Common Mistakes Brands Make on Amazon

This article was originally published on Forbes on June 22, 2020.

Selling on Amazon is full of challenges, but some of those challenges are unnecessary. I lead a company that’s helped over 4,000 brands sell on Amazon over the last 12 years, and during that time, we’ve seen a lot of mistakes, some of which are shockingly common. To help remedy this problem, I’ve put together the seven most common mistakes we see brands make on Amazon and how to fix them. 

7 Common Mistakes When Selling on Amazon

1. More Sellers Does Not Equal More Revenue 

When brands first embark on Amazon, many have the belief that having more sellers equates to more sales, which in turn equates to more purchase orders. While brands may receive more purchase orders, we’ve seen this approach lead to unforeseen problems hundreds of times.  

Having too many sellers, especially if you’re not collaborating closely with each, creates the “too many cooks” problem. Since any seller in the listing can edit listing content and set their own price, inconsistencies and inaccuracies can quickly appear. Low-quality images and poor wording misrepresent your brand, and fluctuating prices can make shoppers question product authenticity. Sellers are likely to compete on pricing, risking a race to zero, which hinders their ability to place future purchase orders.

There are also problems for marketing: When multiple sellers run marketing for the same listing, their ads compete, driving up costs without generating more sales.  

To fix this issue, we advise two steps: 1) Work with one or only a few sellers so you maintain control over your brand’s online representation, and 2) ensure that your contracts limit to whom buyers can sell your product, helping mitigate the risk of unauthorized sellers. 

2. Running Marketing Only On Amazon

Running marketing only on Amazon is a tactical error because it leaves opportunities on the table. Running off-Amazon marketing — such as paid search, paid social, and influencer marketing — increases the number of shoppers you can reach and the number of touchpoints guiding them to purchase. By leveraging both on- and off-platform marketing, brands create a feedback loop of more visibility, which leads to more traffic, which leads to more sales, which improves organic product placement, which leads to more visibility…and the cycle continues. 

3. Running Marketing Only During Peak Seasons

This is a much more grievous sin. Halting marketing during the off-season is a serious mistake because Amazon marketing takes months to gain good traction. By turning off marketing during slow sales seasons, brands are essentially surrendering ground to competitors. When their sales season comes back around, they have to claw their way back to where they left off instead of being positioned to capture new market share.

To fix this issue, don’t ever turn off marketing completely. It makes sense to reduce marketing spend during slow seasons when competition isn’t as fierce, but you should never completely fall off the radar. 

4. Not Aligning Amazon Strategy With Brand Strategy

Another common error is failing to align your Amazon strategy with your overall brand strategy. For example, a brand may run promotions off Amazon that are not carried through to Amazon or produce new stunning images and brilliant copy for their website but don’t update their Amazon listings with them. Amazon is a growing marketplace and needs to align and complement your overall strategy if you want to maximize your online sales. 

5. Noncompliant Claims In Listings

It’s never been a good idea to make misleading or inaccurate claims in product listings. Such claims result in suppressed listings and account shutdowns, which can cost a brand thousands in sales. 

This mistake is likely to become an even bigger issue, as Amazon faces increased scrutiny. Before the coronavirus captured our attention, congress was considering the Shop Safe Act, which would hold Amazon responsible for counterfeit or noncompliant products sold on its platform. Based on our own data, we saw the early indications of how Amazon would respond in February when it tripled their requests for proof of product testing.  

If your listings contain unsubstantiated claims or have not passed U.S. safety testing, then you need to fix that.  

6. Not Understanding Amazon Profit Margins 

Selling on Amazon is not like traditional retail, and neither are the profit margins. These three factors are commonly overlooked or misunderstood:  

1. Amazon fees: Amazon collects a sales commission as well as shipping, storage and fulfillment fees. These fees take a large chunk out of profit margins. 

2. Inventory errors: Sometimes, Amazon’s fulfillment centers lose or damage inventory, overcharge fees or underreimburse. While its automatic systems catch most of these errors, it misses some. Those errors add up, eating into profit margin. 

3. Marketing: Marketing costs money. Some brands see that and stop there. But if your marketing is effective, the profits exceed the costs, sometimes dramatically so. If your profit margins are narrow, you should consider investing in marketing to widen them.  

Addressing these issues starts with gathering data. You don’t know what you don’t know, so start by pulling reports and analyzing data. If you discover a red flag, you can seek help. There are many agencies, consultants, and software applications available that help optimize shipments to Amazon, identify reimbursement cases and improve marketing efficiency.

7. Poor Inventory Management

All too often, we see brands sending way too much inventory into Amazon warehouses without realizing that Amazon will charge long-term storage (LTS) fees, especially around peak seasons. On the other side, we also see brands sending in too few units, resulting in out-of-stocks. Running out of stock harms marketing performance and organic product placement, creating a domino effect that can be tough to bounce back from even when stock is replenished. 

To fix these errors, you or your seller needs accurate sales forecasting, which is typically obtained through software. 

Amazon truly is like navigating a jungle, but there are many experts who can help. Alternatively, you can push up your sleeves yourself and dig into the many resources about selling on Amazon. The Amazon opportunity is too great to ignore.

100 terms every Amazon seller should know

Selling and marketing on Amazon involves dozens of moving pieces. To help with this problem, we’ve compiled a list of 100 terms every Amazon seller should know, including terms related to digital marketing, logistics, finances, and the fundamentals. For ease of use, the terms are listed in alphabetical order. 

Also check out our list of 20 Terms Every Walmart Seller Should Know.

1. A9 Algorithm: Amazon’s proprietary search engine algorithm for determining search results on Amazon.com. 

2. A/B Testing (Split Testing or Bucket Testing): An online marketing strategy used to see which of two versions of marketing collateral yields the best results. The difference between the two versions is typically limited to a single element, such as the subject line of an email, so that testers can confidently attribute differences in performance to the changed element.  

3. Ad Management Software: Software used to streamline management of Amazon ads, typically by improving data visibility, the user interface, and automation. In the case of Amazon, most ad management software is for pay-per-click (PPC) ad types, such as Sponsored Product Ads. 
Learn More >

4. Advertising Cost of Sale (ACoS): The cost of ad divided by the sale. For example, if a product costs $10 and it takes $1 worth of ad spend to generate a sale, the ACoS would be $1 divided by $10, or 10%. ACoS is often used to assess the efficiency of advertising campaigns on Amazon. 

5. Amazon A+ Content: An extra feature for product detail pages available to brands that are enrolled in Amazon Brand Registry. This feature allows brands to add additional copy and images below the bullet points in a product detail page. Amazon claims they increase conversion rates by up to 10%.  
Learn More >

6. Amazon Ad Groups: On Amazon, Ad Groups are a subsection within a sponsored ads campaign that contain ads, targets, and a default bid. Ad Groups can contain a single ad or multiple ads grouped by like products, brands, or campaign goals. Targets can be either keywords, ASINs, or categories. Ad Groups are available for Sponsored Product and Sponsored Display campaigns. 

7. Amazon Attribution: An Amazon service that allows sellers to measure the impact of different sales channels, such as email, video ads, and display ads, by creating unique URLs that enable attribution tracking. The Attribution dashboard in Seller Central allows users to see conversion metrics, such as “page views, “add to cart, and “purchases. 
Learn More >

8. Amazon Best DealsOne of several types of promotions that sellers can run on Amazon where a product is offered with a 15% discount over a 2-week period. During the deal, the product is featured on the Today’s Deals page. The product must have an average rating of at least 3.5 stars and selling price of at least $10. 
Learn More >

9. Amazon Brand Gating: An invite-only Amazon program that allows manufacturers and private label sellers to control who can resell their products. This program helps prevent unauthorized third-party sellers from listing products. 
Learn More > 

10. Amazon Brand Registry: An Amazon program that enables brands to gain additional protections and access to additional marketing services. Enrollment in Brand Registry is free, but requires a trademark registration number. Brand Registry provides access to Amazon’s infringement reporting tool, brand stores, A+ Content, Sponsored Display Ads, Sponsored Brand Videos, and more. 
Learn More > 

11. Amazon Brand Store: curated digital storefront on Amazon where brands can list their entire Amazon catalog in a convenient and branded experience. This feature is available only to brands enrolled in Amazon Brand Registry.
Learn More >

12. Amazon Buy Box: The top right section on the product page where consumers can add items to their carts. The Buy Box is awarded by Amazon to sellers based on product price, availability, seller performance, and whether the product is offered with FBA or Prime shipping.
Learn More >

13. Amazon CouponsAdvertisers can enroll up to 50 ASINs into a single coupon and offer either a dollar amount or percentage off. The coupon cost to the advertiser will equal the discount + $0.60, both of which are subtracted from the coupon budget. Each coupon must have a minimum of $100 for the budget, however, advertisers will be charged only for redeemed coupons. 
Learn More >

14. Amazon Damage Allowance: To cover the cost of handling and disposal of damages, Amazon charges vendors a damage allowance. Vendors can choose not to agree to this damage allowance, but they then must fund the cost of returning the item themselves. 

15. Amazon Early Reviewer Program: The Early Reviewer Program is an Amazon-run initiative that can generate up to five new reviews on a selected product. Amazon randomly contacts verified buyers of an enrolled product and offers the customer an incentive to leave a review within the specified offer period. Amazon offers the buyer a small Amazon account credit (typically $1-$3) that can be used on future Amazon purchases. To qualify for the program, products must have a price point of at least $15 and fewer than five reviews. The product can remain in the program up to one year or until it receives five new reviews, whichever comes first. 
Learn More >

16. Amazon Enhanced Brand Content: A feature offered to Amazon’s vendors and Brand Registered brands that allows them to add additional information to their product detail page. This extra real estate appears below the bullet points on a product detail page. 
Learn More >

17. Amazon Headline Search Ads: Renamed to Sponsored Brand Ads, this ad type displays a banner ad at the top of the search results page. The banner ad contains a brand image and features up to three products. This ad type is typically best suited for generating brand awareness. 
Learn More >

18. Amazon Lightning DealsDeals that run for several hours on and appear on the Today’s Deal page. This deal type offers a limited quantity of units determined by the seller. To be eligible, the brand must have a proven track record of selling well, a minimum 20% discount off the lowest price in the trailing 30 day price or lowest price YTD (whichever is lowest), sales history, and a 3star rating or higher. 
Learn More >

19. Amazon Live: Through Amazons app, Amazon Live Creator, sellers can broadcast livestreams where they demonstrate products usage, features, and benefitsFeatured products appear directly below the live broadcast.
Learn More >

20. Amazon MarketingMarketing services that are available on the Amazon platform, including Sponsored Product Ads, Sponsored Brand Ads, Sponsored Display Ads, Sponsored Brand Videos, Amazon Coupons, Deals, Amazon Live, Amazon Posts, DSP, Brand Stores, A+ Content, and more. Amazon continuously adds and retires marketing services. 
Learn More >

21. Amazon Product Categories: Amazon groups products by specific categories and has different selling requirements for each. These requirements can include additional fees, performance checks, and other qualifications. An example of a product category is “Apparel, which includes Outerwear, Athletic Wear, Innerwear, Belts, and Wallets. 

22. Amazon Prime Exclusive Discounts: A price discount exclusively for Amazon Prime members. Products with Prime Discounts display strike-through pricing. To be eligible for this promotion, a product must be Nationally Prime Shipping Eligible, have a rating of 3.5 stars or above or no reviews, offer 20% off current price, the discount must beat the lowest price offered for the ASIN in past 30 Days by 5%, and the seller must have at least a 4-star seller rating. 

23. Amazon Seller Central: An Amazon platform used by Amazon sellers to market and sell products to Amazon customers.  

24. Amazon Sponsored Brand Ads: Formerly called Headline Search Ads, this ad type displays a banner ad at the top of the search results page. The banner ad contains a brand image and features up to three products. This ad type is typically best suited for generating brand awareness. 
Learn More >

25. Amazon Sponsored Brand Videos: An Amazon ad type that displays a video on the Amazon home page and in the search results. The videos display on mobile and desktop. Amazon recommends including subtitles in the video. 
Learn More >

26. Amazon Sponsored Display Ads: Pay-per-click (PPC) ads on Amazon and Amazon-owned websites and apps that target shoppers by searches, views, purchases, or products. 
Learn More >

27. Amazon Sponsored Product Ads: Pay-per-click (PPC) ads that appear in strategic areas on Amazon, such as the top of the search results page and within a product detail page. These ads give brands products more visibility and increase the likelihood of purchase by consumers.
Learn More >

28. Amazon Spotlight Deals: Deals that run for 24 hours on the Amazon Today’s Deals page or until stock runs out. These Deals are subject to minimum revenue and units sold thresholds. Criteria for Spotlight Deals include whether the item is Top Selling Product, the lowest price trailing 365 days, and a 4-star rating. 

29. Amazon Standard Identification Numbers (ASINs): A unique alphanumeric code for a product listed on Amazon. The ASIN can typically be found in the URL of an Amazon product detail page and in the further details section of the product detail page. 

30. Amazon Vendor Central: The Amazon platform used by manufacturers and distributors to sell product directly to Amazon’s first-party (1P) retail division, Amazon Retail. 
Learn More >

31. Amazon Vine: An invite-only program for Amazon customers who regularly leave reviews marked helpful by other customers. These customers are deemed trusted reviewers and gain access to free products, for which they provide customer reviews. These reviews are identifiable by a green stripe and labelled with Amazon Vine Program. 

32. Amazon Web Services (AWS): Amazons cloud computing platform that offers services such as infrastructure as a service (IaaS), platform as a service (PaaS), and packaged software as a service (SaaS). AWS also offers solutions for database storage, compute power tools, and content delivery services. 

33. AutomatiCampaignsA campaign type within Sponsored Products in which the advertiser sets a default bid at the Ad Group level and Amazon places ads automatically for customer search queries it deems to be relevant. These are commonly used to find new keywords that Amazon’s algorithm views as relevant for the products being advertised. 

34. Average Order Value: The average amount a customer spends at a digital storefront in a single order. You calculate this by dividing sales revenue by the number of orders taken. 

35. Average Time on Site: The average amount of time a visitor spends on a website. Usually defined within a specific timeframe. 

36. Bid: The maximum amount an advertiser is willing to pay in order to get an ad to place for a specific search term. 

37. Bid OptimizationThe act of adjusting the bid for keywords in Amazon ad campaigns in order to improve performance. Bids may either be increased because ads are not competitive enough for important keywords, or they be can be decreased because ads are utilizing budget too quickly. 
Learn More >

38. Brand Awareness: The degree of consumer recognition of a brand based on the brands copy, colors, logo, products, qualities, and style. 

39. Business to Business (B2B): A transaction in which a business sells products or services to other businesses. 

40. Business to Consumer (B2C): A transaction in which a business sells products or services to an end consumer. 

41. Call to Action (CTA): The action that marketing materials are trying to encourage the audience to take, such as “subscribe,” “add to cart,” or “sign up.” 

42. Certified Service Providers (CSP): A person or organization that is certified under the Streamlined Sales and Use Tax Agreement to perform sellers sales and use tax duties (excluding the obligation to remit tax on its own purchases).  
Learn More >

43. Chargebacks: When a customer contacts their bank about a charge they don’t recognize or dispute, rather than contacting Amazon or the seller about the issue. 

44. Click-ThroughRate (CTR): The percentage of visitors on a page who first view then click on an advertisement. 

45. CopywritingThe writing of marketing, advertising, and promotional materials. 
Learn More >

46. Conversion Rate: The percentage of visitors to a page who take a desired action, usually in the form of purchases.  

47. Cost of Labor: The sum of employee wages that have been paid. This also includes employee benefits and payroll taxes.  

48. Cost-per-ClickA method of billing determined by the number of times a visitor clicks on an advertisement. This is Amazon advertising’s primary billing model. 

49. Demand Side Platform (DSP): Amazon’s advertising platform that enables advertisers to use Amazon’s consumer data to target shoppers on Amazon and Amazon-owned websites and apps with display and video ads. 
Learn More >

50. Dropshipping: A method of retail fulfillment where the seller does not keep product in stock. Instead, the seller waits until a consumer purchases the product online, then the seller buys the product from the manufacturer and has the product shipped directly from the manufacturer to the consumer. This method is often used for products not eligible for preferred fulfillment methods, like FBA. 
Learn More >

51. Discount Code (Coupon Code or Promo Code): A code that shoppers use during checkout to redeem special offers or discounts. 

52. First-Party Seller: A seller who owns the marketplace upon which they sell. Amazon Retail, for example, is the one and only first-party seller on Amazon.com.  
Learn More >

53. Fulfillment by Amazon (FBA): An Amazon service in which third-party vendors keep their product at an Amazon fulfillment center. Amazon will pick, sort, pack, ship, track, and handle shipping, returns, and refunds of these products for a fee. 

54. Fulfillment by Amazon (FBA) Fees: A fee charged by Amazon for each unit processed through FBA. The fee is based on the product’s size and weight. 

55. Fulfillment by Amazon (FBA) Storage Fees: A fee charged by Amazon for your inventory that occupies space in an Amazon Fulfillment Center. This fee is based on the daily average volume (in cubic feet). 

56. Fulfilled by Merchant (FBM): A fulfillment method where the seller manages and controls their handling and shipping process, as opposed to Amazon or a third-party logistics provider 

57. Fulfillment Centers: A physical location where third-party logistics (3PL) providers, like Amazon Fulfillment, fulfill customer orders for online sales. 

58. Gross Margin: The revenue a business retains after subtracting costs, calculated by subtracting cost of goods sold from net sales revenue. The higher the gross margin, the more working capital a company has.  

59. High-Converting KeywordsKeywords in a pay-per-click (PPC) advertising campaign that drive high conversion rates. Identifying these keywords and adding them to sponsored ad campaigns is an essential part of optimizing an ad campaign. 

60. Influencer MarketingThe promotion and selling of products or services by having people with social influence and followings promote the product on their social media accounts. 
Learn More >

61. Invoice: An itemized record of a transaction between a seller and a buyer. 

62. Key Performance Indicators (KPIs): Metrics that are actively tracked in order to gauge a company’s long-term overall performance. These are usually set to compare the company’s performance to other companies within the same sector and to previous years’ performances. 

63. KeywordsWords or phrases that shoppers frequently use when searching for a given product. Including keywords in the copy on the product detail page or in Amazon sponsored ad campaigns helps products place higher in the search results and drive more traffic to listings. 

64. Landing Page: A webpage created solely for an advertising campaign. It is where visitors “land” after clicking on an ad or a link. 

65. Listing OptimizationThe process of revising the copy and images on a product detail page in order to improve organic placement in the search results and conversion rates. This process often includes adding keywords to the listing title and bullet points, revising copy to improve readability and highlight key features, and including images that demonstrate product use, features, and benefits. 
Learn More >

66. Low-Converting Keywords: Keywords that drive particularly low conversion rates within a pay-per-click (PPC) advertising campaign. Identifying and negating these keywords is an essential step in improving the efficiency and performance of a sponsored ad campaign. 

67. Minimum Advertising Price (MAP)The minimum price for which sellers can advertise a product, typically issued by the manufacturer. 

68. Minimum Order Quantity (MOQ): The minimum number of products or units that a supplier will produce at one time. This number helps ensure that the supplier is producing enough products or units to drive a profit after the costs of production. 

69. Marketing Campaign Management: The planning, executing, tracking, and analysis of marketing campaigns from the beginning to the end. 
Learn More >

70. Marketing Co-opAn agreement between a manufacturer and a seller where the manufacturer pays for a portion or the entirety of paid marketing efforts for their product. 

71. Marketplace Facilitator: Businesses or organizations that arrange with third parties to sell products and services on its platform. Through this they can facilitate retail sales. 
Learn More >

72. Marketplace Facilitator Laws: Legislation around sales tax responsibilities of Marketplace Facilitators. 
Learn More >

73. Manufacturing Cost: The cost of materials and production borne by the manufacturer. 

74. Media GalleryThe section at the top of an Amazon product detail page containing images and videos. 
Learn More >

75. Net Profit Margin: The percentage of revenue that a company retains as profit after subtracting all costs. 

76. Net-TermsThe amount of time that passes between a seller acquiring inventory from a manufacturer and the seller paying the manufacturer for that inventory. This delayed payment enables sellers to generate revenue to help pay for the purchase order.  

77. Paid SocialPaid targeted advertisements run on social media platforms, such as Facebook and Instagram. 
Learn More >

78. Pay-per-Click (PPC): type of digital marketing in which marketers pay a specific amount each time their ads are clicked. This model is used in most types of Amazon ads. 

79. Purchase Order (PO): The order a retailer places with a vendor to acquire product. This includes the quantity of product ordered and the price paid for it. 

80. Product DescriptionA section near the bottom of the Amazon product detail page where additional product information can be shared. 

81. Product Detail Page: Also called a “listing,” the page featuring a specific product that includes a title, bullet points, product description, media gallery, enhanced brand content, and customer reviews. 
Learn More >

82. Product Profit Margin: The difference between how much the product sells for and the actual cost of the product itself. This is sometimes referred to as a “markup. 

83. Product Rank: A product’s rank compared to other products in each category as determined by Amazon’s algorithm. A lower rank is better, indicating higher customer reviews, more traffic, more sales, and better organic placement on the search results page. 

84. Production Costs: The cost for manufacturing products or services. These can include labor, raw materials, supplies, delivery costs, and general overhead. 

85. Retail Arbitrage: The practice of buying products from distributors, wholesalers, retailers, and so on, then reselling those products at higher price. The resale usually takes place online. 
Learn More >

86. Retail Price: The price of product when sold to an end consumer. 

87. Return On Advertising Spend (ROAS): A measurement of the effectiveness of a digital advertising campaign. Very similar to ROI, this metric is specifically for paid advertising campaigns and helps online business determine best methods and improvements for future digital advertising campaigns. 

88. Return-On-Investment (ROI): A comparison of the amount invested to the amount generated by that investment. ROI is frequently used when measuring the value of paid marketing in generating overall revenue. To calculate ROI, divide the amount generated by the cost of the investment.  
89. Sales Tax: A tax on a sale, transfer, or exchange of a product or service. Usually this tax is applied to the end consumer and not the seller. 

90. Search Engine Optimization (SEO)The science of making web pages more attractive to search engines by implementing highly searched keywords in a page’s frontend content and meta content, optimizing content length, and more. On Amazon, SEO typically involves implementing keywords into product detail pages to improve their organic placement on the search results page. 
Learn More >

91. Search Engine Results Page (SERP): The page that is generated from a system after the user inputs their query. An example of SERP would be the Google results page. 

92. Seller AgreementA contract signed by businesses that sell on Amazon wherein they agree to comply with all of Amazon’s policies.

93. Social Media MarketingA type of marketing conducted on social media platforms such as Facebook, Instagram, Twitter, LinkedIn, Pinterest, Snapchat, and more. This marketing typically seeks to connect brands with their target audience, build brand name recognition and loyalty, increase sales, and drive website traffic. Social Media Marketing often involves content creation, engagement with followers, analysis, and running paid social media advertisements.  
Learn More >

94. South Dakota v. Wayfair, Inc.A landmark supreme court decision that holds sellers responsible for collecting and remitting sales tax in any state where they surpass a certain sales threshold, even if the business lacks a physical presence in the state. 
Learn More >

95. ThirdParty Seller(s): An independent company that sells products on a marketplace they do not own, such as Amazon. Third-party sellers are common on Amazon, accounting for over 50% of all sales on Amazon.com. 
Learn More >

96. Third-Party Logistics Providers: business that provides services for inventory management, distribution, warehouse storage, product preparation, labelling, and fulfillment for other companies. 
Learn More >

97. Today’s Deals: A page on Amazon that features products currently running Deal of the Day, Lightning Deals, or Best Deals. This is the second most visited page on Amazon. 
Learn More >

98. Use Tax: A tax on a storage, use, or consumption of a product or service which has not had sales tax applied to it. 

99. Vendor Fees: A fee collected by vendors to cover the cost of processing sales taxes and transferring them to state and local governments. 
Learn More >

100. Wholesale Costs: The price of products purchased in bulk from the manufacturer, as opposed to the retail price, which is an increased price charged to end consumers commonly used by retailers/resellers. 

ecommerce experts discuss the coronavirus

Continuing our focus on looking for the helpers during the pain and uncertainty so many are feeling right now, we’re dedicating this blog post to some of the biggest helpers at Kaspien: leaders by title and action who are helping Kaspien and our partners navigate through the immediate and long-term impact of the coronavirus.  

This expert spotlight features five Kaspien leaders: 

  • Bryce Burchak, Director of Strategic Initiatives 
  • Keri Rhodes, Director of Marketing 
  • Darby Meegan, Director of Business Intelligence & Product Management 
  • Kelsey Gruis, General Manager of Subscriptions 
  • Jed Nelsen, Senior Compliance Manager 

We asked these leaders 5 questions about how they’ve been affected by and responded to the coronavirus.  

Learn more about how Kaspien is supporting brands during the coronavirus in our COVID-19 Status Update.

1. How has your team’s work been impacted and how have you adapted? 

Bryce Burchak (Strategic Initiatives): To be honest, the biggest change we’ve seen is moving to work from home. My team works closely with our internal departments to accomplish our objectives on time. With our primary objective being to maximize the growth of our partners brands, our work has not changed. We have some different strategies to maximize that growth with the new COVID landscape, but we are still, just as always, focused on identifying and executing tailored solutions for each of our partners to grow their brand 

Keri Rhodes (Marketing)COVID-19 has forced us to change our marketing calendar and strategy. Instead of running B2B marketing for tradeshows, spring, and back-to-school, we’ve had to adapt and respond to the coronavirus. We’ve worked with our local and state government to coordinate support for impacted businesses, created new discounts and offers to make accessing tools and services easier for impacted brands, and worked with our supply network to direct PPE equipment to several hospitals. 

Darby Meegan (Product Management): We’re now all working remote. The team has had to suddenly become thoughtful about how we do work in a new way – a strange thought, and frankly, something I’ve taken a bit for granted. The team has been super malleable: we’re video chatting more, finding new methods to collaborate and communicate both synchronously and asynchronously, and communicating progress twice as often. The most evident win is that our team understands the vision and show ownership outside of the normal work structure we’re all used to working in. 

Funnily enough, several team members have made comments about there not being a good substitute for whiteboards when we’re problem solving as a team – a problem we’ll need to solve as we see our team working more and more remote into the future, not just because of this pandemic. 

Kelsey Gruis (Subscriptions): Rightfully so, our partners look to us to be the experts on marketplaces. With the uncertainty and turbulent landscape caused by the COVID-19 crisisour brands are concerned about sustainability. While our need to support brands by being the marketplace experts hasn’t changed, I would say the magnitude of marketplace changes has. We’re working really hard to gather answers as fast as we can, and subsequently, adapt as fast as we can. We want to do anything we can to ease our partners minds and give them the breathing room to focus on other priorities. 

Jed Nelsen (Compliance): COVID-related product restrictions have surged as Amazon unleashed its algorithms to address bad actors. We saw a 5x increase in the number of products restricted. Some of these suspensions were clearly wrong (we saw certain Funko Dolls restricted for having masks on their faces but not being in the HPC category). Our Compliance Team consolidated all the restrictions, prioritized by listings with inventory, and created cases to reinstate products. We had about one week of crazy, but we are beginning to beat the wave back. 

  

2. What are your top priorities to help Kaspien and our partners get through COVID? 

Bryce Burchak (Strategic Initiatives): Safety, sustainability, and supply chain, in that order. 

It’s important that all of us work to address this situation as safely as possible, and we want to model that for our partners. In doing so, there may be some risks to normal business: most notably, managing an effective supply chain.  

Obviously, Amazon has taken some large internal safety measures, and restricted the flow of some products to their fulfillment centers. In addition, some of our partners have shut down their facilities to protect their employees. Given the distribution network that Kaspien has established over our 12+ years, we have multiple means to deliver our partners’ products to their customers. If companies can no longer handle logistics or product prepping, we have a safe and effective means of handling that for them. Of course, not all products are the same, so we are working closely with brands to discuss how we can accomplish this in the most sustainable manner for their business.  

Bottom line: We’re here for our partners, and we are working extremely hard to leverage our supply chain to mitigate COVID impact in the safest way possible.   

Keri Rhodes (Marketing): The health and safety of our team members, and our unwavering focus on supporting brands through these volatile times. Many brands are being forced to change strategy due to COVID-caused economical shifts, and we have the expertise, technology and resources to help them. Marketing has prepared numerous resources that can help brands adapt quickly, and Kaspien has offered discounted rates to ensure brands can protect their bottom line and sustainability over the next few months. The more that brands can automate and trim fat in their businesses right now, the better positioned they will be as the industry evolves 

Darby Meegan (Product Management)Our team’s wellbeing, prioritizing key initiatives, and ensuring we’re all on the same page by over communicating. 

Outside of some of the extreme health impacts of the coronavirus, everyone’s lives have been disrupted. Our coworkers are trying to find work arounds to celebrate weddings, birthdays, new births, and many other things that deserve clinking glasses, tears of joy and hugs. They’re also trying to find work arounds for supporting loved ones, friends who have lost jobs, their favorite gathering places, struggling to make ends meet, or the passing of loved ones. These are events where video chats can’t suffice. First and foremost, we’re making time to pursue human connection and support where we can. 

Now more than ever, our team is ruthlessly prioritizing key initiatives. With the hurricane of potential projects and opportunities to jump on, we’ve paused and tried to measure twice and cut once, then review outcomes. We’ve tried to consistently ask our team, “Are we missing something over here on X? Is this really the most important thing we could be working on? What are we not working on that we should be?” 

Kelsey Gruis (Subscriptions)For our partners, our goal is to mitigate as much of this crisis as we can, so you don’t have to worry so much about your business. Your focus should be on your employees and your families health and safety. We’re here. Our teams are able to work safely and effectively from home, and we’re working to answer your questions and provide solutions. 

Jed Nelsen (Compliance)From a compliance perspective, our aim is to provide good advice to our partners about Amazon’s policies (such as don’t mention COVID-19 or coronavirus in your listing, or it will get restricted) and ensure that their products are live and available on Amazon, Walmart, etc. 

  

3. From your perspective, what actions can brands take that will be most impactful right now? 

Bryce Burchak (Strategic Initiatives): Be creative and get scrappy. There is not one answer for every brand, as each business is unique. The widely applicable recommendation I can offer is to identify the most sustainable supply chain to your end customer. However, focus should not be limited to this. Brands should review the key functions of their business and get creative in how to best address. Take datasupported action quickly; don’t let analysis paralysis stymie your pivot.  

Actions should be prioritized in accordance with estimated impact. If you’re focused on maintaining revenue, that may drive a different action than a cash flow focus. Spend time digging into each supporting process for your top objective and think creatively about how to adjust. For instance, if you’re focused on consistent revenue, have you updated your marketing spend to align with demand trends and increased lead times? You don’t want to create out-of-stocks.  

Keri Rhodes (Marketing)Find ways to scale their current operations in every way, so that they can be nimble and prepared to change as the landscape changes. Brands should be focused on automating and finding the most effective strategies for their advertising, with the goal of increasing sales while cutting costs and time. Brands should also be aware of opportunities to help their bottom line, like recouping as many dollars back from Amazon as possible through tools like Channel Auditor. 

Darby Meegan (Product Management)The highest priority is financial stability for your company and your team members. 

The Paycheck Protection Program loan went live on April 3rd. Iyour brand needs capital to make ends meet (payroll, rent, mortgage, utilities, and other qualifying debts) this is the place to start. Brands are eligible for up to $10MM depending on their circumstances and if they meet criteria. Applications are available on the SBA website. 

Second in my mind is ensuring the safety and wellbeing of their employees. Whatever a company does in a time of crisis either pays dividends or wreaks havoc once things recover. Their response today communicates to their customers and team members the unspoken values the brand holds, it communicates to their retail partners the resilience and longevity the brand holds, and it communicates to their suppliers they’re doing business with a trustworthy partner.  

Third, expand your logistics network – even if only temporarily – to work with providers who can get your goods directly to consumers. Amazon’s supply chain is feeling quite the strain and many experts believe the worst of the virus is yet to come. There are a few options. Deliverr is my recommendation for best directtoconsumer option – they can deliver for Amazon, Walmart, eBay, personal Shopify stores, and beyond. We’ve worked with them for a number of years and value their partnership. Walmart has recently announced their own fulfillment network, which is a great option to get on their rapidly growing marketplace, however, there will be some delays getting up and running in their platform (including an approval process). 

Jed Nelsen (Compliance): Think holistically and longterm. Can you pivot your business to provide needed supplies for the crisis? Are you maximizing your channels that are still selling (grocery, online, etc.)? Finally, be careful not to be opportunistic (price gouging, hoarding, or bragging). If you exploit the crisis to grow your profits, the blow to your brand will be swift and painful. 

  

4. What actions can brands take that will be most impactful in the long-term? 

Bryce Burchak (Strategic Initiatives)This crisis has made many brands realize how overly dependent they’ve become on their Amazon sales. Now is the time for brands to diversify not only their online presence but also their means of distribution. Other marketplaces are working hard to catch up, with some exciting growth coming from Walmart, eBay, Google, and Shopify in the last 6 months, highlights listed below: 

If brands limit their distribution and presence to Amazon, they’ll miss substantial opportunities for exposure, sales, and improved margins on these other marketplaces. This pandemic should be a catalyst for brands to re-assess their ecommerce strategy and work to broaden the number marketplaces they are represented on and explore new fulfillment strategies. 

Keri Rhodes (Marketing): Find a partner that has the ability to work through these types of crises and has the team to support brands when they need to focus on operations and logistics. A holistic partner helps avoid frequent and reactionary changes in strategy, which can cause distraction and derail progress. 

Darby Meegan (Product Management): Same answers as above: safeguard financial stability, protect your employees and reputation, and expand your logistics network. These efforts will help in both the short-term and long-term. 

Kelsey Gruis (Subscriptions): Remember that, while we don’t know when, this will pass. It may take time to get back to ‘normal’, but it will. We must continue to be persistent in our presence and brand values, and that means maintaining a strong presence on your online sales channels. Ignoring your ecommerce strategy at this time would be detrimental in the long-term for two reasons: 1) Ecommerce is the current new norm. If people are shopping, its online. 2) Whenever this does go back to ‘normal’, brands who maintained their footing will be the best positioned to recover the quickest. 

Jed Nelsen (Compliance): Ensure that you have the right partnerships in place to manage your brand, including marketingsupply chain, legal, etc. When times get tough, who is really adding value to your brand? Also, keep an eye on consumer trends, as tastes and buying behavior will change even once the quarantines are lifted. This pandemic will leave a lasting mark on the economy.  

  

5. What skills and traits matter most during this crisis, for a business and/or leaders? 

Bryce Burchak (Strategic Initiatives): Vision and composure. 

This situation has understandably shaken both our current and future world. As leaders, it’s important that you are extremely communicative in navigating your teams through these uncertain times. Ensure everybody is often reminded of the vision you have beyond one day, one week, or one month. It’s important to not lose focus on the end goal with daily news bringing many interruptions.  

That being said, it’s equally important that your vision is inclusive of changes needed to thrive in the postCOVID world.  Now is the time for innovation and adaptability, so if you need to make a pivot, analyze the proposed change, update your vision accordingly, and get the message out ASAP.  

Things are not easy right now. It’s understandable that many are dealing with anxiety and fear as they try to adapt to COVID life. Leaders have the opportunity to address this and set the tone for their business and employees. Maintaining composure is crucial. The top priority should be to protect employees and steer for safety, but do so as a voice of reason and understanding. Don’t get caught up riding the highs or the lows; keep an even-keel and let your teams rely on you to be the calm during the storm. Be the champion of composure for whomever you are leading.  

Keri Rhodes (Marketing): “Find the helpers during tough times.” A great reminder for brands to seek out and provide support within and without their networks. It’s also important for business leaders to remain calm and search for the positives. Events like COVID will make many businesses stronger in the long-run and develop bullet-proof processes that can aid in times of crisis. Businesses and leaders should also be understanding that everyone in the world is being impacted by COVID, so while we are all in this together, people’s lives are being impacted in very different ways. Extending options and being understanding will go a long way for their protecting a business’s most valuable asset: their employees.   

Darby Meegan (Product Management): Vision, teamwork, and ownership. 

Vision cannot be beaten. The legendary Peter Drucker is quoted as saying “culture eats strategy for breakfast.” I totally agree, especially if your culture is built on a vision. Regardless of your position in your organization, what is the why behind what you do? If you and your team have a shared sense of purpose, things go smoother. Here at Kaspien, our vision is to be a brand’s ultimate online growth partner. Every team member here is empowered to put brand’s growth first and advocate for it. That vision of what we’re doing permeates our development team that creates tools for our customers and our internal teams, it enables our data and product teams to innovate and dig into data to create new solutions, it gives our operations team some gumption in positioning our partner’s goods the best way possible, and it ensures our Account Managers and Sales team are true advocates for the brands we work with. If we were just selling goods, I guarantee we wouldn’t approach our work with the ferocity and creativity that we do. Our vision is our true north and the engine behind our competitive edge. 

Teamwork is always paramount in a business and a team. It becomes increasingly so in a period of urgency. Whether you’re a contributor or the leader, empower your teammates to utilize data, map out their approach, communicate their actions transparently, and make decisions. If your team can operate as a collective unit with each member bringing their distinct experience and perspective to the table, you’ll see times of crisis as a chance to reformat and empower your team. Teams need good process, but effective collaboration is even more important. 

Ownership is next. If you can make decisions based on what is the best thing for your customers, you cannot go wrong. You’ll empower those around you. You’ll form partnerships with your vendors, customers, or suppliers. You’ll create momentum and start seeing others rise to the occasion. The bigger impact of ownership, however, is spreads to others. Don’t jump in and take on every project or solve every problem. Trust your team (ahem, see above), and hand over the reins. Teammates, bosses, and coworkers will rise to the occasion and you may be pleasantly surprised about how many key players have been waiting for their opportunity to shine. 

Kelsey Gruis (Subscriptions): Empathy. I think understanding that each person (employee, manager, or customer) handles and deals with things, including crises, differently. My personal belief is that we need to meet people where they are at and acknowledge that how I deal with something is different than how you do – and that’s okay. Customers need to see a brands empathy in that way too. We can’t market a brand/product specifically on how I feel about the crisis; we have to take an even-keeled approach that focuses on sustainability and working together. 

Jed Nelsen (Compliance): Leaders need to be calm, get good insights from the data, and be decisive. Don’t panic; it only makes things worse. Look to what your data is telling you and ask tough questions that get to the heart of the issues. Finally, if decisions need to be made, make them sooner rather than later and commit. 

 

Chat with the Experts 

If you have questions about how your business should be responding to the coronavirus, get in touch with Kaspien’s experts. 

Selling Online Can Help Mitigate Business Risk

COVID-19 will be here for months, disrupting our communities and our businesses in ways that we are only beginning to understand. If you have only operated your business in brick & mortar stores, moving your brand online can help you shield your business from adverse effects of the economic fallout from the coronavirus. We can speak from firsthand experience: Kaspien was founded at the height of the last recession in 2008. While many industries struggled to survive the rough economy, we not only survived the recession, we thrived in a vibrant and fast-growing market.  

Yes, online marketplaces like Amazon are a different beast today than they were 12 years ago, but there is still security to be found in diversifying your assets. Expanding your brick & mortar business to have a strong presence on Amazon, Walmart, and other growing online marketplaces is a smart way to position your brand to survive unexpected shifts in the market, like the one we are currently experiencing. 

How to Start Selling on Online Marketplaces 

When expanding to major ecommerce platforms like Amazon and Walmart.com, brands have three general routes for listing their products online: first-party, third-party, and direct-to-consumer.  

Definitions: 

  • First-party (1P): A first-party business model is when you sell product wholesale to the marketplace (like Amazon Retail or Walmart Retail), and they sell the product at retail price on their platform. In a 1P relationship, you get paid a large check once every few months.  
  • Third-party (3): A third-party business model is when you sell product wholesale to a third-party seller (like Kaspien), and the 3P sells the product at retail price on Amazon, Walmart, or wherever else you’d like to curate a brand presence. In a 3P relationship, a single retailer can represent your brand across all channels. As with the 1P relationship, you get paid a large check every few weeks to few months.  
  • Direct-to-Consumer (DTC): A direct-to-consumer business model is when you, the brand, manufacture product and sell it on marketplaces yourself. Instead of a periodic large paycheck, you generate a much smaller but steady stream of profits as products sell. This can be done independently (hiring the necessary teams internally) or by partnering with an agency (hiring the necessary teams externally). 

Other than the cash flow model, the biggest difference between the three business models is in who provides the personnel, expertise, strategy, hardware, software, infrastructure, and time needed to successfully run an online business.  

A Word of Warning About DTC 

Although the idea of cutting out the middleman may have strong appeal to individuals with a strong and wholly commendable do-it-yourself attitude, there’s good reason that 1P and 3P not only exist, but flourish. Providing the needed resources – material and immaterial – is a lot of work. It takes teams of people and years of experience to excel at, so many brands find it easier and still highly profitable to use 1P or 3P. If they so desire, they can then work towards DTC while still actively growing an online presence 

We say this not to warn you away from DTC because we’re a 3P (through our platform model, we can actually serve as your 3P, agency, or provide you with industry-leading software for your own teams to use. To us, it doesn’t matter how you sell; we can help in the way that best serves your brand. But that’s another story). We say it to simply educate you about the reality of the situation and equip you with the information needed to make an educated decision.  

Which Online Business Model is Best? 

To determine which business model will best serve your brand as you look to expand your online presence, we’ve compiled a list of key considerations, as well as a list of next steps you can take immediately.  

Our whitepaper, The Costs of Amazon, explores each of these considerations and more in greater detail.
Download it for free
!

4 Key Considerations for Selling Online 

There are four basic key considerations as you plan to expand your business on Amazon, whether it’s for the first time or you’re scaling your efforts there.  

1. Cash Flow 
We touched on this in our definitions of the three primary business models, but cash flow differs in each business model. In 1P on Amazon, for example, brands are typically paid on Net-90 or Net-120 terms. These PO’s also tend to be larger than what 3P’s purchase. In a 3P relationship, brands are typically paid on Net-30 to Net-60 terms, so brands are paid more frequently. In a DTC model, brands operate off of sales revenue. Each cash flow model has its pros and cons, and which serves a brand best depends on the brand’s existing infrastructure and whether a brand can adapt their revenue model.  

2. Resources 
Does your team have the experience and knowledge needed to run an efficient online business? This includes marketing, product preparation, inventory management, brand protection services, tax compliance, and more. Does your business already have the hardware and software in place to manage your processes and infrastructure? This is doubly important as businesses begin to work remotely to comply with social distancing mandates. It takes a village to run an optimal online business. The answers to these questions will be a significant factor in determining whether you pick 1P/3P retail model versus a DTC model.  

3. Services 
We just mentioned the many services that go into driving a successful business on Amazon. In addition to asking “if” you have resources for them, you should also consider the quality and price of each. 1P and 3P’s offer many of the same services. Now it’s a question of who can provide the better results for the better price.  

4. Control 
Finally, and crucially, there is the question of brand control. When you work with another business – whether it’s a manufacturer, logistics provider, seller, or agency – you relinquish some control of your business. That’s just the reality, which is why it’s so important that you take time to explore their services, negotiate contracts with clauses about who can sell your product and who can update your product listings, and generally make sure you find a company that will work with you as a partner in the full sense of the word. 

Next Steps to Start Selling Online 

Those are the considerations, but what action items can you take today? Supply lines are hurting at both ends, and there’s a strong sense of urgency to act now so you can minimize the adverse impact to your business caused by COVID-19.  

Here are our recommendations: 

1. Shop Around 
We’d love for you to work with us as your 3P, agency, or software provider, but you should do your homework. There are many 3Ps, agencies, and software providers out there. Which one offers the best customer support, the most effective services, and the best pricing? While selecting a partner to help you launch or expand your online presence is not a permanent decision, it will have lasting impacts, so do your due diligence and find a partner who will position your brand for long-term stability and growth.  

2. Ask for Advice 
Reach out to your professional and personal network for advice. Get advice from people with firsthand experience, whether that’s friends, family, colleagues, or even competitors. Faced with the threat of this crisis, it’s our duty to put aside competition and work to protect our communities and businesses, and thereby help prevent any greater economic hardship than we already face.  

3. Once Informed, BDecisive 
Do your research but do it quick, and once you’ve found a good match, act quickly. The sooner you can get your online business running, the more damage you can mitigate.  

4. Scale Smart 
Ignoring online marketplaces as a business venture is risky, but going too far too quick can also be dangerous. As you seek to expand your brand online, make sure that you’re putting your best foot forward. Which products have the best opportunity to succeed? Making this assessment is largely dependent on category saturation and competitors. Invest in your most differentiated products first, and then expand your online catalog from there.  

Learn More 

We recently published a whitepaper that explores each of these factors in much greater depth. Download The Costs of Amazon whitepaper for free here. 

We’re always happy to answer any questions you have. Please feel free to reach out through our contact form or schedule a call directly with one of our ecommerce specialists.  

Amazon taxes for online sellers

Death and taxes: the two certainties in life. This phrase is often credited to Benjamin Franklin, though the true source is unknown. Regardless though, the idea of taxation, and sales tax specifically, has been around about as long as commerce and trade itself.  

This reality was temporarily destabilized by the sudden and rapid growth of online marketplaces like Amazon, with legislatures struggling to keep pace with the fast-paced innovations. For many years, brands and marketplaces alike avoided paying sales tax in many states. That changed in June 2018 with the landmark supreme court case of South Dakota v. Wayfair, Inc. 

South Dakota v. Wayfair, Inc 

South Dakota believed that online retailers like Wayfair were not paying duly owed sales tax, shorting the state important sales tax revenue. Earlier tax laws included “physical presence” clauses, which meant that if a brand did not have a brick and mortar store within the state’s borders, they were exempt from the sales tax. South Dakota argued that that these physical presence clauses no longer make sense in today’s digital economy, and they fought for the ability to tax online retailers for sales made in their state. Ultimately, the Supreme Court agreed.  

As a result, brands that exceed a certain number of annual sales within a given state must pay the state’s sales tax, even if the brand doesn’t have a physical presence in that state.   

Key Takeaways 

  • Online sellers are now required to collect and remit sales & use tax for online sales in 42 states, even if they lack a physical presence in that state  
  • 33 states have enacted Marketplace Facilitator laws, which transfer the responsibility from sellers to online marketplaces like Amazon, Walmart.com, and eBay 
  • Sellers who sell outside of online marketplaces, such as on a direct website, are still responsible for collecting and remitting sales & use tax 
  • Some states have designated Certified Service Providers (CSP) that manage the tax nexus for online retailers. Kaspien partners with one of these CSPs to handle sales & use tax collection and remittance for our partners and clients 

 

How Marketplaces Are Affected 

This landmark decision opened the door for other states to revise or create ecommerce tax laws, requiring sellers to collect and remit sales taxes. So far, 42 states have implemented laws compelling sales tax collection for ecommerce sales.  

States have recognized that these new laws are burdensome to both states and sellers, as they create more administrative work for both parties. As such, many states have taken steps to simplify the process and relocate the burden to marketplaces (i.e. Walmart, Amazon, eBay, Etsy, etc.) through Marketplace Facilitator laws.  

Marketplace Facilitator laws were created because states believe that a platform is far more likely to consistently meet or exceed the economic nexus threshold, resulting in more consistent sales tax revenue to states. This approach also lowers states’ administrative costs, so they process returns for the platform instead of every seller.  

Additionally, many states are working to create a more uniform sales and use tax system across the country because they realize that a simpler process will result in more widespread compliance. Twenty-four states have banded together to form the Streamlined Sales and Use Tax Agreement (SSUTA), with more states moving towards these same measures.  

How Sellers are Affected 

Not every state with ecommerce tax laws has enacted Marketplace Facilitator laws, which means that there are still some states where sellers bear the burden to collect and remit sales tax, rather than the marketplace.  

Keeping track of all the laws and requirements of each taxing jurisdiction is a full-time job in itself, and not all sellers are equipped to make immediate adjustments needed to comply with the laws.  

To help with this problematic situation, the Streamlined Sales Tax Governing Board (SSTGB) has designated certain providers as Certified Service Providers (CSP) of the SSUTA. These CSPs calculate and automate the filings at no charge to the retailers. Some CSPs utilize software applications to help sellers track when they have reached the point of economic nexus in a specific threshold, help you register in those tax jurisdictions, and then assist with the actual filing of returns for those areas. Some software platforms even integrate into your accounting software to track the transaction data and compile the necessary information to prepare the returns.  

Kaspien offers one such sales & use tax service, partnering with TaxCloud to offer our partners and clients the best solution for automated sales & use tax compliance for both online and brick & mortar sales.  

TaxCloud offers the following benefits: 

  • TaxCloud automatically registers brands in SSUTA member states and assist with registration in non-member states 
  • TaxCloud tracks brands’ total sales and alerts them when they are approaching a nexus threshold and may be required to register 
  • TaxCloud can integrate directly into the Amazon Seller Central account or with the Walmart.com portal and pull in all transactional information without requiring any manual formatting 
  • TaxCloud can file for brands in all 9,998 tax jurisdictions in the U.S. at the required cadence (monthly, quarterly, annually) for each 

The advantage of leveraging TaxCloud through an Kaspien partnership is that we can provide the service in addition to dozens of others, functioning as your one-stop shop for all things ecommerce. View all of Kaspien’s services. 

Request more information about Kaspien’s tax and compliance services through our contact form 

Ecommerce Taxation Around the World 

Over time, how we do business changes, and with it, the collection of taxes. Currently, France is leading the charge in Europe to enact digital taxes on giant tech companies (Facebook and Amazon being some of the largest companies affected) because they feel that they are missing revenue from these companies. It will be interesting to see how all of that shakes out. Death and taxes; the two certainties in life. And from the looks of things, neither of those certainties are going to change anytime soon. 

Why You Need a Clean Amazon Sales Channel

Have you ever been offered an amazing deal, only to find out that some seemingly small decision you made in the past has made it impossible to move forward?

This happens to consumer product brands all the time. During the early days when you have to really claw for a place in the market, most brands will take any deal that’ll get products moving out the door.

The thing is, when you sold a single pallet to “Joe Reseller” who works out of his garage, you didn’t know that 12 months later, QVC or Home Depot was going to come to you with a giant opportunity. The problem: they’ll say to you “We’ll only work with you if no one else is authorized to sell your product online, especially below our price.”

Well, Joe Reseller dusted off his pallet of your products recently and has become a major issue as he releases your legitimate products into an Amazon listing for half price. Unless you can get him to stop (and he never answers his email, the only contact you have) then the big guy is going to pull out, and you’ll be left at square one. This could be retail arbitrage, a distributor, a reseller, or even a brick & mortar partner.

To earn a quick couple thousand dollars last year, you may have sacrificed a few hundred thousand per month now.

Here are the things you need to think about before another product walks out of your warehouse:

Seller Agreements
Keep these airtight from day one. Always use language that limits sellers to only the activities you talked about. Don’t think, “Oh, they don’t sell on Amazon, so I don’t need an online sales clause.” Things change! Any product can end up in a liquidation situation down the road, and you want to make sure that whoever is doing so isn’t undermining your overall strategy.

If you’re unsure about how to decide which sellers to work with, check out of blog post on the pros and cons of an exclusive seller vs multiple sellers

Get in Early
Even if you don’t feel ready to begin on a given online marketplace, take the time to stake your claim now. Just like buying a domain you may one day use, set up a brand store and product listings as soon as possible, even if they aren’t currently live. Whether you like it or not, chances are high that your products will end up on Amazon. It’s exponentially easier to gain control of an untouched channel than it is to wrestle your channel back form a bunch of shadowy strangers with nothing to lose.

Learn more about the importance of being the first to take your brand to Amazon in Why Your Brand Should Probably be on Amazon – Even if You Don’t Want to be on Amazon

Plan
Have a product roadmap. If your goals include appealing to a national retailer, or the exposure of a TV spot, you need to stick to a plan! It’s like getting accepted to any ivy league university; everything you did in your school days counts. This means not only paying attention to whom you sell your products, but also to whom they might sell them. It also means thinking about inventory coverage and duration. Is Amazon Retail tempting you with a big juicy PO? Does it represent 2 years of stock at the current sales rate? That could be a big problem down the road when you try to pivot, and Amazon doesn’t want to play. 

Need more help protecting your brand? Check out our blog post, 11 Ways to Protect Your Brand Against Counterfeits, IPR Violations, and Rogue Sellers

The Bottom Line

Think long-term. Where do you want your brand to be in one year? How about five years? If you want to be the leader in your market by then, you’ve got to take these proactive steps now. 

Not sure where to begin? Kaspien can help you plan short-term objectives to position you to hit long-term goals. Download our free whitepaper, The State of Amazon Marketing, learn more about our services, or get in touch through our contact form

 

Homeland Security Counterfeit Report will Effect Amazon Merchants

Between 2005 and 2016, there was a reported 154 percent rise in the international trade of counterfeit goods; from $200 billion to $509 billion. At the U.S. border, the Department of Homeland Security (DHS) reported seizures of infringing goods rose from 3,244 to 33,810 per year. The rise of counterfeit goods represents a growing threat to market integrity, with DHS reporting “global employment losses due to counterfeit goods were between 2 million and 2.6 million jobs in 2013, with job displacement expected to double by 2022.”

Furthermore, counterfeit products represent a significant and material threat to consumer’s safety. Counterfeit products are likely to have little or no quality controls and may not meet U.S. safety standards. In recent years, counterfeiters have sold contaminated food, cosmetics, and prescription drugs, sub-standard brake pads, airbags, helmets, and climbing gear, and faulty electronics that have caused injury, death, and fires.

Ecommerce has played a major role in enabling the counterfeit problem, with few barriers to entry and difficulty to identify counterfeits without inspecting the product in-person. The Organization for Economic Cooperation and Development wrote, “Ecommerce platforms represent ideal storefronts for counterfeits and provide powerful platform[s] for counterfeiters and pirates to engage large numbers of potential consumers.”

Homeland Security Responds to Counterfeits

In response to growing concerns about consumer safety and market integrity, DHS recently published “Combating Trafficking in Counterfeit and Pirated Goods,” a 54-page report detailing actions that government agencies and major marketplaces can take to reduce the threat of counterfeit goods to consumers and businesses.

Under the Tariff Act of 1930, articles entering the United States under a certain value are not subject to the same formal customs procedures and data requirements as high-value, high-volume shipments. Additionally, loopholes in the international parcel system allow foreign sellers to import goods at discounted rates.

To remedy these loopholes, the report offers a series of actions recommended for the U.S. government, as well as a list of best practices for ecommerce platforms prepared by the National Intellectual Property Rights Coordination Center, a division of DHS. While some of DHS’s recommended government actions will require legislation, some can be enacted without legislation through powers already available to DHS, Customs & Borders Protection (CBP), and Immigration & Customs Enforcement (ICE).

These recommendations would directly affect marketplaces like Amazon, and therefore, also Amazon merchants.

Immediate Actions to be Taken by DHS and Recommendations for the U.S. Government:

  1. Ensure entities with financial interests in imports bear responsibility
  2. Increase scrutiny of Section 321 environment
  3. Suspend and debar repeat offenders; act against non-compliant international posts
  4. Apply civil fines, penalties, and injunctive actions for violative imported products
  5. Leverage advance electronic data for mail mode
  6. Anti-counterfeiting consortium to identify online nefarious actors (ACTION) plan
  7. Analyze enforcement resources
  8. Create modernized ecommerce enforcement framework
  9. Asses contributory trademark infringement liability for platforms
  10. Re-examine the legal framework surrounding non-resident importers
  11. Establish a national consumer awareness campaign

 

DHS intends to modernize their enforcement to meet the challenges of the ecommerce environment. One, by treating domestic fulfilment centers as ultimate consignees for imported goods. This will put more onus on the online platforms like Amazon, as they will be held to a higher degree of responsibility by the U.S. government.

Two, by extending the scope of statute that would disallow repeat offenders to obtain importer of record numbers. Moreover, DHS recommends the administration pursue legal remedies to fine or penalize third-party marketplaces dealing counterfeit goods, which would push Amazon to actually pursue and enforce anti-counterfeit measures.

The focus of the report is to create a modernized ecommerce enforcement framework. This would include new statutory authorities and streamlined enforcement processes. More onus and liability would be put on the third-party marketplaces to combat counterfeit trafficking.

Best Practices for Ecommerce Platforms and Third-Party Marketplaces

  1. Comprehensive “Terms of Service” agreements
  2. Significantly enhanced vetting of third-party sellers
  3. Limitations on high risk products
  4. Rapid notice and takedown procedures
  5. Enhanced post-discovery actions
  6. Indemnity requirements for foreign sellers
  7. Clear transactions through banks that comply with U.S. enforcement requests for information (RFI)
  8. Pre-sale identification of third-party sellers
  9. Establish Marketplace Seller ID
  10. Clearly identifiable country of origin disclosures

 

One of the major recommendations for platforms and third-party marketplaces is to implement robust terms-of-service. For Amazon, this would give the platform sweeping powers to investigate and debar sellers found to be selling infringing goods. Furthermore, DHS recommends steps to more rigorously vet new sellers and implement new limitations on high risk product categories, which could lengthen the time it takes to bring new products to market.

The balance between the efficiency and section on marketplaces, and the protection of consumers and rights holders, has been a long-standing issue in the world of ecommerce. The new DHS recommendations include enhance post-discovery actions, putting more burden on the online marketplaces.

There are concerns that any new requirements for preventing counterfeits would harm smaller marketplaces and reduce competition by entrenching existing platforms. Whether these concerns will be addressed when recommendations are enacted remains to be seen.

 How the Issue Arose

The very same conditions that have made online marketplaces like Amazon so attractive to legitimate business have coincidentally given rise to a slew of illegitimate sellers.

To date, there has been very little scrutiny on businesses to sell online. The ease of setting up a seller account, sometimes multiple accounts, has reduced the burden of bad actors to fairly compete with legitimate sellers and brands. With such ease of access to a massive marketplace, bad actors can easily begin selling counterfeit or pirated products to millions of consumers.

Consumers generally have a positive attitude towards online marketplaces, primarily because major trusted brands are available there. Counterfeit sellers are able to curry favor with consumers by selling next to and using legitimate brands’ trademarks.

The CBP’s list of most seized counterfeit products in FY2018 included:

  1. Apparel/Accessories
  2. Footwear
  3. Watches/Jewelry
  4. Handbags/Wallets
  5. Consumer Electronics
  6. Consumer Products
  7. Pharmaceuticals/Personal Care
  8. Optical Media
  9. Toys
  10. Computers/Accessories

 

In a retail landscape where online sales are becoming key to a successful brand, intellectual property protections are increasingly important. As opposed to the traditional brick-and-mortar environment where products are only exposed to regional marketplaces, the world of online marketplaces exposes a brand’s products worldwide instantaneously. Ecommerce has revealed that a robust intellectual property protection plan needs to be front-and-center of any online sales strategy.

What Comes Next

With the DHS’s acknowledgement of the counterfeit issues that plague ecommerce platforms, brands and sellers can expect major changes in marketplace policy. Regulators have gone beyond just trying to stop counterfeit goods at the border and have widened the scope of enforcement actions. They have called to action the online platforms; to work with regulators and disincentivize the counterfeit trade.

More liability for the marketplaces has been implied with this new report. Major ecommerce platforms will be expected to take responsibility to police sellers and listings.

It remains imperative that brands have an intellectual property rights protection strategy, whether that is monitoring the marketplace or relying on a trusted partner.

Seller Central without Inventory

One of the most common pain points we hear from manufacturers when we go to tradeshows is that they lose some of their brand control when their products are listed on AmazonFor manufacturers who want to retain their current business model of selling through third-party retailers, but would still like to affect their sales channel, we suggest a simple trick: 

Create a Seller Central account.  

You may be asking, “What if I don’t want to sell my product myself?” You aren’t required to hold an inventory position to have a Seller Central account. A Seller Central account, even without inventory, helps manufacturers contribute to sales growth and improve brand control.  

Specifically, creating a Seller Central account enables manufacturers to: 

  • Access Sponsored Brand Ads 
  • Enable you to answer questions and comments as the brand, increasing customer confidence 
  • Improve integrations of Amazon with social media marketing 
  • Become Brand Registered (this requires a trademark), which in turn allows you to: 
  • Build a Brand Store 
  • Create A+ Content 
  • Access Amazon Live 
  • Access Amazon Attribution 

Read about each of these tools in our free whitepaper, The State of Amazon Marketing.

These tools can significantly help manufacturers protect their brand integrity on Amazon, without forcing them to change their desired business model. It should be noted that the benefits of creating a Seller Central account are easiest to obtain for brands who have active relationships with their distribution network, as some tools will require collaboration with their retailers. 

How to Create a Seller Central Account 

  1. To create a Seller Central account, go to Amazon’s pricing page: https://services.amazon.com/selling/pricing.html  
  2. Navigating to the pricing page will allow you to select the Individual Plan, which is entirely free, rather than the Professional Plan that has a $39.99/month subscription fee. If you are not taking an inventory position and using Seller Central only to gain access to additional tools, you do not need the Professional Plan. Note that Amazon will ask for a credit card/bank to have on file since they’re assuming sales will occur through the account, but so long as none do, you won’t see any fees. 
  3. Next, complete several forms detailing your contact information and proving you’re not a robot, and you’re set. 

 

Gaining Access to the Seller Central Tools 

Seller Central has a fairly logical navigation, making it easy for newcomers to utilize the platform.  

  • To access Sponsored Brand ads, navigate to ‘Advertising’ along the top menu and select ‘Campaign Manager’. From this view, you can create and manage Sponsored Brand campaigns, as well as Sponsored Product and Sponsored Display campaigns. By running ads yourself, you gain more control of your marketing, rather than delegating control to one of your sellers. This is most useful if your sellers are not well versed in Amazon marketing strategies. By using ads to drive more sales for your third-party sellers, the more POs they will place with you and the more sales you’ll both experience. 
  • To answer questions in the Customer Q&A section of each listing, you’ll need to first add your brand’s ASINs to your Seller Central account, then enable notifications in the Product Support section of your Fulfillment by Amazon Settings. In some cases, you may have to go through an approval process before you’ll be able to add certain ASINs to your Seller Central account. Even when these ASINs have an inventory of 0, you’ll be notified of when a question is posted to the listing, and then you can respond as the brand, building customer confidence and encouraging sales. 
  • To integrate your Amazon strategy with your social media strategy, you’ll need to become Brand Registered so you can begin using the Amazon Attribution Program. 

Become Brand Registered 

Enrolling in Brand Registry provides brands access to additional access to marketing services, brand protection services, and analytics. To become Brand Registered, visit our enrollment guide 

Once you’re enrolled, here’s how to gain access to all the other goodies: 

  • To use Amazon Attribution, log into your Seller Central account and visit the registration page. If you have enrolled in Brand Registry, you will be able register. Once Amazon confirms your registration, you can immediately start creating advertisers, orders, and line items to use for your off-Amazon marketing attribution. Read our blog post for an overview of how to start using the program. 
  • To use Amazon Live, download the Amazon Live Creator app and log in to your brand’s Amazon account. Currently, Amazon offers the service solely through an iOS mobile app (Amazon has not yet released an app for Android or Google phone users). Once you have the app, use Amazon’s guide to test the program and begin broadcasting. 
  • To create A+ Content in your Seller Central account, navigate to the Advertising tab and then A+ Content Manager. Once there, you can start creating A+ Content for any of your registered ASINs. You’ll construct the content in the builder with the preset modules. 
  • To create an Amazon Brand Store, navigate to the Stores tab in the navigation bar, and then click on Manage Stores. This window will provide you a list of all registered brands that you can build Brand Stores for. Simply click “Create Store” to start the creative process of building a beautiful landing page for your brand. 

 

Other Ways to Increase Brand Control 

There are a whole host of ways to better protect your brand on Amazon and other online marketplaces. Check out our blog post, 11 Ways to Protect Your Brand Against Counterfeits, IPR Violations, and Rogue Sellers to learn about other helpful methods and tools.  

Benefits of Amazon Brand Registry

This post will be updated regularly as the offerings through Amazon Brand Registry platform change.

Latest update: November 2019

If you are selling your own products on Amazon, the next best thing you can do for your brand is apply for Amazon Brand Registry. Anyone with an active registered trademark can apply, and once you do, it opens the door to a vast amount of benefits and marketing tools that far too few brand owners are taking advantage of. After your application has been accepted, you’ll gain access to a few immediate benefits, as well as an ever-growing list of powerful marketing and research tools.

Learn How to Enroll in Brand Registry

Benefits of Amazon Brand Registry

Brand Integrity Protection

One of the more common struggles brands encounter while selling on Amazon is keeping their content on the listing detail page accurate and looking as they desire. The fact is that anybody, authorized seller or not, can come into an Amazon listing and publish unauthorized content changes. Sometimes, these listing edits are innocent; other times, they’re malicious and indicate an attempted hijacking.

When your brand is registered with Amazon, only authorized accounts can make changes to your listings. Authorized accounts include your own brand’s account or any other account to which you’ve assigned a role.

There are three tiers of roles you can assign to other Amazon accounts, and each has their own level of permissions. If an account holds any of these roles, they are permitted to make listing edits. If anybody else attempts to edit through a ticket with Amazon, they will immediately receive a rejection notice. The three available roles are:

  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

 

Infringement Reporting Tool/IPR Violations

Amazon will use all the information you provide during your application process to protect your brand on the Amazon market. This tool can alert you when products are incorrectly using your trademarked terms or logos and when product listings are being created with your brand name after you have already listed your full catalog on Amazon. It can even notify you when sellers are shipping products from countries you do not manufacture or distribute to.

There is also a manual search tool you can use to proactively find infringement violations. Whether you are using the global, image, or bulk ASIN search, once you find violators, Amazon will guide you through the steps to submit reports of potential infringement. Once these have been reported, Amazon will investigate the accusations on your behalf and take appropriate action on the potential violators.

Amazon Brand Registry Self-Service Marketing Tools

Now, here’s the fun part of Amazon Brand Registry: You gain access to more marketing tools! These services are ever changing; many services are released through Brand Registry, such as Brand Stores and Enhanced Brand Content, but occasionally, Amazon will phase out services that are either outdated or are no longer of value.

Amazon Attribution Program

Digital marketers have always struggled with attributing sales to their off-Amazon marketing efforts, so the announcement of the Amazon Attribution Program beta was like Christmas for US Amazon sellers. Very similar to building unique campaign tags and URLs for Google Analytics tracking, sellers can now provide unique tags to social media posts, their influencers, and any other off-Amazon digital marketing strategies. Advertisements will receive the attribution if the purchase happens within the 14-day window. If multiple advertisements are engaged by a shopper, only the final ad will be credited. This program is necessary for the data-driven marketer, enabling more strategic adjustments to services and budget.

Amazon Live

This free US-only service allows brands to broadcast live or live-like videos to Amazon consumers. These livestreams can showcase product usage, features, or act almost like an infomercial on the Amazon marketplace. These videos will display on the Amazon Live page and beyond. We’ve even seen livestreams appear in competing product listings. To get the most out of your Amazon Live efforts, it’s best to pair them with promo codes since it provides a clear CTA. And the best part? Amazon Live is currently free.

Brand Dashboard

The Brand Dashboard was one of the more exciting releases in 2019 for registered brands. This dashboard offers a variety of insights that helps brands keep tabs on their brand’s health, monitor new reviews, and check the quality of newly launched ASINs. The main dashboard provides a good snapshot of performance rates as well as conversion and traffic recommendations. The snapshot includes many valuable metrics you may have already been monitoring, but the ability to view them all in one convenient place can help brands better understand the overall state of their Amazon business. Price competitiveness, detail page completion rates, and search terms optimizations are just a few of the metrics hosted on this page.

Brand Analytics

Possibly the best tool Amazon has provided for researching search terms, this reporting platform gives you insight into how your products compare to others in the market. Compare your products to top competitors, see top-performing search terms across the entire channel, or dig into the demographics of your customer base during any given time period. The competitive intelligence offered in this reporting is like none other. This free tool empowers brands to make strategic decisions with their search term and marketing strategies. Just keep in mind that there is a 3-4 day lag in the reported data.

Video Uploads

Videos have been available in the listing media gallery for quite some time, but how to get videos there was an unsolved mystery. Unless you were a large, reputable brand or had a special contact with Amazon, you were out of luck. Amazon now offers a Video Upload Manager under the Inventory tab in seller central. Videos submitted through here must be a .mp4 or .mov format under 500MB and cannot include any website URLs or other marketing materials. When you upload, you must submit a video title, related ASINs, and a video thumbnail. Once submitted, Amazon will review, and it could take up to 72 hours before publishing. Additionally, if your media gallery has more than six images, we’ve seen videos replace the sixth media gallery slot.

Brand Stores

Amazon Brand Stores allow brand owners to create a customized landing page within the Amazon marketplace. It looks like a branded website within Amazon and can be customized with your own images, videos, product listing links, and much more. You can even create a navigation bar to improve the consumer’s experience as they browse through your catalog by category, product line, or in whatever structure makes the most sense for your catalog. Amazon provides a handful of store metrics like number of visitors, views, top performing pages, and any sales that were attributed to the store. Your Amazon store will also have a custom URL that you can use for inbound marketing efforts, and it can work very well with the Amazon Attribution program in helping determine where traffic is coming from.

A+ Content Manager

Registered brands have access to the A+ Content Manager, formerly called Enhanced Brand Content in Seller Central and A+ Detail Pages in Vendor Central. A+ Content is the section of the Amazon listing that appears in either the Product Description (Seller Central) or the From the Manufacturer (Vendor Central) areas of the listing. It is an opportunity for brands to utilize additional image assets and formatted content to help persuade consumers to make their buying decision. Amazon makes claims that A+ Content will improve conversion rate by up to 11%. This is a great opportunity for higher priced items where consumers will need more convincing, or for very technical products that need a lot of details explained.

Brand Registry is an Obvious Choice

I think we can all agree the Amazon marketplace is such an incredible opportunity for brands and manufacturers around the world, but if you aren’t being protective and proactive with your brand, it can also be detrimental. Adapting to the new “normal” in commerce means you will be selling on Amazon, and if you don’t set yourself up for success with Amazon’s Brand Registry program, you could be setting yourself up for failure. Get a trademark, register your brand, and take advantage of these tools to perfect your brand integrity and watch your customer retention and sales grow.

Learn about each of these services and more in our free whitepaper, The State of Amazon Marketing

Selling CBD on Amazon

Here at Kaspien, we receive regular inquiries from existing partners and new brands wanting us to help them launch their CBD products on Amazon. One of the most common questions we get is, if CBD is so widely available why can’t I sell it on Amazon? Isn’t CBD just like hemp oil that been around for a long time?  

What is CBD?

Unlike hemp oil, CBD is one of 113 identified Cannabinoids in the Cannabis plant that accounts for 40% of the overall plant extract and is normally extracted as an oil from hemp. Additionally, CBD is purported to have many of the same properties of marijuana without the psychoactive effects of THC.

As a result, CBD related products are trending as supplements, food additives, and oils. The trend has even been addressed directly by the head of the FDA and was the subject of a recent FDA Public Panel.

There are many competing messages about the current legality of CBD, the numerous health claims being made, and the marketplace rules surrounding CBD’s sale. This blog post will try to concisely explain the 2018 Farm Bill, the current Federal and state regulatory issues with CBD, and the current marketplace prohibitions on CBD products.

CBD’s Legal Status

The 2018 Farm Bill

With the passage of the 2018 Farm Bill, the Federal ban on the growing and sale of hemp and hemp-derived products was repealed. While the Federal ban has been removed, the 2018 Farm Bill did not “legalize” the sale of CBD oil as some brands have claimed.

Instead, the 2018 Farm Bill removed CBD’s classification as a Class I Drug (no known benefit) but left the legality of its use to the FDA and the states. Furthermore, Congress strictly defined hemp and hemp-derived products as containing less than 0.3% THC. In practical terms, this means CBD derived from hemp is no longer Classified like marijuana (a Class I drug) and instead became classified as a Class V drug.

Prior to the 2018 Farm Bill, the FDA approved the use of CBD oil as a prescription drug to treat a rare form of Childhood Epilepsy, under the brand name Epidiolex™. However, because CBD has been approved as a drug administrable only with a prescription, all other CBD products that cross state Lines are regulated the same way, as Class V drugs requiring FDA approval before being sold.

The FDA’s Stance

What this means, according to FDA Principle Associate Commissioner Lowell Schiller, is that “it is currently illegal to put into interstate commerce a food to which CBD has been added, or to market CBD as, or in, a dietary supplement.” While the FDA is engaging industry groups and conducting additional safety reviews of CBD, the FDA is enforcing this rule against brands that market CBD products as treatments for diseases.

Most recently, the FDA sent a warning letter to Curaleaf Inc™, giving them 15 days to respond with plan to correct their violations or face additional injunctions and seizures. The main reasons given for the Warning Letter were the advertising claims, including treating Cancer, Alzheimer’s and Pain Relief, using CBD in supplements in violation of FDA rules and creating “Unapproved Animal Drugs” because the products contain CBD.

The FDA is still working through its review of CBD and may issue additional guidelines allowing its use. However, until the FDA rules change, it is currently not legal to enter into interstate commerce any food, dietary supplements, or new drug that contains CBD.

States Still Have Jurisdiction

Although the 2018 Farm Bill allows the FDA to regulate CBD for interstate commerce, it specifically did not pre-empt state law in regulating hemp and CBD.

By not pre-empting state law, states are given free rein to regulate the use of CBD within state boundaries. Even prior to the 2018 Farm Bill, states were regulating CBD with everything from outright prohibitions, like Idaho, South Dakota, and Kansas, to no meaningful restrictions, like Washington State and Oregon, creating a number of issues for brands looking to sell their CBD products.

Like marijuana, CBD regulations vary state by state, and so long as the products are completely manufactured and sold within a specific state, never entering into interstate commerce, and are not prohibited under that state’s laws there may be no issues.

These state-specific rules and boundaries pose significant sourcing, logistical, and growth challenges for brands looking to sell their CBD products. However, given the state specific controls, it is theoretically possible to have no legal issues building a product line that contains CBD. Furthermore, the provision for States’ Rights helps to explain why there hasn’t been a stronger crackdown on CBD products despite the previous Federal ban and current FDA restrictions.

CBD in Ecommerce

Online Marketplaces Prohibit Selling CBDs

Given the regulations that vary by state and the restrictions on CBD from the FDA, it is no surprise that most marketplaces prohibit the sale of CBD products on their sites.

For Amazon, the largest marketplace in the US, the restriction is directly related to CBD’s current classification as a Class I drug (Amazon still hasn’t updated its policy to reflect the changes of the 2018 Farm Bill). Amazon’s restricted products page states: Drug listings must not be for controlled substances or products containing controlled substances, such as: Products containing cannabidiol (CBD), a Schedule I Controlled Substance.”

Not only are products containing CBD banned but the use of euphemisms for CBD products like “Rich hemp Oil,” Full Spectrum hemp Oil” etc. are prohibited. Trying to sell a product containing CBD on Amazon is a pretty sure recipe for getting your listing restricted. 

Similarly, Walmart, Google Express, and eBay have restricted sellers from selling CBD products. These other marketplaces almost always cite the restriction of sales of prescription drugs in their reasons for not allowing the sale of products that contain CBD. For marketplaces, the very model of facilitating the sale of products across state borders means that all products they sell fall under the jurisdiction of the FDA. While it is not difficult to find listings for the CBD products on marketplaces, it’s only a matter of time until each of those listings is taken down for violating a marketplace policy.

The Future of CBD Sales in Online Marketplaces

Consumer demand for CBD doesn’t show any signs of weakening, and the FDA is continuing its exploration of how best to regulate CBD. The FDA is not known for moving quickly, but we will continue to monitor the regulatory developments and advise if things change.

The FDA is focused on gathering additional data on the safety, possible adverse interactions, and risks of long-term exposure to CBD as it considers issuing new guidance. For now, the Federal and state restrictions have led to prohibitions on the sale of products containing CBD on all the major marketplaces. Listing products containing CBD will get your products and potentially your selling account restricted. That being said, as long as brands are only sourcing and selling within a state, and that state allows the sale of CBD, they may be able to build their brands while awaiting further developments at the Federal level.

While many brands are excited to jump on the demand for CBD products, the ability to grow the brands online is limited by FDA restrictions and prohibitions on all the major marketplaces.

Earning customer trust is vital

Trust is paramount to the success and longevity of any relationship, including the relationship between brands and their customers. Brands rely on customer trust for stability and growth, and right now, that trust is weak. According to the 2019 Edelman Trust Barometer, only 34% of consumers trust most of the brands they buy.  

This can be partially attributed to a shift in culture. Edelman’s research shows that consumers now expect brands to take a larger role in society, with consumers expressing interest in brands combatting fake news and misinformation, taking stands on societal issues, and brands expressing shared values. A 2017 study by Cone Communications found similar results, reporting they would purchase a product because the company advocated for a value they share. 

This shift makes sense when considering the rise of corporate giants like Amazon, Facebook, and Google, whose influence on our daily lives is undeniable. Consumers are increasingly concerned with brands’ greater impact on society, giving much attention to how brands handle and protect customer privacy and their impact on the environment, public health, and human rights. 

Brands should take note and respond to this shift. Beyond just general decency, proactively addressing these concerns can help brands earn consumers’ trust, which, surprise surprise, pays dividends for a business.  

The Benefits of Earning Customer Trust 

Earning shoppers’ trust fosters brand loyalty, with repeat customers facilitating growth. Shoppers are more than twice as likely to patronize a trusted brand before a competitor, continue purchasing from that brand, and even act as brand advocates, promoting and defending the brand, if they trust it. 

Customers reward trusted brands
Source: Edelman

Edelman also found that consumers pay significantly more attention to advertisements from brands they trust compared to those that they do not fully trust. With 74% of consumers using at least one method to avoid advertising, that extra attention can provide a significant advantage over competitors. 

Trust is Earned by Demonstrating Competency and Sincerity 

According to Kevin Sanders, a marketing thought-leader with 25 years of experience at Kellogg’s, The Coleman Company, Timberland, and founder of Becoming Trusted, trust is earned through the combination of two factors: competency and sincerity.   

Companies have become exceedingly proficient at communicating how well the product performs, the quality of materials, and its dependability. Collectively, these factors represent competency: a product performs the desired function well. While competency is certainly important, it is only half of the puzzle for earning trust.   

The other half is sincerity. Sincerity is a measure of honesty and fairness, or general goodwill. It means that brands aren’t trying to deceive or mislead their customers and that they’re charging fair prices. It means that they care about their customers’ experience, even after they’ve made a purchase; that customers are more than a number. Many companies struggle to earn customer trust because they fail to communicate sincerity. In most cases, this is not because they lack it, but because they don’t proactively communicate sincerity in their messaging. 

Why is that? 

In the past, brands had the luxury of time to prove them honest and fair. Shoppers couldn’t order online; they had to go to stores, and they made relationships with these businesses. Over time, opportunities would naturally present themselves for a business to demonstrate its sincerity, so it only had to promote its competency in its marketing materials. With globalism and ecommerce, that reality is gone. If brands want to earn trust, they cannot afford to be passive. They must learn to actively communicate competency and sincerity.  

If brands want to earn trust, they cannot afford to be passive. They must learn to actively communicate competency and sincerity.  

How to Earn Customer Trust 

Communicating sincerity is not as difficult as it sounds, so long as you’re willing to match words with actions. Use the following three steps to proactively communicate your brand’s sincerity and build trust. 

1 – Define your mission 
It’s easier to rally your employees and your audience if you have a clear mission to work towards. Start with a long-term vision, but then set achievable short-term goals that will bring you closer to it. By defining your mission, you create a topic that allows you to organically highlight your brand’s sincerity. Share why this cause is important to your company, and report on how your brand helps support it through its goals.  

2 – Invite your audience to aid in your mission 
Once you’ve defined your mission and set short-term goals, invite your audience to help you achieve them. Rallying behind a common cause promotes engagement and builds rapport. REI did this spectacularly during the 2019 government shutdown. As reports came in of littering and vandalism at unstaffed national parks, REI asked its audience to help them clean the parks. It was an opportunity for the company to back up its words with actions, demonstrating its sincerity to earn respect and trust with its community. 

3 – Use social media to engage directly with your audience 
Social media is the vehicle for communicating your brand mission and inviting audience engagement. In the place of in-person interactions, brands can use social media to showcase their products (highlighting competency) as well as their efforts to support their employees, help customers with issues, and their actions in wider societal issues (demonstrating sincerity). 

It also represents a great application of behavioral economics. If brands can cultivate a distinct brand personality that strikes a cord with shoppers, they can create an emotional impetus that encourages purchases or sparks conversations. One need look no further than Wendy’s infamous Twitter account to see the engagement they’ve generated from their fiery interactions with customers and competitors. Readers loved the strong personality and word quickly spread across the internet of Wendy’s twitter account.

The fact that consumers prefer to patronize brands they can trust should come as no surprise. The difficulty has been in learning how to prove worthy of consumer trust in an increasingly skeptical, fast paced world. While challenging, brands should make dedicated efforts to earn customer trust for both the well-being of their communities and the longevity of their business.  

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.  

How? 

When a manufacturer partners with multiple retailers, a few things happen: 

  • You receive more POs. 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. 

With an exclusive seller: 

  • You streamline your PO 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