How to protect your brand from Amazon resellers: 5 steps
5-minute read
Are resellers damaging your Amazon sales?
Dealing with unauthorised resellers on Amazon can be extremely disheartening and damaging to your sales and profits.
You’ve taken the time and effort to build your brand, optimise your listings, and make your images look fantastic. You’ve sent in your inventory to FBA, set up your ad campaigns, and sales are starting to take off.
Then suddenly, a tinpot company with a fake-sounding name swoops in and bulk-buys your product in a 70%-off retailer promotion you never agreed to.
They start selling on Amazon for 2p below the £RRP and steal the sales you’ve been working so hard to achieve, all while Amazon sits back and watches!
In this guide, we'll explain what you should (and shouldn't) do to manage these dispiriting resellers so you can regain control of your Amazon performance.
The problem with Amazon resellers
Unfortunately, Amazon resellers are inevitable. If your brand has a large distribution network and a presence across multiple sales channels, resellers can get hold of your products.
It might be that Holland & Barrett does a 2-for-1 online promotion. Or that big Jason in Superdrug messes up the prices (again!).
Either way, resellers will sniff out a bargain faster than a pig hunting truffles, buy up as many units as they can, then send them into FBA and undercut your price—all while making a tidy margin on top.
There are several ways resellers can hurt your brand:
Sales: Typically, if a reseller offers a lower price, you'll lose the Amazon buy box. This means that when a customer clicks 'add to cart' or 'buy now,' they’re buying from the reseller, not from you. This leads to your sales taking a nosedive.
Inventory management: Resellers not only cause your brand to lose out on sales but also make Amazon inventory management incredibly difficult. How many units should you send to FBA if you don't know when the resellers will leave?
Brand reputation and reviews: It's impossible to know how well resellers have stored and transported your products and whether they follow Amazon's expiration date guidelines. These issues can result in negative product reviews on your Amazon product page through no fault of your own, and can mean a customer is lost from the brand forever.
What is Amazon's policy on resellers?
Amazon’s overriding policy is profit maximisation at the expense of sellers.
Therefore, they classify resellers as an ‘issue related to distribution networks’ and consider it 'inappropriate' to intervene.
To explain why Amazon is taking this stance, it’s important to consider that Amazon’s number one goal is to make sales. They don’t care where these sales come from.
Resellers encourage a "race to the bottom" in pricing, which results in more sales, happier customers, and more commission in Amazon’s sky-rocket.
Impact of ‘competitive external pricing’
It's not just Amazon resellers you have to watch out for...
Amazon also pays attention to how your products are priced on other retailers’ websites.
Amazon’s bots constantly track the price of your products on retailer websites such as Boots, Holland & Barrett, Superdrug, Asda, etc.
Your price could be the lowest on Amazon, but if it’s higher than a customer could find from another retailer, Amazon may suppress the Buy Box.
In other words, it could remove the “Buy Now” button from your listing entirely. That’s a "game over" for your sales.
What doesn't work to stop resellers on Amazon?
Contacting resellers on Amazon: It used to be common practice to send cease and desist letters to each reseller via the ‘contact seller’ button on Amazon. However, this approach is now prohibited under Amazon’s terms of service. Any reseller worth his salt will also know it's an empty threat.
Brand gating: Brand gating is a tool designed to help brands that face serious counterfeit challenges; however, it is not intended for use against unauthorised resellers. It’s almost impossible to become brand-gated—even Adidas doesn’t qualify for brand-gating on Amazon UK!
Amazon transparency programme: The Amazon Transparency Programme is designed to protect your brand from counterfeiters. Transparency codes must be applied to each unit of stock sold, whether on Amazon or through other channels. This will increase your COGS & workload, but does nothing to stop resellers.
What works to stop resellers on Amazon?
Repricing: To combat resellers effectively, it's essential to establish a clear and consistent pricing strategy. Use an automatic repricing tool like BQool to adjust your Amazon product prices. If the reseller is willing to undercut your minimum price, they'll win the buy box, but their profit margin will take a hit.
Subscribe & Save (SnS): SnS orders are not affected by resellers or external pricing. Use the programme to support your sales, even without the buy box.
Distribution agreements: Establish agreements with your wholesalers to ensure they do not sell on Amazon and don’t sell below your RRP on other online platforms.
Communication with retailers: Contact your retailers for insights into their promotional periods. If you know when the promotions are taking place, you can adjust your strategies to reduce their impact on Amazon.
Work with an Amazon specialist agency: Amazon experts can help you create a tailored reseller strategy that makes it harder for resellers to target your brand.
In summary
Like Amazon seller support agents, resellers cause confusion, stress and misery for everyone who runs into them.
They can hit your sales and wreak havoc with your inventory systems, all while Amazon does nothing.
However, although resellers are an evil inevitability, they can be effectively managed if you follow some simple steps to manage your pricing, boost your SnS numbers, establish distribution agreements and talk to your retailers about their promotional plans. If it's all too much, work with an expert to make life easier.
If you’d like to learn more about effectively managing resellers or discuss your Amazon strategy, feel free to get in touch.
