Amazon Agency vs Amazon Retail

Expansion into Ecommerce has Accelerated 

Before 2020, ecommerce had been steadily growing its share of all retail. But when the coronavirus hit and countries around the world issues stay-at-home orders, it forced consumers and businesses to turn to online sales channels in numbers never seen before. As a result, we’ve seen an acceleration in brand and consumer adoption of ecommerce.

Road Bumps Along the Way 

But, 2020 also saw brands face many hurdles on online marketplaces. Amazon struggled to keep pace with the surge in purchases, and they had to restrict which types of products they would accept into their fulfillment centers for a time. Amazon’s first-party (1P) division, Amazon Retail, and third-party sellers (3Ps) alike struggled to remain in stock as supply lines locked down, manufacturing was interrupted, and consumer demand skyrocketed for products well outside of their typical peak season.  

Charting a New Course 

After the turbulence of 2020, many brands are reconsidering their approach to ecommerce. To help brands make an informed decision, we’ve put together a list of the key factors that brands should consider when deciding if they should work with an Amazon retailer (1P or a 3P) or transition to working with an Amazon agency.

Should You Work with an Amazon Retailer? 

Now that we’ve covered the primary options, let’s dig into key factors for making a decision about working with an Amazon retailer, an Amazon agency, or transitioning from one to another. 

What is an Amazon Retailer? 

Starting from the top, when a brand partners with a retailer, the retailer buys product from the brand at wholesale prices, then sells it for retail prices on Amazon.  

The brand’s profits are payment for their product, minus the cost of manufacturing. The retailer’s profit is the consumer’s payment for the product, minus the wholesale expenses and channel management costs, which includes things like shipping, storage, fulfillment, commission, and marketing fees. 

When it comes to Amazon, brands that sell through a retailer can partner with Amazon directly (first-party or 1P) or with a third-party seller (3P). Learn about their key differences in our blog post, Amazon 1P vs 3P. 

Many brands choose to sell through a retailer because it provides cash up front, and the brand doesn’t have to get involved in the hassle of actively managing an Amazon channel. 

Pros of an Amazon Retailer 

Let’s start with the pros for partnering with an Amazon retailer (1P or 3P): 

  • Paid upfront via a retailer’s purchase order, which can be useful for funding manufacturing costs 
  • Not responsible for managing consumer-facing sales channel (fewer infrastructure costs) 
  • They handle online sales tax 
  • They are already registered for international value-added taxes (VAT), making international expansion much faster 
  • They provide the expertise and resources  
  • Perhaps the simplest way to start selling on Amazon 

Cons of an Amazon Retailer 

Now for the potential cons of working with an Amazon retailer (1P or 3P): 

  • Limited control over your brand’s representation online 
  • Limited control over product pricing 
  • Limited visibility into channel performance 

It’s worth noting that some of the cons of working with a retailer can be mitigated by partnering with a trustworthy partner. If you’re interested in this business model but concerned about the cons, seek out a retailer that’s committed to building a healthy relationship with your brand. 

Costs of an Amazon Retailer 

As mentioned, in a retail model, the retailer pays the brand for their product. However, retailers may ask for various discounts from the brand so they can pay the numerous Amazon fees (commission, shipping fees, tiered storage fees, and fulfillment fees) while still having some margin left over to generate revenue for themselves.   

Making a Decision 

Work with an Amazon retailer if: 

  • You want to focus on the manufacturing and brick and mortar side of your business, while they handle taking your products to market 
  • You don’t want to be responsible for paying shipping, storage, fulfillment, and commission fees 
  • Your business’s cashflow model relies on large purchase order payments 
  • You want to expand sooner rather than later into foreign markets 

Should You Work with an Amazon Agency? 

If you’re not interested in starting with a retailer or you’re working with a retailer and want to take more ownership of your Amazon channel, you may consider working with an Amazon agency. 

What Value does an Amazon Agency Add? 

Now, let’s say a brand doesn’t want someone else representing them on Amazon; they want to sell their products themselves. That’s an increasingly popular decision, and one that we’ve seen more and more brands transition to in recent years.  

However, there’s a challenge in representing yourself. Managing an Amazon channel requires three things that can be hard to come by: 

  1. Personnel: You need bodies dedicated to managing your Amazon channel. If you’re using existing personnel, what projects are you pulling them off of? If hiring new personnel, you need the budget for salaries and benefits. 
  2. Expertise: At over 25 years old now, Amazon is a mature marketplace that requires complete attention. With millions of sellers on the platform, you must enter the platform with a strong understanding of the landscape and strategies if you want to succeed. 
  3. Time: If you manage your brick-and-mortar relationships, do you have time to also manage your ecommerce relationships (and critically, keep the two in balance so that one relationship doesn’t sour the other)? 

 

If you lack in any of the above, then you may need outside help to fill in the gaps. That’s where Amazon agencies come in.  

What is an Amazon Agency? 

Amazon agencies can typically offer services in two ways: complete Amazon management or selected services. The former means that they provide everything needed to run every aspect of your Amazon channel. The latter means they provide only a handful of services that you specifically need help with, such as managing your Amazon advertising campaigns, while you handle the rest. 

Pros of an Amazon Agency 

Pros for partnering with an Amazon agency: 

  • More control over your brand’s representation online 
  • More control over product pricing 
  • Increased visibility into channel performance 
  • Your profit margin may exceed that of a retail model 
  • They provide the expertise and resources 

Cons of an Amazon Agency 

Cons for partnering with an Amazon agency: 

  • You’re paying the agency instead of having a retailer pay you 
  • You may be responsible for inventory and supply chain management (some agencies offer this service, but not all) 
  • Since you are selling through your own Seller Account, you are responsible for collecting and remitting online sales taxes 
  • You’re also responsible for VAT in international markets, slowing your ability to expand internationally 

When determining if you’re willing to pay for an agency’s help, think of it as an investment. If you pick the right investment, it may set you back at the start, but soon, it will pay for itself and then some. 

 

Costs of an Amazon Agency 

In an agency model, the brand pays for all the Amazon fees themselves (commission, shipping, storage, fulfillment, marketing), but you have more margin to work with. Because the brand holds the inventory risk in an agency partnership, the agency fee can be significantly lower than the retailer’s margin. The agency then collects either a monthly retainer or a commission. 

Making a Decision 

Either start by working with an Amazon agency or transition to one if: 

  • You want more control of your brand’s representation online 
  • You want a greater share of product margin 
  • You need additional personnel, expertise, time, or resources to effectively manage your Amazon channel 
  • Your budget allows for you to pay a retainer or commission  
  • Your business’s cashflow model can adapt to using revenue from end-consumer sales 

Should You Sell Yourself (Direct to Consumer)? 

If you want to represent your brand yourself on Amazon and you have the personnel, expertise, time, and resources to do so, then you don’t need to partner with a retailer or an agency.  

This route is the end goal for many brands, but it has by far the most and greatest requirements. As such, we often see brands start in retail or agency partnerships, then transition toward selling themselves.  

In this post, we’re focused on comparing working with a retailer to working with an agency, but you can learn more about a Direct-to-Consumer model in this blog post. 

 

Amazon Retailer vs Amazon Agency: Which is Better? 

The annoying but honest answer is that it depends.   

Retail is generally the better choice for brands that need immediate cash flow to fund their manufacturing. Working with a retailer also simplifies domestic and international taxes, as brands do not need to deal with VAT or sales tax when selling online through a retailer; the retailer handles it for them. This also enables brands to expand into foreign markets quicker, since the legal infrastructure is already in place. 

Agency is generally the better choice for manufacturers with tight margins, want larger margins, and/or want more ownership over their brand’s presence in online marketplaces. 

Service That Grows with You 

Kaspien holds a unique position in brand services for online marketplaces, as we’re able to serve brands in both capacities: We can be a brand’s Amazon retailer, Amazon agency, or help them migrate from one to the other. Through our platform, brands can continue building upon the same foundation of data, products, services, and solutions, no matter how their ecommerce needs evolve. 

Related Content 

How Much Inventory Should I Store in Amazon FBA? 

Amazon’s logistics network received quite a bit of attention in 2020. Quarantines led to surges in online buying, and Amazon’s fulfillment centers struggled to keep up (although Amazon grew 40% year-over-year in Q2)To cope, Amazon temporarily restricted which product categories it would accept into fulfillment centers, increased the minimum performance requirements for utilizing their systems, and limited the maximum number of products that could be stored in their warehouses. 

But even before COVID-19, Amazon logistics were a hot topic. In the great game of supply and demand, the question has always been how to provide enough inventory without overstockingHere at Kaspien, we live by the idiom “always buy enough, but never too much.” That, however, is much easier said than done.  

Running out of stock can result in cascading repercussions that damage the velocity of a listing, so it’s imperative that we consistently strike a balance between having enough but not too much inventory. – Joy Kuykendall, Account Manager

There are many factors to consider when deciding how much inventory to ship and store at Amazon, several of which we’ll cover here. Your first step: determine your goals before assigning a strategy. 

What are My Company Goals? 

Is your strategy geared towards cash flow management? If so, you’ll more than likely consider a more conservative approach, what we call a “lean model” here at KaspienIf your goals are focused more on revenue this year, you’d probably consider a more aggressive approach, pushing higher quantities to market and supporting sell-through with pricing and marketing strategies. 

Inventory Management Strategies 

Once you have goals in place, you can determine if you want a lean model or an aggressive model. Obviously, both come with their own set of considerations and risks. But what exactly are the consequences for stocking too much or too little inventory at Amazon? 

Overstocking Results in Fees 

Most Amazon sellers are aware that Amazon charges monthly storage fees per item (by cubic foot)If, for one reason or another, you wind up with too much inventory at Amazon, you’ll be subject to what are referred to as “Long-Term Storage Fees” in addition to monthly storage fees. Per Amazon, “Inventory that has been in a fulfillment center for more than 365 days will be charged a monthly long-term storage fee (LTSF) of $6.90 per cubic foot or $0.15 per unit, whichever is greater.” These fees compound the longer the inventory sits in the warehouse without selling, eroding your bottom line.  

At Kaspien, we have a devoted team to monitor our inventory levels and ensure listing price supports a healthy sell-through rate. 

“It’s important for sellers to find the optimal level of inventory. Overstocking inventory increases storage costs and can negatively impact a seller’s IPI [Inventory Performance Index] score.” said Autumn Roybal, Pricing and Inventory Manager.  

The best way to avoid these fees would be to not overstock at the warehouse or to conduct a removal, which has its own set of associated fees. 

Understocking Costs Sales & Impacts Marketing 

Sellers also face repercussions when they run out of stock at Amazon. If you run out of stock, then competing sellers or competing brands will win the sale. But running out of stock has more than just an immediate impact. Once out of stock, your listing won’t hold its rank, and product rank ties directly to product searchability and discoverability. As a result, marketing and sales performance suffer even after you replenish inventory. 

As Joy KuykendallPartner Optimization Account Manager, puts it, “We must closely monitor inventory cycles of each listing to ensure there is enough inventory to prevent stocking out, especially in listings for which we are the only Prime seller. Running out of stock can result in cascading repercussions that damage the velocity of a listing, so it’s imperative that we consistently strike a balance between having enough but not too much inventory.” 

How Much Inventory Should I Buy? 

As with most things, a balanced approach is generally the safest and most impactful route to managing inventory levels. One of the most valuable tools for determining your ideal inventory level is historical sales data, ideally for 30-60 days. You can also reference year-over-year trending, if you have the data available, to further help forecasts.  

Using historical sales data, you can predict how the product will sell over multiple months, though it’s not quite linear. You must also account for seasonal trends and channel details, such as seller saturation, rank, and reviews. Thirdparty sales estimators can give you a good idea where to start if you don’t have access to historical sales data, such as when you’re launching a new product or product line. 

Also, keep in mind product specific nuances. Is the product at a high price point? Does Amazon consider it oversized? Is it meltable? Hazmat? Not only will these items have different sales velocity, they will also have different implications when it comes to fees associated with longterm storage at Amazon. 

Amazon Inventory Storage Fees 

The below fees are accurate as of November 2020.  

Monthly Amazon Inventory Storage Fees (Non-Hazmat) 

Standard Size 

  • January – September $0.75 
  • October – December $2.40 

Oversize 

  •  $0.48 
  •  $1.20 

Monthly Amazon Inventory Storage Fees (Hazmat) 

Standard Size 

  • January – September $0.99 
  • October – December $3.63 

Oversize 

  •  $0.78 
  •  $2.43 

Determine Amazon Inventory Carrying Costs 

In addition to storage fees, you should also keep in mind other costs your inventory will accrue so you can factor it into your margin calculations. Amazon inventory carrying costs refers to the total expenses associated to managing, shipping, and storing inventory at Amazon. This includes the aforementioned storage fees, as well as general operational costs to your business in discovery and planning, manufacturing or acquiring, shipping and handling, and any insurance or taxes for the item. Lastly, FBA fees should be considered part of the Amazon inventory carrying cost: The Fulfillment by Amazon (FBA) fee is a per-unit fee, based on the dimensions and weight of the item. 

How can I Prepare for Supply Chain Disruptions? 

As we all learned in 2020, supply chain disruptions can be a very real threat to a seller’s ability to “always buy enough, but never too much.” Some of these disruptions can be accounted for, such as major holidays in the countries where you produce products (Chinese New Year is a great example). In these cases, you can plan ahead and prepare for these events. You can also extend forecasts and stock up more than normal to account for the months where the lead times won’t support timely inventory fulfillment.  

For unexpected disruptions like we all experienced with COVID-19, it may behoove you to develop a “backup plan,” such as a dropship listing you can turn on in a pinch in the event that your FBA inventory runs out. Seller Fulfilled Prime (SFP) and Fulfilled by Merchant (FBM) are other worthwhile options to protect against out of stocks if you have the means to support them.  

How Should I Plan for Peak Seasons? 

Sellers generally see improved sales across the board during peak seasons. You can determine peak seasons for your specific product or brand based on historical sales, but generally, trends on the marketplace are common sense. Sunscreen sells well in the summer months; Toys sell well around the Christmas holidays.  

Make sure you prepare early to ensure you have enough inventory allocated for the higher velocity season. You could consider negotiating discounts or improved payment terms to offset the larger cash investment for allocation. Obviously, be mindful of your normal best practices for ordering, and always expect Amazon to impart some sort of kink in the chain (see Amazon Inventory Restrictions at the top of this post).  

Peak seasons also tend to have longer lead times due to port delays and increased freight velocity/surcharges, so be sure to account for those during your planning. 

In Closing 

There’s plenty to consider when determining how much inventory to ship into and store at Amazon, and when you’re first developing your strategy, it can take some trial and error. Remember that not all SKUs are created equal and tailoring your most effective strategy can take some time. Using the above tips and tricks will  help you on your way! 

Learn More about Inventory & Supply Chain Management 

We’re co-hosting a webinar with Levin Consulting about opportunities and challenges facing consumer technology brands in 2021. It will be held on January 19th at 10am PT / 1pm ET.

Here are 5 reasons why you should attend!

5 Reasons to Attend our Electronics Webinar

1. Levin Consulting has 33 Years Experience in the Consumer Electronics Industry

Levin Consulting has spent the past 33 years serving consumer technology brands in the retail space. From emerging technologies to Fortune 100 giants, they’ve seen the evolution of many electronics brands and will be sharing a wealth of industry insights at the webinar.

2. Now is Peak Planning Time if You’re an Electronics Brand

With the latest technology unveiled at CES, now is the time to plan your overall strategy for both traditional and e-commerce retail so you’re ideally positioned for the year, but especially Black Friday & Cyber Monday and next holiday season. Our webinar will take an overall look at the state of the industry and provide actual takeaways you can implement into your current planning.

3. We’ll Provide Actionable Advice About Launching or Optimizing Your Brand on Amazon

One of our pet peeves are webinars that are all fluff without any actionable advice, so we will never produce a webinar like that. With our 12+ years of experience selling in Electronics on Amazon, the webinar will be jam-packed with category-specific advice such as compliance regulations, advertising nuances & strategy, and listing optimization techniques we’ve found to be successful. 

4. You’ll Gain COVID-19 Trend Insights and Explore What They Mean for 2021

The pandemic has affected every category, and consumer electronics is no exception. Levin Consulting will explore these industry trends as a whole and Kaspien will narrow in on what it means on Amazon. 

5. You’ll Get a Free Copy of our eBook, The Amazon Seller’s Guide to Electronics

We have all sorts of good things in store, and one of them is providing a free copy of our popular eBook, The Amazon Seller’s Guide to Electronics. This 28-page guide is our compilation of everything we’ve learned about selling in the electronics category on Amazon. 

Register for the Webinar

Date: January 19th at 10am PT / 1pm ET

Duration: 60 minutes

Even if you cannot attend at this time, register and we’ll send you a recording of the webinar!

Amazon Electronics Category Overview

The Electronics category is one of the largest, most competitive, and most mature categories on Amazon. Amazon itself has a dominant presence, both as a first-party retailer (1P) and in a private label capacity, with Amazon Echo, Alexa, Kindle, and Fire TVs being just a few of their offerings in Electronics.  

But, Amazon isn’t the only established player in this space. Major brands like AppleSony, and many others have large catalogs on Amazon. The Electronics category also sees a surplus of copycat and knockoff products, as there are plenty of factories that will happily produce the same product for two brands and apply a different sticker to each.  

Even with these challenges, there have been tremendous success stories. Brands like Anker and 1More both established much of their initial business on Amazon and have grown into major players on and off the channel. But selling in this category is difficult; brands need to be ready to hit the ground running. It’s a marathon sprint, and the race has already started. 

Overview 

Amazon 1P Dominates Electronics Sales 

Amazon has a strong first-party (1P) presence in the Electronics category, accounting for 43% of the total sales in Consumer Electronics, according to Amazon’s responses to the US House Committee on the Judiciary’s Questions for the Record 

 Amazon’s dominance in this category is partly owed to Electronics brands themselves, many of whom choose to partner with Amazon 1P as their wholesale online retailer. We can see this played out on Prime Day in 2020. A Rolling Stones poll found that on Prime Day, the top selling products were: 

  1. Apple AirPods with Charging Case (sold by Amazon) 
  2. Bose Solo 5 TV Soundbar (sold by Amazon) 
  3. YI 1080p HD Wireless Home Security Camera 
  4. VANKYO LEISURE 3 Mini Projector 
  5. Echo Show 5 (sold by Amazon) 
  6. Amazon Smart Plug (sold by Amazon) 
  7. Back Bay Wireless Bluetooth Shower Speaker 
  8. 23andMe Health + Ancestry Service 
  9. Pure Clean Automatic Vacuum Cleaner (sold by Amazon) 
  10. YOSUDA Indoor Cycling Bike 

 

During Prime Day 2020, Amazon 1P accounted for half of the top ten selling products. Eight of the top ten selling products were from the Electronics category, including the top seven products. Digital Commerce 360 estimates that Amazon saw over $10.4 billion in sales on Prime Day 2020, and that Amazon claimed 65% of those sales. 

Amazon’s Prime Day sales demonstrate Amazon’s control in the Electronics category, as well as the enormous interest in purchasing Electronics on Amazon. Shoppers have learned they can find nearly all their Electronic wants and needs on Amazon, making it a key market for Electronics brands and sellers.  

The Electronics Category is Saturated 

Of course, when there’s so much value up for grabs, everyone wants a piece. The Electronics category is not just saturated; it’s among the most saturated categories on Amazon. It is one of the most-purchased-from categories, one of the most competitive with ads and pricing, and rife with knockoffs and counterfeit products. There are literally tens of thousands of purchasing options for headphones alone, making it into its own sub-category. 

Brands entering the Electronics category have a difficult road ahead. For new brands, rising about the clamoring crowd of lookalike products is incredibly challenging in most established sub-categories, such as headphones, speakers, and mics. However, there are strong opportunities in emerging technologies, such as “smart home” products. 

The saturation of the Electronics category is, of course, a long time in the making. Electronics sellers have been on Amazon for many years, maturing into one of the most experienced categories on Amazon. Which brings us to our next point… 

One of the Most Mature Categories 

The Electronics category is one of the most mature categories on Amazon. What exactly does that mean?  

By maturity, we mean that the sellers operating in this category tend to have an above-average understanding of what goes into selling on Amazon. They understand the competitive landscape, Amazon’s dialectic role friend and rival, the necessity and value of marketing, how to marry their brick and mortar and ecommerce strategies, etc. When the category is so saturated, sellers have had to learn to adapt or fail. 

This maturation is leading the category into the next phase of its lifecycle, where major players are reclaiming the landscape. As mentioned, Amazon dominates much of the category by retailing products from leading brands and creating its own low-cost private label products. In 2020, Amazon’s retail sales account for 97% of their sales in the Electronics category, while private label accounts for just 3%.  

Despite its small share, you shouldn’t write off Amazon’s private label. AmazonBasics is a growing threat in the landscape, as AmazonBasics often develops their own versions of successful items on the market at a much cheaper price.  

This practice landed Amazon in hot water in 2020, when the Subcommittee on Antitrust, Commercial, and Administrative Law of the Committee of the Judiciary published a report that claims Amazon uses private third-party information to inform its private label decisions. 

However, Amazon isn’t the only one taking a larger market share. Major brands like Bose, TLC, and Sony are taking more ownership of their Amazon channels as they realize the opportunities of this marketplace. If the trend continues, the Electronics category may shift to consist of several dominant brands in established sub-categories, while they and new brands continue to fight for market share in emerging sub-categories. 

Learn More 

There are many challenges in the Electronics category: seller saturation, competitive ads and pricing, direct competition with Amazon 1P, knockoffs, counterfeits, quality control, safety testing and certifications, and more. It’s a lot for any brand to handle on their own. 

Fortunately, we’ve got the resources to help. Download our free Amazon Seller’s Guide to the Electronics Category to learn even more about the category landscape, shopper psychographics, and category-specific marketing strategies. 

Download the Amazon Electronics Category Guide


5 Steps to Creating an Aligned Company

Originally published on Forbes.

In today’s global and fast-paced world, information flows at the speed of light. It’s also widely available, so new competitors appear very quickly. To survive in this landscape, companies must be able to react to new information quickly and strategically. In short, they need to be “agile.”

Agility is a social process. It comes from how individual employees and teams operate on a day-to-day basis. However, fast responses put a company at risk of internal teams becoming siloed and falling out of alignment. When teams fall out of alignment, the company loses its agility.

In the tech industry, one of the most critical yet common disconnects in alignment is between developers and external-facing teams. In this article, I’d like to share five steps that company leaders can take to keep their teams aligned and company agile.

1. Regularly Remind Employees About Your Value Chain

Creating and maintaining clarity on the value chain is the first step toward alignment. The value chain is how a company delivers products and services to customers. Each employee should understand, at a basic level, the components, how the company delivers value and their role in that.

For example, a software company may break the value chain into four main components: build, sell, onboard and operate. Of course, this is a simplified view, but what matters is that each employee understands the overarching premise of the company’s value chain because they can then think about how others affect their work and how their work affects others.

2. Structure Your Company To Support Alignment

The next key to alignment is organizational structure. The divisions, departments and teams within a company should be arranged vertically and horizontally in a way that promotes strong communication between employees who should be influencing each other.

This may not map one-to-one to the value chain — and in many cases, it shouldn’t. Take our previous example of four components. If one division is mapped directly to one component in the value chain, it becomes siloed, and that can impede alignment and agility.

Instead, I recommend companies map out their organization in a matrix, placing the teams in charge of creating products or services on the y-axis and the teams in charge of delivering value to customers on the x-axis. Place teams with intention so that each intersection identifies two units that should be regularly communicating. This structure can enable economies of scale and scope.

3. Promote Consistent And Predictable Company-Wide Operations

Creating a matrix also helps visualize and facilitate the third step: predictable company-wide operations that balance between strategy and operations horizontally and constant communication vertically. Divisions, departments and teams should work collaboratively and in unison. Employees, managers, directors and executives should communicate frequently both up and down the chain. That could mean anything from daily standups to monthly business reviews to biannual planning sessions. Keeping teams aligned and productive is a balancing act between too few and too many meetings, so workshop it until you find what works for each team.

By keeping operations predictable and consistent, the company can maintain alignment and confidently plan its future strategy, progressing toward even greater achievements.

4. Everyone Operates In Teams

So far, I’ve discussed from a top-down perspective how to assemble a value chain, organization structure and operating procedures with the aim of aligning back to a company’s mission and objectives. While a top-down perspective is useful for discussion, at the end of the day, it’s the employees who execute and make the vision into reality. How does one ensure that every person in the organization stays aligned as they perform their day-to-day job, make decisions and so on?

That’s where the team framework comes in. Teams are the foundational unit of how companies operate, not individuals. Everyone operates as part of one or multiple teams, no matter their seniority or role. They may work largely independently, but their work still contributes to a larger vision and is therefore part of the team. Effective teams communicate openly and regularly about objectives, plans to reach them, obstacles and timelines.

For example, you may have a team focused on delivering a software product. Members of that team would include representatives from the development, product, marketing and sales teams all coming together with the common goal of producing, optimizing and selling the product. Where there was once misalignment between siloed teams, there is now a unified team aligned in its understanding of what’s needed to drive success.

5. Teams Have Communication Networks

As I touched on in my last Forbes article, working well together within a team is not enough. Leaders should guide their companies a step further and ensure that teams are also working in unison with other teams.

Teams have stakeholders that care very deeply about the outcome of the team (because their goals could be dependent on the team’s results), even if the stakeholders aren’t part of the daily execution. It’s critical that teams maintain a constant two-way flow of information with their stakeholders so they avoid siloes or bottlenecks.

It sounds great in theory, but the reality is never so simple. To accelerate the adoption of this framework, each team should:

  • Identify stakeholders. Which other teams depend on them? Which other teams do they rely on?
  • Identify the best way to communicate consistently and predictably with those teams.

In short, go deep with your team and wide with other teams.

Live It Every Day

Creating an aligned organization is a daily effort. When you work on a project, ask yourself: Are you part of a team? Are you following the team framework? Who are your stakeholders? Are you communicating with them and how? Adopting these five frameworks can be key to creating and maintaining alignment throughout your company. Their success starts with you. 

Amazon Brand Protection

One of the most important topics in ecommerce is channel control. In ecommerce, channel control means a brand has complete control of their representation across all marketplaces (Amazon, Walmart, eBay, Target, Google Shopping, their website etc.). This includes consistent appearance and voice, consistent pricing, and a consistent product experience for all consumers. 

Brands have struggled with channel control for years, and 2020 has made accomplishing that mission even more difficult. As the number of online sellers increases at an overwhelming rate, so too does the number of rogue sellers and Minimum Advertising Price (MAP) violators.  

Why is Channel Control Important? 

Channel control is essential for protecting a brand’s bottom line, and perhaps even more importantly, their reputation. Every day, we hear from brands that are struggling to enforce their reseller policies and are seeking assistance. They frequently find rogue sellers in their listing violating MAP and it can be extremely difficult to identify the source of the rogue seller’s product 

Such situations are frustrating and time-consuming, but they must be addressed because channel control is fundamental for a brands success.  

It Affects Shopper Confidence 

When brands lack channel control, it results in inconsistent branding, inconsistent pricing, inconsistent customer service, etc., all of which can put shoppers on guard. Is the product a fake? Is the atypically low price a deal or a scam? Are they receiving reliable answers to questions about product use, appearance, and safety?   

To maintain channel control, brands must have an enforceable selling strategyMany brands have MAP policies, and some have Authorized Reseller Agreements or Exclusive Agreements. However, even among these brands, many still lack a plan for how to enforce their policies, and a policy that can’t be enforced isn’t worth anything. 

How to Remove Rogue Sellers and Counterfeits 

So, how can you enact and enforce a strategy to safeguard your brand’s channel controlMonitoring and managing thousands of sellers is certainly no small effort. At Kaspien, we recommend utilizing software and/or partnerships to make this enormous task more manageable.  

Price & Seller Tracking Software – Perispect  

If your strategy requires enforcing a MAP policy tracked across multiple listings and sellers, Perispect will save you valuable time.  

Perispect is Kaspien’s proprietary brand protection software. It empowers brands to track sellers and their pricing across 6 marketplaces and 9 countries, all in one platformWhy is that helpful?

 

Marketplaces Do Not Enforce MAP or MSRP 

Well, twenty-five years in, it’s no secret that Amazon takes a handsoff approach to enforcing MAP or MSRPAmazon’s mission to have the lowest prices available with the quickest deliveryWhen sellers price down, even if its just a few cents, they make the marketplace more attractive to shoppersOther marketplaces, such as Walmart, eBay, Wish, etc. are following Amazon’s lead as well. As a result, brands cannot rely on the marketplace to help them enforce their pricing policy; they must do that themselves.  

Perispect Empowers Sellers with Actionable Insights 

That’s where Perispect comes in. Perispect scans each marketplace, identifies the sellers in your listings as well as their listed price, and stores this information in a centralized, easy-to-read dashboard! If a rogue seller appears or a seller drops below MAP, Perispect immediately notifies you.  

As a result, you don’t have to manually monitor your brand’s listings and sellers. Even if a seller changes their name, Perispect’s seller tracking capabilities will record the name change and associate it with the previous record, so you can track a seller’s actions regardless of whether they rename themselves.  

The software also provides brands with the sellers contact information, including email, phone number, addressMerchant ID, and their seller rating, along with their total number of ratings. This enables brands to quickly assess the seller and send violation noticesThese notices are then tracked in a case management dashboard, making it easy to follow up. 

Gain Evidence to Enable Enforcement 

In Perispect, brands can easily see their channel from a brand level or by seller. At a brand level, brands will see all their listings, MAP price, number of offerings, and the lowest price. A dropdown on each listing shows the sellers, their pricing, and a screenshot of their pricing to use as evidence in the event of a pricing violation. The screenshots are stored for 2 weeks. 

How Much Does Perispect Cost? 

Perispect starts at $99/month.  

Unauthorized Seller Removal with VantageBP  

While Amazon plays a hands-off role with MAP policies, Amazon does take product infringement very seriously. As your channel grows, so too does the likelihood of counterfeit products and rogue sellers entering your listings. VantageBP can help brand’s remove these sellers. 

VantageBP

VantageBP Removes Counterfeits and Unauthorized Sellers 

VantageBP is a proven ecommerce monitoring and enforcement agency that specializes in identifying rogue sellers and eliminating counterfeit products from the marketplaces. VantageBP’s rapid scanning technology quickly identifies unauthorized resellers and new products listings.  

When VantageBP discovers a violation, they send an automated seller notification requesting the seller’s information and where they obtained your products. If no response is received after 48 hours, they send a second noticeIf the seller provides an invoice, receipt, or supplier information, they will be marked as verified in VantageBP’s system. If they do not respond with adequate information, the seller is flagged as unauthorized. VantageBP then generates and files an enforcement action request with the given marketplace to expedite removal.  

What Happens if Sellers Cannot be Removed? 

If the seller provides a supplier invoice or supplier information, VantageBP cannot remove the seller from the listing, as they are following Amazon’s reseller policies. However, VantageBP will still pass along any information they gathered to you so you can inform the supplier of your reseller policies.  

Track Progress in Real-Time 

VantageBP shares a real-time dashboard with their clients showing their finding. Brands can review information by listing or by seller. By receiving the information updates in real-time, brands can have immediate conversations with suppliers, instead of waiting for weekly or monthly updates. The information gathered from the sellers is saved within the dashboard, giving you access to the evidence you need for relaying requests to suppliers. 

Why Doesn’t Kaspien Remove Rogue Sellers?  

Kaspien partners with brands in one of three ways – as their wholesale retailer, as their ecommerce agency, or as their software provider. Because Kaspien is a third-party seller, there’s a conflict of interest if we try to remove other third-party sellers. However, many of our partners request assistance in removing unauthorized sellers from their listings. That’s why we partner with VantageBP to provide this important service. 

How Much does VantageBP Cost? 

Kaspien’s partners receive a referral discount when working with VantageBPVantageBP customizes their monthly fee based on your brand’s needs, and there are no contracts locking you in. After working with VantageBP for just 4 months, one of our partners saw a 62% increase in listing control! 

Other Ways to Protect Your Brand on Amazon

While achieving and maintaining channel control may be difficult, it’s well worth the effortIn addition to Perispect and VantageBP, here are some free resources on other ways brands can safeguard their online brand integrity.  

Walmart vs Amazon: How the two companies compare

Amazon has long dominated online marketplaces in the US. However, in 2020, Walmart launched a series of initiatives that would borrow from Amazon’s learnings to bring Walmart into a competitive position, such as Walmart Fulfillment Services and a subscription service, Walmart+ (Walmart Plus) 

The success of these initiatives immediately underwent a trial by fire as the coronavirus pandemic swept the US. Amidst quarantines and dramatic swings in consumer buying behaviors, Walmart’s online segment has conducted itself admirably.  

So, in this post, we’re taking a closer look at how Walmart Marketplace compares to the great leviathan of US ecommerce. 

Walmart vs Amazon – History 

Amazon’s History 

Amazon was founded as an online book seller on July 5, 1994. The company went public just under three years later in 1997then expanded into music and DVDs in 1998.  

Amazon as we know it today, with millions of third-party sellers selling alongside Amazon on its platform, began in 1999, when Amazon launched its third-party seller marketplace. Amazon Web Services, or AWS, joined the fray in 2003.  

2005 brought the introduction of Amazon Prime. From there on out, Amazon continued to grow into the behemoth we know today. The last 15 years have been filled with acquisitions and ventures into all types of industries, including mobile phones, robotics systems, the Washington Post, Twitch video game streaming service, Whole Foods, the creation of Echo and Alexa, prescription medication, and more.  

This article contains a thorough summary of Amazon’s major milestones over the years. 

Walmart’s History 

Walmart is far older than Amazon, founded in 1962. The company went public in 1970.  

The next 30 years saw rapid growth in physical store locations, but it wasn’t until 2000, just five years after Amazon launched, that Walmart launched online stores. Likewise, it wasn’t until 2009 that Walmart launched a third-party seller marketplace, 10 years after Amazon.  

However, Walmart beat Amazon to the online grocery game, starting online grocery pickup in 2015.  

Walmart acquired Jet.com in 2016, a move that would ultimately teach Walmart many lessons about ecommerce, but not drive any immediate, significant growth. 

Walmart launched TwoDay Delivery in 2017 to compete with Amazon’s 2-day shipping, then NextDay Delivery in 2019. 

Though Walmart had been making progress in developing its online marketplace, it wasn’t until 2020 that their online marketplace really began to capture brands’ attention as a high-opportunity ecommerce marketplace 

In February 2020, Walmart launched Walmart Fulfillment Services. In September 2020, they launched Walmart+, a subscriptions service with exclusive benefits, similar in theory to Amazon Prime, but each offering a different set of perks enabled by their unique positions. 

Walmart vs Amazon – Size 

Ecommerce Share 

Amazon currently controls roughly 38% of the United States ecommerce retail market, according to eMarketer. On the other hand, Walmart only controls approximately 8% of the ecommerce retail market.  

Amazon has over 95 million monthly unique website visitors in the US, while Walmart.com has over 100 million monthly unique visitors. 

Physical Locations 

It should come as little surprise that Walmart’s physical locations vastly outnumber Amazon’s, given each company’s history. Walmart has 5,353 US stores as of July 2020, while Amazon ha589 physical stores as of August 2020. 

International Presence 

Amazon has marketplaces in 16 countries, while Walmart has its online marketplace available in 10 countries and physical stores in 27 countries 

Walmart vs Amazon – Customers 

How do Walmart shoppers differ from Amazon shoppers?  

The answer? Not a whole lot. According to Walmart, Walmart’s and Amazon’s customer demographics are nearly identical when viewed by generations or by income levels. 

Walmart’s VP of Walmart Fulfillment Services delved into more Walmart vs Amazon myth busting in our co-hosted webinar. You can watch it for free on-demand. 

Walmart Fulfillment Services (WFS) vs Fulfillment by Amazon (FBA) 

Speaking of Walmart Fulfillment Services (WFS), let’s take a look at how it compares to Fulfillment by Amazon (FBA). 

For the moment, WFS and FBA share many similarities. Both services allow third-party vendors to ship their product at a fulfillment center, where the product is stored until purchased, then fulfilled. Both will: 

  • Pick, sort, pack, ship, and track products 
  • Handle shipping, returns, and refunds  
  • Provide 2-day shipping 
  • Provide same-day shipping in select areas 

One big difference is that Walmart.com allows for item pickup at any of its stores, while Amazon only has a few stores that do online pickup. 

WFS vs FBA eBook & Webinar

We offer a comprehensive breakdown of WFS vs FBA in our free eBook. If you’re interested in learning more about WFS, watch our on-demand WFS webinar that we co-hosted with Walmart’s VP of WFS. 

Walmart Fulfillment Services vs Amazon FBA

Walmart vs Amazon – Marketing Services

In terms of marketing, Amazon and Walmart.com are very similar, but Amazon has many more options to choose from.  

Amazon Marketing Services 

Amazon marketing products available to sellers include:  

Walmart Marketing Services 

Extensive right? In contrast, Walmart offers a limited selection of marketing products for sellers, including:  

This difference in selection is not surprising though. Amazon has been focused on ecommerce for 25 years, while Walmart has only really made ecommerce a heavy focus in the last five years. Over time, Walmart Marketplace will develop new marketing services to match Amazon’s list. 

For the time being, online sellers will see far greater returns from marketing dollars invested into Amazon marketing than in Walmart marketing. Amazon’s services offer greater control over audience targeting and more data insights, which, in turn, yield higher profitability. 

Walmart Plus vs Amazon Prime 

Until recently, Walmart did not have a competitor to Amazon Prime, Amazon’s premium paid subscription service. In July 2020, Walmart announced Walmart+, its own premium paid subscription service. These subscriptions are very similar as both give you access to perks and benefits like two-day shipping and one-day shipping on a host of products.   

Walmart Plus vs Amazon Prime

Walmart Plus Member Benefits 

  • Free 2-day shipping 
  • Early access to deals 
  • Express delivery for groceries and select goods 
  • Fuel discounts at Walmart gas stations 
  • Scan & Go service in Walmart stores 
  • Walmart dropped its minimum $35 purchase requirement for 2-day shipping in December 2020 
  • Planned Walmart Plus credit card 
  • Planned Walmart Plus entertainment package 

Amazon Prime Member Benefits 

  • Free 2-day shipping 
  • Early access to deals 
  • Express delivery for groceries and select goods 
  • Prime video 
  • Free video games 
  • Free access to Amazon library 
  • Ad-free Amazon Music 

Amazon Prime costs $119/year, while Walmart Plus costs $98/year. Amazon Prime has 126 million members in the US as of October 2020, so Walmart has a lot of catching up to do. 

Walmart vs Amazon – Challenges 

Counterfeit Products Plague Amazon 

Amazon has the ignominious reputation of being rife with counterfeits and unauthorized sellers. In January 2020, the United States Department of Homeland Security released a report detailing counterfeiting on the Amazon marketplace platform. The company has been slow to face the issues but has been making some strides.  

Unlike Amazon, Walmart.com is a gated marketplace, which has helped mitigate the risk of counterfeits and unauthorized sellers. 

Amazon Accused of Stealing Third-Party Data 

Another problem facing Amazon is the accusations of stealing data from businesses that use its marketplace or Amazon Web Services (AWS). Jeff Bezos, founder and CEO of Amazon, testified before United States Congress about these allegations on July 29, 2020, and Amazon provided written answers on September 4, 2020 to the committee’s follow-up questions. 

Walmart is Playing Catch Up 

Walmart Marketplace’s greatest hurdle is that it is starting so far behind Amazon in the ecommerce game. However, Walmart has an extensive infrastructure, capital, and the benefits of learning from Amazon’s successes and failures. As we touched on regarding marketing, Walmart is still well behind Amazon, but they have made admirable progress this year with the launch of Walmart Fulfillment Services and Walmart Plus.  

Walmart vs Amazon – Ecommerce Growth 

As anyone can see, there are pros and cons for both Amazon and Walmart. Amazon may be the giant in the ecommerce space, but that means they have a large target on their back. Both Amazon and Walmart have seen tremendous growth in 2020: 

Walmart Ecommerce Quarterly Net Sales Growth 

  • Q1 2020: 74% year-over-year 
  • Q2 2020: 97% year-over-year 
  • Q3 2020: 79% year-over-year 

Amazon Quarterly Net Sales Growth 

  • Q1 2020: 26% year-over-year 
  • Q2 2020: 40% year-over-year 
  • Q3 2020: 37% year-over-year 

Clearly, both companies’ offer huge growth potential. In general, we recommend prioritizing Amazon over Walmart because the sales potential is, currently, so much greater on Amazon. However, Walmart is growing rapidly, and you would be wise to try to get on Walmart sooner rather than later so you can grow with it. 

Want to learn about selling on Walmart.com? Check out our free eBook!

Download the eBook

WFS: Walmart’s Gamble to Challenge Amazon FBA


FBA Seller Reimbursement Services

Selling on Amazon offers many opportunities and is an excellent way to grow your brand. One of the most helpful tools that Amazon offers sellers is Fulfillment by Amazon (FBA)which boasts a sprawling network of Amazon-owned warehouses across the country. Sellers ship inventory to these Amazon fulfillment centers for storage and eventual fulfillment to the end consumer. Amazon’s fulfillment services are a foundational component of Amazon’s success. 

However, these fulfillment centers aren’t perfect. They regularly make mistakes that cost sellers money, and sellers must petition Amazon for reimbursement if they don’t want to eat the costs. With many sellers unaware that they need to take action, we often see significant amounts of money left on the table. 

Why Does Amazon Owe FBA Sellers Money? 

Amazon’s fulfillment centers regularly lose or damage inventory, overcharge fulfillment and storage fees, or under-reimburse sellers. To get fully reimbursed, FBA sellers have to cross reference up to 17 reports to identify and submit cases. 

Most Common Types of Mistakes in Fulfillment Centers 

There are quite a few mistakes for which Amazon may owe an FBA seller reimbursement, but two case types in particular account for the vast majority of inventory reconciliation cases: 

Inbound Discrepancy 

Inbound shipments with items that have a discrepancy between shipped and received after 15 days.   

Lost Inventory

Inventory lost minus inventory found and reimbursed. 

At Kaspien, we see these two case types account for 95% of all FBA seller reimbursement cases. Below are other types of cases that account for the minority of reimbursement cases. 

Amazon Inventory Reconciliation Case Types 

Carrier Damaged Return

Customer returns that were damaged by Amazon-partnered carrier minus reimbursed. 

Commission Discrepancy

Orders with SKUs where the charged referral fee (commission) exceeds Amazon’s estimated referral fee for the order date. 

Damaged Inventory

Inventory damaged in the warehouse. 

Destroyed Without Permission

Inventory destroyed. 

Dimension Discrepancy

ASINs with either dimensions or weight that have significantly increased compared to previous values, affecting fulfillment fee and/or monthly storage fee. 

Failed Return

A refund was issued to customer for a return, but the items returned were fewer than the number that was refunded. 

Fulfillment Center Damaged Return

Customer returns that were damaged in an Amazon fulfillment center. 

Fulfillment Fee Discrepancy

Orders with SKUs where the charged fulfillment fee exceeds Amazon’s estimated fulfillment fee for the order date. 

Missing Reimbursement

Customer return flagged as ‘reimbursed’ but the seller doesn’t see the reimbursement come through. 

Missing Return Unit

Customer return was flagged as ‘Unit returned to inventory’ but the unit was not actually returned to inventory.  

Over Refunded

Refund issued to customer exceeded the actual order total.  

Returned Inventory Discrepancy

Customer returns with units returned to inventory under a different SKU than that which was purchased. 

Under Reimbursed Failed Return

A refund was issued to customer for a return, then the customer failed to return the item, and the reimbursement was issued but the reimbursement amount is less than the refunded amount. 

Under Reimbursed Return

A refund was issued to a customer for return, the customer returned the item, and the reimbursement was issued but the reimbursement amount is less than the refunded amount. 

Unfulfillable Damaged Inventory

Damaged inventory that has been damaged for more than 20 days and is therefore unfulfillable. 

How to Get an FBA Reimbursement 

Manual Amazon FBA Reimbursement 

Due to the ambiguity of Amazon case management, managing inventory reconciliation manually is laborious and inefficient. Here’s the general process for manual case management:  

  1. Download separate business reports (in some cases, this may add up to 12 separate reports). 
  2. Cross-reference reports to identify reconciliations.  
  3. File and manage separate Amazon cases for each instance where Amazon owes you money while complying with each case’s unique allowance window.  
  4. Manual case management can take up to a month to actualize, which requires careful tracking and frequent follow-up on all submitted cases.  
  5. Review your Amazon statements to ensure you were reimbursed for the correct amount, even after the case is closed. 

As you can see, the FBA reimbursement process is arduous. In the long-term, few brands can afford to spend the time managing the manual process, but neither can they allow cash to bleed from FBA errors. 

Automated Amazon FBA Reimbursement 

Luckily, there are plenty of software solutions for this problem, including our own proprietary seller reimbursement software, Channel Auditor 

What is Channel Auditor? 

Channel Auditor is a software that helps FBA sellers mitigate fees and recover lost funds. It does so by automatically identifying cases that are eligible for reimbursement and expediting case creation. It’s your Amazon auditor that never sleeps.  

Does Channel Auditor Automate Case Creation? 

Amazon’s policies expressly forbid automating case creation in Seller Central. Those violating this policy can be fined, suspended, or banned.  

Channel Auditor does not automate case creation, but it does the next best thing. It automatically identifies cases that are eligible for reimbursement, then provides the exact text and evidence needed to petition for reimbursements. All you have to do is copy and paste, click submit, and Channel Auditor does the rest. 

How Channel Auditor Automates Amazon FBA Reimbursements

Automatic Case Identification

First, sellers connect Channel Auditor to their Seller Central account, allowing it to pull inventory reports for their channel. Channel Auditor immediately and automatically starts cross-referencing multiple reports to identify Amazon reimbursement cases. Using this information, Channel Auditor can forecast how much money a seller can be reimbursed.

Expedited Case Creation

After inventory reconciliation cases are identified, sellers select the cases they want to create from within Channel Auditor. Channel Auditor provides the exact text needed, including links to evidence that supports the claim.

Easy Case Management

From there, Channel Auditor automatically tracks case progress and notifies the seller of their results.

Channel Auditor Case Study

A brand in the Health & Personal Care category started using Channel Auditor in June 2020. In a single month, they were reimbursed over $7,000! In less than five months, they recovered over $13,000 in Amazon seller reimbursements! 

See How Much You’re Owed 

If you’re curious how much Amazon owes you but aren’t ready to start a subscription, that’s alright. Request a quote from Channel Auditor – for free – and we can tell you exactly how much money Channel Auditor could recover for you if you used it.  

Request a free quote today. 

Dropshipping Business for Amazon

Since the outbreak of COVID-19, you may have been hearing more about Amazon dropshipping, and for good reasonWhen the pandemic hit the US and shelter in place orders went into effect, several things happened in quick succession: 

  • Online purchases surged as shoppers turned to ecommerce instead of brick and mortar stores 
  • Some product categories experienced out-of-season sales peaks, resulting in out-of-stocks 
  • Amazon’s fulfillment centers buckled under the strain of new orders, and to recover their footing, they restricted inbound shipments 

As a result of the out-of-stocks, brands needed to ship more goods into Amazon’s fulfillment centers so they could resume selling to Amazon shoppers, but Amazon’s category restrictions prevented them from doing so quickly enough. 

That’s when many brands and sellers discovered the enormous benefits of Amazon dropshipping. 

What does an Amazon Dropshipping Business Look Like? 

Dropship is a selling and fulfillment model wherein a brand acts as the manufacturer, fulfillment provider, and potentially also the seller. It can be a key component in creating a dynamic fulfillment network. Let’s take a look at the most common dropship approach vs. the fulfillment by Amazon (FBA) model: 

Dropship Model 

  1. Manufacturer and seller agree to dropship together, which involves creating an EDI connection between their inventory management and warehouse systems 
  2. Seller lists product on marketplace 
  3. Shopper orders product and seller is paid 
  4. Seller places order with manufacturer and manufacturer is paid 
  5. Manufacturer ships product from their warehouse directly to the shopper 

 

Fulfillment by Amazon (FBA) Model 

  1. Manufacturer and seller agree to FBA together 
  2. Manufacturer is paid as seller places a purchase order, then manufacturer ships inventory into Amazon fulfillment center 
  3. Seller lists product on marketplace 
  4. Shopper orders product and seller is paid 
  5. Amazon fulfillment center ships the product to the shopper 

 

TL;DR: Dropship differs from FBA in two significant areas: when sellers and manufacturers are paid and who provides fulfillment services. In FBA, the seller pays the manufacturer upfront via a purchase order. FBA also requires inventory to be on-hand in the Amazon fulfillment center before consumers can buy the product. Dropship does not require this. Instead, manufacturers double as fulfillment centers. 

Pros and Cons of Dropshipping on Amazon 

Pros of Amazon Dropshipping 

1) Expand catalog selection.
Through dropship, brands can list products on Amazon for which sellers won’t place a product order. For example, if a brand wishes to offer a large product selection, but a seller cannot justify buying a large volume of product due to slow sales velocity, dropship enables sellers to still list those slow-moving products without taking on inventory risk. Then, if products perform well in dropship, they can be migrated to FBA.  

2) Easier prep requirements. 
Because inventory is not shipped into Amazon fulfillment centers, brands do not have to meet Amazon’s strict product preparation requirements. This eases the burden on brands and opens the door to sell products on Amazon that exceed Amazon’s FBA size or weight thresholds. 

3) Mitigates FBA-dependency.
As mentioned previouslydropship provides a degree of agility and resilience to a brand’s fulfillment strategy. If they have a dropship infrastructure already established, sellers can respond quickly to unexpected consumer demand since brands don’t have to send inventory to Amazon first or be limited by Amazon’s inventory restrictions. 

Cons of Amazon Dropshipping

1) Shipping speed depends on you.
Dropship sellers are not guaranteed a Prime badge or 2-day shipping on Amazon because the manufacturer is fulfilling orders. This can result in fewer sales, especially if you’re operating in a saturated category, as consumers are more likely to purchase products with 2-day shipping than products without.  

2) You handle customer service.
In dropship, brands are responsible for promptly shipping out orders, processing returns, and addressing customer inquiries. This requires committing additional resources, not the least of which are time and personnel. 

3) Requires constant maintenance.
Dropship on Amazon requires an always up-to-date connection between the manufacturer’s warehouse and the marketplace listing. If the brand is working with a seller, this means that the seller’s inventory system must be in sync with the manufacturer’s inventory system. Being in sync involves connecting technology, but also that manual inputs are being maintained. If this is not done, it can result in out-of-stocksharming sales velocity and creates a poor customer experience. 

When Should You Dropship on Amazon? 

Amazon Dropshipping is generally seen as an excellent backup to FBA because FBA offers so many benefits for brands, sellers, and consumers. However, we saw dropship become a massive asset in March 2020, when Amazon’s fulfillment centers ran out of stock of essentials. Through dropship, we were able to help our partners continue fulfilling orders even when they were restricted from replenishing inventory levels, resulting in a 3.25x increased in Amazon orders year-over-year 

In short, dropship is an excellent safety net and a great way to expand your product selection on Amazon as your grow your channel. If you’re looking for someone to help in your Amazon dropshipping efforts, check out our dropshipping services. If you’re interested in learning about other fulfillment options for ecommerce, check out our post, Walmart Fulfillment Services vs Amazon FBA.

Scissors cutting price tag

One of the most frustrating experiences as a brand owner is seeing copycat competitors undercut your pricing. In retail, competition is healthy because it forces businesses to innovate, resulting in better deals and products for consumers. However, sometimes it’s not a matter of two quality products vying for patronage. In some cases, it’s a high-quality product being undercut by a low-quality product.  

There’s not much that brands can do about competitors’ prices, but there’s plenty they can do to convince shoppers that the higher cost of their product is well worth it.  

How to Defend Against Competitors Undercutting Pricing 

#1 – Highlight What Makes Your Product Better 

On Amazon, customers have many choices when looking at products. A simple and free way to help your products stand out is to promote your differential features in the copy, images, and A+ Content. Differentiators are features that make your product different from your competition, such as location of production, quality of materials, performance, additional features or capabilities, aesthetics, or warranties These factors can help convince customers that your product is worth paying a little more.

#2 – Use Amazon Live 

Amazon Live is an Amazon service that allows sellers to broadcast livestreams in which they demonstrate product usage, features, and benefits. Featured products appear directly below the live broadcast window. Brands can use Amazon Live to share their story, live events, educational content, and so much more. Customers on Amazon Live can ask questions and receive answers in real timeAmazon Live allows customers and brands to connect on a more intimate level compared to a video or listing and is an excellent (and free) way to increase visibility. 

#3 – Engage with Your Audience on Social Media 

Social media is one of the most powerful tools that brands can leverage to grow their audience. When we talk about social media, were meaning Facebook, Instagram, Twitter, LinkedIn, Snapchat, TikTok, YouTube, and so many more platforms.  

Brands can use social media in many ways, but one of the most important uses is actively engaging with your customer base. This means responding to comments in a timely manner, creating social posts that invite your audience to actively participate in a discussion, and responding to all direct messages. Audiences want to feel a connection to a brand, and engagement on social media is one of the top ways to do so.  

Most importantly, a strong social media presence builds brand trust. Consumers are more educated than ever, and social media is a big part of that education. They’ll initially turn to your social channels to ensure your brand is legitimate but they’ll stay to engage with your brand on a personal level.  

If you need assistance in growing your brand’s social presence, look into our social media management service.

#4 – Respond to ReviewsComments, and Questions on Listings 

When managing many listings, responding to each and every review and comment can seem dauntingHowever, responding to your customers, regardless of whether their feedback is positive or negative, is critical to differentiate your brand from competitors. Responding to questions, praise, and criticism takes time and energy, and not everyone is willing to do it. By taking time to respond to customers in a timely manner, you demonstrate that your brand cares about your customers, and shoppers will favor you for that. 

#5 – Represent Your Brand Consistently Across All Sales Channels 

Consistent representation across all sales channels is often overlooked, but it’s incredibly important for maintaining brand integrity and strong customer relations. Inconsistent representation can lead shoppers to question quality and product authenticity.  

Brands should seek to maintain a consistent brand name, brand voice, high quality copy and images, and prices across online marketplacesThis ensures you provide a fantastic customer experience with your brand, no matter where shoppers find your products. By doing so, you cultivate a reputation as a reliable brand that cares about your brand, products, and customers. 

#6 – Be Where Your Customers Are 

The ecommerce landscape is constantly changing. In order to stay ahead of your competitors, you need to meet shoppers where they’re at. In today’s age, that means listing your products online, such as on Amazon, Walmart, and Google Shopping. As mentioned above, that likely also means curating an active presence on social media. In addition to posting and responding regularly, consider running social media ads and leveraging influencer marketing. You competitors may simply wait for shoppers to find them, so you can get a leg up by getting directly in front of shoppers, no matter where they’re at. 

Amazon Q3 2020 Earnings Report

Today, Amazon released their Q3 earnings report. Amazon’s net sales this quarter grew 37% year-over-year, down from 40% YoY growth in Q2 but still staggering, nonetheless. Other highlights from the earnings report include: 

Overview

  • Operating cash flow for the trailing 12 months increased by ~$20 billion compared to the same period last year, up 56% to $55.3 billion 
  • Operating income nearly doubled YoY, up from $3.2 billion to $6.2 billion 
  • Amazon’s net income tripled YoY, up from $2.1 billion to $6.3 billion 
  • Amazon reports that it has created over 400,000 jobs globally in 2020 
  • Amazon Sweden launched yesterday, October 28

Segments

  • Third-party seller services grew 55% YoY 
  • First-party sales grew 38% YoY 
  • The “Other” segment, which consists largely of advertising revenue, grew 51% YoY, demonstrating that advertising revenue continues to be one of the fast growing segments
  • AWS grew 29% YoY, on par with growth in Q2 (the last two quarters are the slowest growth rate in the last 3 years) 

Other 

  • Subscription services are up 33% YoY 
  • Shipping costs are up 57% YoY 
  • Amazon’s logistics and fulfillment square footage is expected to grow 50% YoY in 2020
  • Amazon expects net sales to grow between 28% and 38% YoY in Q4 

A Record Breaking Quarter

At $6.3 billion, Amazon’s Q3 earnings shattered records, the previous record being $5.2 billion in Q2 this year. To not appear to benefit too greatly from the pandemic, Amazon has pledged another $4 billion to COVID-19 costs for the fourth quarter. It’s also worth noting that on Prime Day, which occurred in October this year, that Amazon did not appear to struggle with fulfillment. Their logistics success on Prime Day is reassuring as sellers head into the holiday season.

Amazon’s earning report covers much more, delving into Amazon’s contributions to communities, job growth, climate change, Amazon products, Prime Video, AWS, and more. As an Amazon seller/agency/software provider (we do a lot), we’re going to focus this coverage on what the report suggests for brands selling on Amazon. 

Our biggest hot take: Amazon’s feeling the heat from the antitrust investigation, and is taking time in this earnings report to try to deflect or minimize some of the allegations laid against it. 

Amazon Tries to Deflect Antitrust Concerns 

On July 29, 2020, Amazon founder and CEO Jeff Bezos testified before a congressional antitrust committee. Amazon also supplied written answers to the committee’s questions on September 4. The committee published a 450-page report on October 6 with their findings from a 16-month antitrust investigation into Amazon, Google, Facebook, and Apple.  

For those who listened to Bezos’s testimony or read the aforementioned documents, it’s easy to see that Amazon is making a defense for itself within its Q3 earnings report. We’ve broken down some of the most notable references to the antitrust concerns.  

Does Amazon Hinder S&MB Growth? 

Amazon has been accused of stymieing the growth of small and medium-sized businesses. In this earnings report, as with previous reports, Amazon points to its efforts to support small and medium-sized businesses, including: 

  • Amazon Accelerate, a program that teaches business owners best practices for selling on Amazon 
  • Ignite Digital Festival, an event for delivery service partners offering best practices and updates for logistics 
  • Stand for Handmade, a program in India that waives selling fees for local, handmade products 
  • Amazon Launchpad Innovation Grants, a program in Australia to provide grants to start-ups and S&MBs 

Amazon Takes Majority of Prime Day Sales 

During the antitrust hearing, Amazon faced questions about unfair usage of third-party data and unfair competition against third-party sellers by Amazon’s first-party retail segment. 

In their earnings report, Amazon makes a point to state that on Prime Day, third-party sales grew 60% YoY, up to $3.5 billion, “growing even more than Amazon’s retail business.”  

This note seems to be a defensive move by Amazon, as others have noted that Amazon’s firstparty sales hit an estimated $7 billion and accounted for 60% of all Prime Day sales. In year’s past, first-party sales accounted for closer to 40% of all Prime Day sales. Third-party sellers may have grown at a greater rate than Amazon’s retail segment, but Amazon took a far larger slice of the Prime Day pie this year. 

Amazon’s Efforts to Protect Brands & Consumers 

Amazon also drew attention to Project Zero, announcing that the tool is available in 17 countries around the world. Project Zero allows brands to remove alleged counterfeit sellers from their listings themselves, without going through Amazon’s approval process. The program has been historically difficult to gain access to.  

Bezos referenced Project Zero during his testimony when asked about what Amazon is doing to protect brands and consumers from counterfeit products.  Mentioning it again in the earnings report helps send the message that Amazon is continuing to expand its anti-counterfeit efforts.

Marketplace Earnings Reviews

Read our breakdowns of Amazon’s Q2 Earnings Report, Walmart’s Q2 Earnings Report, and Target’s Q2 Earnings Report.

Amazon Brand Registry Roles

The Amazon ecosystem is getting more competitive and complex each day. Counterfeit goods slipping into listings and rising marketing costs are just two of the many issues brands face when selling on Amazon. Luckily, one tool brands can use to overcome some of these issues is Amazon Brand Registry.

What is Amazon Brand Registry?  

Amazon Brand Registry is an Amazon program that provides brands additional protection and access to other marketing services, including: 

Enrollment in Brand Registry is free but requires a trademark registration number with the United States Patent and Trademark Office (USPTO). Learn more about all the benefits in our Always Up-to-Date List of Amazon Brand Registry Benefits. 

What are Amazon Brand Registry Roles? 

One big issue for unregistered brands is the lack of control over their listings. When your brand is not part of the Amazon Brand Registry, unauthorized sellers can come into your listing and change content. As brand trust becomes more important to consumers, it is crucial to maintain control of your listings.    

When brands are brand registered with Amazon, only authorized accounts can change listings. Authorized accounts can include your employees or another account to which you have assigned a role, such as an authorized agency. There are currently three types of Amazon Brand Registry roles: Administrator, Rights Owner, and Registered Agent. Each comes with a different level of permissions.   

  1. Administrator: An individual who has full permission to assign roles to user accounts.   
  2. Rights Owner: An individual who is the rights owner or an employee of the rights owner who is authorized to report violations.   
  3. Registered Agent: A third party who is authorized by the rights owner to report violations.   

 

If you wish to give a seller the authority to report violations on your behalf and have extra authority within your listings, you must add them as a Registered Agent, Rights Owner, or Administrator. 

How to Assign Brand Registry Roles 

To assign roles for Amazon Brand Registry, follow these steps: 

1 – On the Amazon Brand Registry platform, click on Brand Registry Support. 

Welcome to the Brand Registry

2 – Click through Update your brand profile > Update role or add new user to account 

Amazon Brand Registry Support

3 – Follow the on-screen form to submit the seller’s email as the role you desire them to have. 

Apply for Amazon Brand Registry 

Learn how to apply to Amazon Brand Registry.