As I’ve (hopefully!) made clear over the last couple of blog posts, there are many decisions a business owner faces when it comes to selling on Amazon. (You can find out the cold hard facts about how you cannot NOT sell your products on Amazon and more about what retail and online arbitrageurs are doing to your brand here, and if FBA or FBM is better for your business here.) Today, we’ll look into HOW your brand is sold by looking over three options and their pros and cons.
Option 1. You sell the product, using your own Seller Central account with no other sellers.
This is a great method as long as someone in your business knows how to sell on Amazon (and, perhaps more importantly, has the time to do it). As you can surely imagine, there are a lot of potential pitfalls involved in selling on Amazon, so having someone on board who really understands how to do it is key (and a huge asset to any business!). In this method, your brand creates a Seller Central account on Amazon, and you sell your products from there.
Do you love a pros-and-cons list as much as we do when a decision must be made? Let’s do it!
- First up is a big one: customers like to see the brand and the seller as the same! They like the confidence of knowing that they are buying directly from the brand. I’ve seen sales increase when a brand starts selling their own products, even without any other changes being made to the products or the account! For example, see the listing right over here. --->
- If you sell your own products on Amazon, you retain complete control over how the listings look. You also have complete control over the pricing.
- Your Amazon Seller cares about your brand as much as you do. (Literally!)
- You need to allocate time and resources to managing an Amazon account.
- You can’t take advantage of other companies buying your product and selling it. What I mean by this is: if your brand has resellers, the resellers buy and sell your product, freeing up your capital immediately, instead of your business owning the product until it sells to the end customer. It’s better for cashflow for a brand to sell to resellers.
- Unless you are hiring someone to run your Amazon account or committed to becoming an expert yourself, you are potentially missing out on strategies to dramatically increase sales on Amazon. There’s a lot more to it than just listing products and waiting for them to sell.
Option 2. You choose an exclusive Amazon seller, either by having the exclusive seller sell under their own seller account or by having the exclusive seller sells on the brand's seller central account.
This is a good option for brands that would rather focus on other aspects of their businesses (and, as business owners, we all know there is no shortage of those!), such as developing products, carrying out marketing initiatives, or improving customer service.
A word of warning for this method: I always suggest that, even if your brand wants to completely outsource your Amazon sales, you still create the product listings on your own Seller Central account. (This gives you control over your listings in the event that your relationship with your exclusive reseller ends for some reason.) My biggest piece of advice for this option is to not have resellers list your products on their account.
What’s that you say? You’d like another pros-and-cons list? Buddy, you got it!
- When you outsource selling on Amazon, you free up time to focus on developing your products (and other areas of your business).
- You still have control over pricing, since there is only one other seller.
- Your brand sells at wholesale prices to the reseller and potentially misses out on higher margins than if you sold your brand directly on Amazon.
- If the reseller creates the listings on their own account, your brand risks losing control of your listings if your relationship with the reseller ends.
Option 3. You use two or more carefully chosen resellers.
As you move from only selling yourself to having one trusted reseller to multiple resellers, the level of control you have over your listings diminishes. Having more than one reseller makes sense if you have products that are extremely hot sellers (in which case, congrats!), and there is a chance that the inventory of only one or two sellers could run out. If you already have established dealers selling your products on Amazon, you can establish a list of certified Amazon sellers—although we do recommend keeping the list relatively short and well-curated. Policing multiple sellers can get difficult. It's easier for one reseller to lower their price (break MAP) for some reason, and then force other resellers to lower their prices to sell their inventory. Also, if there are multiple sellers, any one of them could suggest changes to the listings that could cause the listing to change.
You may have noticed (and we hope you have!) that at Grand Portage Trading Co., we believe selling on Amazon is a series of choices, none of which are necessarily “good” or “bad,” but more “right” or “wrong” for your particular brand and business. That said, we DO see companies with the following completely unrecommended Amazon policies:
- Don’t: Make a policy that a reseller needs to have a brick-and-mortar store to be able to sell your products on Amazon. Creating an online business is completely different than creating a brick-and-mortar store, so don’t confuse the two.
- DO: Choose resellers you trust, who have proven track records, wide knowledge bases of online sales, and true expertise in selling on Amazon.
- Don’t: Allow ALL your dealers to sell your brand on Amazon. Unless you have a curated list of authorized resellers, it’s tough to monitor your pricing on Amazon. It’s far better to choose a few companies that are skilled in online sales and fully invested in your brand.
- DO: Leverage the expertise of companies that specialize in selling on Amazon. Let them focus on what they do best, so you can focus on what you do best.
So HOW will you choose to sell on Amazon?
Believe me when I tell you: navigating selling in the Amazon Marketplace is overwhelming! I know it first-hand. It’s a new skill set—even people with MBAs and decades of experience have felt the learning curve with the seemingly exponential growth and development of this sales avenue. The good news is: there is so much knowledge out there. (We understand, of course, that this is part of what makes it so overwhelming—that’s where we come in!)
Not sure which one is right for you? Want to talk through it with someone? I'm Matt Bussey, founder and CEO of Grand Portage Trading Co. I find the whole world of business fascinating, and I love to talk to people about it. Send me an email, and we can set up a free consultation.