By Martin Heubel, Amazon Strategy Consultant at Consulterce
No, Amazon is not eroding your brand’s profit margin. It’s your distribution strategy with other retailers that does.
The online retailer only reflects how poorly you control your distribution.
It’s a tough pill to swallow, but the truth is:
Amazon is not a retailer. It’s a marketplace that connects existing demand with your supply as a manufacturer.
If your distribution strategy is to sell everything to everyone, it’s no wonder you face Buy Box suppressions, requests for margin support, and difficult vendor negotiations.
Whilst it’s tempting to think that switching to 3P is the solution, it’s likely to make matters worse. That’s because it tackles the symptom, not the structural defect (i.e. the lack of distribution control).
Instead, start reviewing:
- Who you sell your products to
- What discounts you grant distributors
- Which products you list on Amazon
If you’re pointing fingers at Amazon because you think they’re taking away all your margins…
…then perhaps you got it wrong from the start.
For further information and support, contact Martin Heubel here
