impossible to ensure a consistently positive customer experience. Instead, brand reputation will be the result of the collective experience that thousands of customers have with companies. You have very little control over this experience, and will not be able to build the trusted relationship you would expect to have with just one or two authorized sellers.
With a single trusted seller on each product listing, customer service levels are going to be exactly where they need to be to build the brand equity to maximize the growth of your brand.
The more sellers on your product listings, the less control you are going to have that can negatively impact your brand in the long term, cause price wars, affect customer service, and aggravate brick & mortar retail partners.
It’s better to find a preferred 3rd party seller, grant them exclusivity – once they are proven worthy then work with them to systematically remove all the unauthorized sellers that are currently on your product listings.
We Can Help!
At Jim’s Whims, we have demonstrated experience spanning years assisting brands with Amazon and eBay.
Additionally, we can bring value to our brand partners by improving Amazon listings optimizations and Pay Per Click (PPC) Advertising campaigns at a very reasonable cost while building your brand with your image. We’re upbeat about the future, and would love to talk further, call us at (469) 487 8221
About Jim’s Whims
We’ve built relationships on trust, results, and a long-term vision for growth and sustainability. Ultimately, we are passionate about creating a business of quality endeavor and connectivity. This is how we seek out partnerships with brands and distributors; a genuine, personal investment in the lives of customers. We will get to know you. You will get to know us. Let’s get to mixing!
By: The Team @ Jim’s Whims