Why Having Fewer 3rd Party Sellers Will Increase Sales
Why Having Fewer 3rd Party Sellers Will Increase Sales
Click the button below to schedule a meeting and get your Brand Vitals Snapshot
Click the button below to schedule a meeting and get your Brand Vitals Snapshot
Partner with us and discover just how much we can increase your brand reach and monthly profit.
Partner with us and discover just how much we can increase your brand reach and monthly profit.
If your brand relies on 3rd party sellers to sell your products on Amazon, it’s critical to understand how the number of sellers on any given product listing will impact sales, pricing, customer service, and brand equity in general.
Generally speaking, the larger the number of sellers, the less control your brand will have over pricing, content, promotions, advertising, and customer service.
If your brand relies on 3rd party sellers to sell your products on Amazon, it’s critical to understand how the number of sellers on any given product listing will impact sales, pricing, customer service, and brand equity in general.
Generally speaking, the larger the number of sellers, the less control your brand will have over pricing, content, promotions, advertising, and customer service.
© 2019 Life Magnitude Inc. | All rights reserved. | PS - You rock
© 2019 Life Magnitude Inc. | All rights reserved. | PS - You rock
The Race to the Bottom on Price
The more sellers you have competing for the buy box, the faster these sellers are going to start creating a race to the bottom on price, violating MAP pricing policies and pissing off your offline retailer partners in the process.
With just one or two sellers, there is no need to compete for the buy box, and therefore, there is no reason to deviate from MAP pricing – and that means fatter margins for you because they won’t be asking for wholesale discounts in order to compete in the race to the bottom.
In the image above, you’ll notice that in the pie chart on the left, each slice of the pie is quite small; whereas over on the right, two sellers are splitting the pie 50/50.
In which case do you think sellers have more money available to spend on advertising your product?
Obviously not the one of the left!
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 guarantees 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
How well your Amazon product listings are optimized will influence both how well your products rank in Amazon’s search results as well as how well potential buyers convert once they do find your product pages.
With multiple sellers on any given product listing, no one seller has any ‘ownership’ or incentive to put time and resources into optimizing the product listing to its fullest.
The Race to the Bottom on Price
The more sellers you have competing for the buy box, the faster these sellers are going to start creating a race to the bottom on price, violating MAP pricing policies and pissing off your offline retailer partners in the process.
With just one or two sellers, there is no need to compete for the buy box, and therefore, there is no reason to deviate from MAP pricing – and that means fatter margins for you because they won’t be asking for wholesale discounts in order to compete in the race to the bottom.
In the image above, you’ll notice that in the pie chart on the left, each slice of the pie is quite small; whereas over on the right, two sellers are splitting the pie 50/50.
In which case do you think sellers have more money available to spend on advertising your product?
Obviously not the one of the left!
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 guarantees 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
How well your Amazon product listings are optimized will influence both how well your products rank in Amazon’s search results as well as how well potential buyers convert once they do find your product pages.
With multiple sellers on any given product listing, no one seller has any ‘ownership’ or incentive to put time and resources into optimizing the product listing to its fullest.
No Control of Your Promotions
No Control of Your Promotions
If you have multiple sellers on each product listing, how are you going to control and coordinate all the promotions you’d like to run on Black Friday, Prime day, Valentine’s Day, Mother’s Day, etc…?
With multiple sellers, the reality is that you can’t control what they are all going to do, and in all likelihood they aren’t going to coordinate with each other, thereby resulting in a complete lack of any cohesive promotional strategy.
If you have multiple sellers on each product listing, how are you going to control and coordinate all the promotions you’d like to run on Black Friday, Prime day, Valentine’s Day, Mother’s Day, etc…?
With multiple sellers, the reality is that you can’t control what they are all going to do, and in all likelihood they aren’t going to coordinate with each other, thereby resulting in a complete lack of any cohesive promotional strategy.
To illustrate, consider a very simple example. If each product listing is a pie, and each slice is a seller, why would a seller bother making a larger pie if they are only getting one slice?
Whereas, if the seller’s ‘slice’ is, in fact, the entire pie, the seller has serious incentive to do everything they can to make the biggest pie possible.
To illustrate, consider a very simple example. If each product listing is a pie, and each slice is a seller, why would a seller bother making a larger pie if they are only getting one slice?
Whereas, if the seller’s ‘slice’ is, in fact, the entire pie, the seller has serious incentive to do everything they can to make the biggest pie possible.
Inconsistent Customer Service Levels
When consumers purchase your products on Amazon and they have a problem or a question, they are going to contact the seller via email.
Inconsistent Customer Service Levels
When consumers purchase your products on Amazon and they have a problem or a question, they are going to contact the seller via email.
What Results Should I Expect?
The results you’ll see from your Amazon advertising campaigns will vary widely depending on the search volume and level of competition.
You can find detailed analysis of a product launch here.
What Results Should I Expect?
The results you’ll see from your Amazon advertising campaigns will vary widely depending on the search volume and level of competition.
You can find detailed analysis of a product launch here.
Discover how to stop unauthorized online sellers from violating your MAP policy
Discover how to stop unauthorized online sellers from violating your MAP policy
The Negative Impact of Multiple Sellers
Whenever I talk to brands that sell their products on the Amazon marketplace, they are often surprised to learn that having more sellers on each product listing is a bad thing. Many mistakenly assume that having more sellers will somehow increase exposure – and therefore increase sales.
Nothing could be further from the truth.
Consider the following…
The Negative Impact of Multiple Sellers
Whenever I talk to brands that sell their products on the Amazon marketplace, they are often surprised to learn that having more sellers on each product listing is a bad thing. Many mistakenly assume that having more sellers will somehow increase exposure – and therefore increase sales.
Nothing could be further from the truth.
Consider the following…
Demand is Not a Function of the Number of Sellers
Amazon is nothing more than a consumer product search engine, and as such, the number of sellers of your product has zero 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.
Demand is Not a Function of the Number of Sellers
Amazon is nothing more than a consumer product search engine, and as such, the number of sellers of your product has zero 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.
So if having more sellers doesn’t increase sales volume, what does it do?
So if having more sellers doesn’t increase sales volume, what does it do?
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.
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.
With just one seller on each of your products listings, product promotions can be strategically planned in advance. 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.
With just one seller on each of your products listings, product promotions can be strategically planned in advance. 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.
They key thing to remember is that these consumers won’t necessarily realize that they aren’t communicating with your brand, so if the customer service they receive is below expectations, they are going to blame your brand!
With multiple sellers on a product listing, it will be nearly impossible for you to ensure a consistently positive customer experience. Instead, your 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, you can rest assured that customer service levels are going to be exactly where they need to be to build the brand equity you need to maximize the growth of your company.
They key thing to remember is that these consumers won’t necessarily realize that they aren’t communicating with your brand, so if the customer service they receive is below expectations, they are going to blame your brand!
With multiple sellers on a product listing, it will be nearly impossible for you to ensure a consistently positive customer experience. Instead, your 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, you can rest assured that customer service levels are going to be exactly where they need to be to build the brand equity you need to maximize the growth of your company.