In today's digital age, it's impossible to ignore the massive influence that Amazon has on the world of online retail. With over 300 million active customers and 2.5 million sellers, Amazon has become the go-to destination for many consumers seeking to buy products online. While it's understandable that many brands would want to design their distribution strategy around Amazon, there are compelling reasons why managing Amazon into a brands distribution strategy, but not designing a distribution strategy around Amazon is important for long-term brand health and profitability.
Firstly, Amazon is known for its aggressive pricing strategies and commoditization of products. This can lead to a race to the bottom, where brands are forced to continually lower their prices to remain competitive on the platform. While this may boost short-term sales, it can erode brand equity and lead to lower margins and profitability over the long term. By managing Amazon as part of a broader distribution strategy, brands can maintain control over their pricing and positioning, and focus on building long-term customer relationships rather than engaging in a constant battle for the lowest price.
Secondly, Amazon has a reputation for prioritizing its own private label brands over third-party sellers. This can put brands at a disadvantage and limit their visibility on the platform. By managing Amazon as part of a broader distribution strategy, brands can diversify their sales channels and reduce their dependence on any one platform or retailer. This can help to mitigate the risk of being overshadowed by Amazon's private label offerings and ensure that brands are able to maintain their unique identity and brand equity.
Thirdly, by managing Amazon as part of a broader distribution strategy, brands can take advantage of the platform's massive customer base and data-driven marketing capabilities, while still maintaining control over their own customer relationships. Amazon's advertising and marketing tools can be incredibly powerful, but they come with the risk of relinquishing control over customer data and relationships. By managing Amazon as part of a broader distribution strategy, brands can leverage these tools while still maintaining ownership of their customer relationships and data.
Finally, managing Amazon as part of a broader distribution strategy can help brands to future-proof their business and adapt to changing market conditions. Amazon's dominance is unlikely to wane any time soon, but that doesn't mean that brands should become overly reliant on the platform. By diversifying their sales channels and maintaining control over their pricing, positioning, and customer relationships, brands can be better prepared to weather any future disruptions or changes in the online retail landscape.
The challenge lies in controlling the 2.5 million sellers on the Amazon platform, which impacts a Brands total distribution strategy. This task can and often times sounds daunting. The Grey Market is creative and nimble, but within the portion of the 2.5 million sellers on Amazon alone, that are not authorized to sell products from a certain brand, there are common areas with how they are obtaining product. The key is identifying those commonalities and addressing them. This is the space that Counter Diversion has focused on since 2017. If a Brand knows the source of product to the Grey Market, they can address it and alter how their products show up, reduce the pressure on product values to win the buy box and improve Brand Equity.
Counter Diversion is a boutique SaaS company - we don't have marketing and we don't use high-pressure sales tactics. Our goal is to have solid, honest conversations about the issues at hand and then either recommend our service or another one that is a better fit for your needs. If you'd like to engage in that type of discussion, please schedule a free consultation.
