By Martin Heubel, Amazon Strategy Consultant at Consulterce
Most vendors are looking for the magic profitability bullet for their business with Amazon.
The problem with this?
It’s a fairy tale told by agencies and service providers.
I see this all the time:
1P sellers are told that a 3P business would be more profitable.
3P sellers are advised that 1P is the solution to keep scaling.
Brands that have tried both are told a DTC approach with Buy with Prime (BwP) is the way to higher profit margins.
But here’s the problem:
- 1P doesn’t scale if you don’t know how to negotiate,
- 3P is not automatically more profitable, and
- DTC requires a very different set of skills.
None of these generic recommendations should be taken seriously in the first place.
This is because each model serves different organisational constellations for brands with different capabilities.
So just because your #1 competitor is adopting a hybrid strategy with Amazon, don’t assume copying their decision will also lead to better margins for your business.
The opposite is true if your business model and internal capabilities are just an inch different.
For further insight and support, contact Martin Heubel here
