Many brand owners are selling on Amazon as a vendor, and assume this is the end of the story for their Amazon channel. However, many brand owners don’t realize they may be leaving a lot of money on the table by not fully utilizing all of Amazon’s platform.
In this white paper, I will discuss the various ways to protect your brand on Amazon by using a seller account, and how a seller account may be more profitable for some products or the entire brand, when costs are broken down for each channel.
What is Retail Arbitrage?
Retail arbitrage refers to the practice of small internet middlemen who go on “sourcing trips” to local stores, and use scanners or their smart phones to find products heavily discounted that can be resold online for significant profits. This is often done with discontinued items, or slow moving items that the brand owner tried to get off their books. These sellers will create their own detail pages for the brand owner’s products, and sometimes, these are not authentic products. They make money because Amazon takes care of the entire fulfillment and customer service process for them, through Fulfillment by Amazon (FBA), a program that allows sellers to ship in boxes and boxes of purchased retail goods to Amazon’s fulfillment centers, and Amazon takes care of the rest. While there are storage fees associated with this, and pick and pack fees, the sellers can still make money by moving enough volume through the system.
What can a brand owner do?
By signing up for a seller account and getting brand registered, a brand owner gains full control of these pages, and can request they be merged with the correct pages or deleted from the catalog. They can also report violations of their intellectual property, and report counterfeit goods, if that is an issue. Brand protection is a major reason for opening a new seller account and setting up monitoring on Amazon. Additionally, by using FBA themselves, a brand owner gets the same benefit of direct to customer fulfillment that Amazon offers as a vendor, but with a different pricing structure, as the seller gets to set the price at which their product will sell.
What other reasons are there to expand a Seller account?
Retail arbitrage sellers are making a living doing this work – there are thousands and thousands of sellers who make enough money reselling items they’ve found in stores to do only that for their income. This is a huge volume of sales that brand owners are leaving on the table! By transferring discontinued or slow moving products to your seller account instead of doing small POs with Amazon Vendor Central, or selling the remainder of the item off at a discount, the brand owner can continue to make full profit on that product. This is obviously only one part of your overall strategy, and approaching it in a data driven manner comparing costs for doing business on Vendor Central and Seller Central is essential, but there is certainly room for improvement for many brand owners.
Why does Amazon allow violations of rules and counterfeit items on Amazon?
Amazon is a very large platform, and it would be impossible in the current business model to evaluate everything before it goes live. As such, Amazon relies on brand owners to police their own products.
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