One of the most common questions for brands who currently or plan to sell on Amazon is, “How many retailers should I sell my product to?” The obvious answer is “as many as possible,” but obvious doesn’t mean best. In reality, having unlimited sellers can actually be extremely detrimental to a brand’s overall health on Amazon, as well as in brick and mortar stores.
Pros and Cons of Partnering with Many Third-Party Sellers
When a manufacturer partners with multiple retailers, a few things happen:
You receive more Purchase Orders
More sellers, more purchase orders. Depending on their inventory management strategies, you may receive a single large PO a few times a year or receive smaller, more consistent POs every month. Bear in mind that with multiple sellers, each seller’s respective purchase order will be smaller than it would be with fewer sellers.
You become increasingly vulnerable to exploitation
With many sellers, counterfeiters have an easier time mixing with your inventory and it’s easier for unauthorized sellers to acquire inventory. The combination of these effects harms your brand integrity and can rapidly erode customer trust, harming your brand’s sales both online and in physical stores.
Your marketing becomes less effective
While you may be on friendly terms with all of your sellers, they’re each other’s competitors. With multiple sellers in the same listing, their sponsored ads compete against each other, driving the bids higher. Because they’re bidding against each other to sell the same product, they’re effectively wasting marketing dollars that could otherwise be used to help you outperform your competitors.
Your brand control wanes
More sellers means more people have the ability to edit your listings and interact with your customers. Some sellers will have more effective strategies than others, but their ability to execute those strategies will be hampered when their optimization efforts can be changed at any time by another seller. Additionally, it becomes more difficult to enforce your pricing policy.
Pros and Cons of Partnering with an Exclusive Third-Party Seller
You streamline your Purchase order process
Rather than having multiple sellers place POs, you can develop the ideal process with one exclusive seller, which can help expedite shipment processing, reduce labor, and streamline accounting, saving you time and increasing productivity. Combined with the other benefits of an exclusive partnership, you’re positioned to surpass the income you’d receive from multiple sellers placing POs.
You’re better protected
A single seller minimizes the risk of counterfeit product entering your distribution chain or rogue sellers acquiring inventory. By plugging those holes in your supply chain, you have better quality control for your customers’ experiences.
Your marketing is more powerful
Sponsored Product ads run only while a seller is in the Buy Box, which means that your sponsored ads’ impact is far more efficacious with a single seller because any traction the ads build is aggregated into a single seller.
You retain maximum brand control
By limiting sellers, you limit access to who can edit your listings, thereby protecting your brand control and brand image. You also have a much easier time in maintaining your pricing policies with a single, trusted seller.
These factors demonstrate the advantages of working with fewer sellers, with an exclusive seller often being the most beneficial for achieving both your short-term goals and long-term vision.
You can read about the different ways an exclusive retail partnership can dramatically improve your product visibility on Amazon in our blog post, How Relevant Are You? The Art and Science of Amazon Search.
If you want to request an Amazon brand audit and learn how Kaspien can elevate your Amazon business, reach out through our contact form.
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