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More than 300 million customers shop Amazon today — surely such an opportunity to access so many new customers would be enticing to most brands. Yet, for leaders of recently launched brands, there is usually consternation around what to do with the Amazon channel.
Common questions include:
“Should we sell on Amazon?”
“What happens if we don’t sell on Amazon?”
“Won’t selling on Amazon hurt sales on our own website?”
To understand the impact Amazon has on brands of all sizes and shapes today, here are three key Amazon issues affecting brands today.
1. Your brand will be sold there, somehow.
First, whether your brand is already popular or will be in the near future, expect someone will sell your brand on Amazon, whether you want to see your products there or not. As an open marketplace, Amazon welcomes practically anyone to sell practically any brands or products on the site — and those re-sellers can operate under a display name that offers them anonymity as re-sellers. Amazon doesn’t care how or where a re-seller sourced those items, as long as the items are not counterfeit, expired or sold under an incorrect product condition. In fact, Amazon will bluntly tell brands that the presence of unauthorized re-sellers is not Amazon’s problem — it’s up to the brand to control its own distribution channels and agreements.
By minimizing the restrictions for being a reseller, Amazon has successfully attracted millions of resellers offering products to the Amazon customer. While more than 480 million different items have entered the Amazon catalog, it is the presence of so much competition across these items that has led to intensive price competition across resellers, and ultimately lower prices for Amazon customers.
As brands become more popular, they tend to be available in more channels and individual retail outlets, each of which is a potential source of product that can be ultimately directed or diverted onto Amazon. Stopping a popular brand from ever showing up on Amazon is akin to pulling the product completely out of all distribution channels — yes, sales success outside Amazon will increase the likelihood someone decides to sell your brand on Amazon. It can be an easy sale to a huge customer base, all done without the reseller having to make itself identifiable to the brand.
2. You need to control distribution actively from the beginning of time.
Young brands need to grow, and that often involves making short-term decisions that have long-term ramifications. One such common decision is filling all purchase orders from all interested re-sellers, without adequate attention to where that product is actually going to be sold.
Remember that part about your brand becoming more popular over time? Many brands want the sales growth to continue, and don’t put enough restrictions in place over which retailers and distributors are buying product from the brand. If the brand has a minimum advertising price (MAP) policy, that’s fine for trying to keep authorized resellers in line, but what happens when unauthorized resellers (or authorized resellers selling under indeterminate, disguised names) show up? U.S. trade law provides resellers with First Sale Doctrine — the concept that anyone can buy a product and retain the right to resell it (as long as the item is not altered), even if the product’s trademark owner doesn’t want that item to be resold. This concept is fully leveraged by most unauthorized resellers online, allowing them to source product and resell it, often at lower prices than what the brand seeks to have as its minimum sales price.
I encourage every new brand to invest in a trademark attorney who can develop an online re-seller policy with anti-diversion language. If the brand adequately polices its distributors and retailers using this legal tool, the brand is much more likely to reduce the risk of product diversion, and more likely to scare away unauthorized re-sellers who might view the brand as yet another way to make a quick buck.
3. Your brand content on Amazon really matters.
Whether authorized or not, someone eventually will offer your brand for sale on Amazon. And when it does, that reseller will set up product listings that describe your products and your brand. Through images and text, that reseller will determine how your brand promises are communicated in the Amazon listings of your products. Rarely will any reseller represent your brand as well as you will do as the steward of your brand. As I have seen all too often, Amazon listings get so highly indexed in Google that is not uncommon for a brand’s listings on Amazon to show up higher in both organic search and pay-per-click results than the brand’s own website pages.
With Amazon-provided tools like Brand Registry available for trademark-registered brands to lock down their branded content in the Amazon catalog, it is paramount to invest the time to make sure your brand is properly represented across all listings in the Amazon catalog. Even if you don’t want your brand sold on Amazon, remember the first truism of brands on Amazon — someone will eventually sell your product on Amazon, and some form of product listing will get used to represent your products. So, make sure to secure that content, and ensure that it is consistent with all of the branding efforts you have so diligently put in place in every other online or offline sales channel.
Amazon is here to stay as a sales, branding and advertising channel. For brands that actively develop and manage an Amazon strategy that incorporates proper branding and active channel governance, these are the brands that will positively leverage Amazon for what it can offer brands today.