Lets face it, if you are manufacturer and recently discovered your products being sold on Amazon, you either have or will experience the carelessness of Amazon Sellers.
At first, it started out great. You discovered one of your resellers placing your products on Amazon and thought nothing of it. After all, this seller's sales and purchase order sizes were increasing. More and more wholesale applications started rolling in with larger and larger purchase orders. Then, you get not one call, but two or three from your brick and mortar sellers complaining about the low prices on Amazon. Sure enough, you check and there are dozens of your products selling at break even prices on Amazon.
At this point your either ignore it but eventually you can not any longer. So why is this happening?
Amazon's Marketplace Flywheel Effect
Everything Amazon does is for the benefit of their customers. After all, happy customers equals returning customers. Amazon accomplishes this in a many ways but the two most important ones we all have experienced is their large product selection and low prices.
So how does Amazon accomplish both of these? 3rd party sellers aka Amazon Sellers.
Let me introduce you to Amazon's Marketplace Flywheel Effect. The circle of growth is what has made Amazon the monster of ecommerce it is today.
Looking at the circle, you can see where the customer's experience plays a large rule in the success of their growth.
With positive customer experiences, more and more shoppers come to their marketplace which in turn brings in more sellers. The more resellers that come to their marketplace, the larger the product selection will be and will lower costs and prices due to competition. More product selection and lower price attract more shoppers and the cycle repeats itself. It's a simple as that.
To support their Flywheel model, Amazon has built a ecommerce platform that systematically puts this into action.
Buy Box Logic
Amazon allows anyone in the world to sell their products on Amazon. Further more, Amazon allows multiple people to sell the same product. The more sellers Amazon has selling the same product, the better it is for Amazon and the customer. The worse for sellers and you.
The Boy Box shown here is simple the understand. When a customer clicks the "Add to Cart" button, the seller listed under the price gets the sale.
If your product has multiple sellers, then there are rules for sellers to get what is called Buy Box Eligibility. There are number of rules but there is only one the matters the most, PRICE!
In order for a seller to get an order, they must be priced the lowest of all the sellers on the product page. If they are not priced the lowest, Amazon will not including them in the buy box rotation.
And that folks, is why you have low selling prices on Amazon.
The problem most sellers are faced with is getting stuck with inventory. To combat this, they use auto repricing tools to chase the price down until they stock out. Many sellers make their money with volume by operating on very tiny margins but have huge catalogs of products that turn stock quickly.
Rather than help solve the problem of poor performing product pages and low selling prices, sellers will liquidate their stock by dropping their price then move onto another product to sell.
This is why most sellers do not care about your brand. It's about volume, not a relationship.
Brand Ascend Helps Your Company Avoid These Problems
Brand Ascend realized early on that the volume game is not one we are interested in playing. After 4 years of selling on Amazon, we watched this problem grow quarter after quarter leaving manufacturers confused on how to solve the problem.
With our experience, we take the guess work our of trying to figure out what it takes to grow your sales on Amazon and to know what pitfalls you should avoid to reach success.
We want to work with brands and establish a long term working relationship where we both succeed. Brand Ascend offers you brand control assistance, the creation and optimization of beautiful product listings along with reliable distribution designed for success.
Best of all, our services are free of charge. All marketing expenses are paid from our own pockets. We developed our own marketplace marketing system that uses a cohesive process that will ensure your product's and sales grow successfully.
Brand Ascend understands how Amazon works and we help you avoid those mistakes but investing in your company and your product. Give us a call today at 888.651.2396 to learn more.