The Risks of Having Too Many Third Party Sellers on Amazon

In a previous blog post, you read about the importance of having third party sellers to carry your brand. If you’re a brand owner and have too many third party resellers, it’s time to rethink your strategy and stick with a trusted seller. 

You may have noticed that your sales have not shown a significant increase despite having third party sellers carry your brand. This could be because you don’t have control over them. 

Why You Should Stick with an Exclusive Third Party Seller

You may have experienced your resellers competing against each other for the Buy Box. If you thought that this will help you drive sales, think again. Chances are, they will just violate the MAP policy by lowering their prices just to clear out their inventory. Thus, having too many sellers actually does more damage than good. Here are the reasons why you should just have one exclusive third party seller. 

1. Too many sellers have zero impact on keyword ranking – If you think that having your products visible all over Amazon due to many sellers will help, it doesn’t. Keyword ranking relies on the number of searches that buyers perform. 
2. Demand does not increase with many sellers – On the other hand, demand is also consumer-driven. This is also related to keyword search and how many times your keywords are entered on search fields. 
3. Sellers won’t have to “share” the inventory – Imagine this: if you have 15 third party sellers, they would have to share the total inventory, including your own. For example, if you have 1000 units and 15 sellers, each third party seller can sell about 66 units each. While if there is only a single third party seller, he can sell up to 500 units shared with your own. 
4. Avoid MAP violations– Perhaps the biggest problem that brand owners and suppliers face is MAP violations. When there are too many resellers, they compete against each other by lowering prices, sometimes even lower than your suggested price. What happens is, people would buy from just that one seller and not even buy from the brand itself. 
5. No competition to win the Buy Box – In addition, if there is only one exclusive third party seller, there will be no competition to win the Buy Box as it will just rotate between the supplier or brand owner and third party seller.
6. Less sellers, higher profits for the exclusive reseller– When there are fewer sellers, exclusive retailers will have more budget for ad spend because they don’t have to compete with numerous other third party sellers. 
7. Third party seller accountability – Exclusivity breeds accountability. When you have a single reseller, it’s like having a business partner who focuses on good sales instead of competition. They will also be more likely to carry your brand as if it were their own. 
8. Gain control over promotions – Having a single reseller also helps you gain control over promotions such as discounts and deals. If you have plenty of resellers, they may have their own deals and won’t be open to signing up for your deals because this would mean competition and less sales for them. 
9. Easily manage customer service levels – Another caveat of having too many sellers is that customer service affects the brand. Third party sellers don’t care much about customer service because they do not really represent the brand. They only care about sales. When a customer complains, they will just tell the customer to contact the brand owner. This spells negative feedback from customers and will taint the brand name. 
10. No need to offer lower wholesale pricing– As mentioned previously, third party sellers will try to bargain with you for a wholesale price so they can decrease their retail prices and gain more sales. This means less profit for you as you will only earn a small percentage of the actual sale price. 

Conclusion

More product exposure does not necessarily equate to higher sales. In fact, it may just be the opposite. The main problem that many brand owners and suppliers face is not having enough control over the resellers. This affects sales negatively due to violations in the MAP policy and competition for the Buy Box. This could eventually lead to a price war and lesser sales for the brand owner and other brick-and-mortar partners that carry your brand. In addition, having an exclusive reseller will also help you manage customer service and lead to happier customers. 

Are you looking for an exclusive third party reseller who is also an expert in the field? At FBA Haven, not only do we sell your products but we treat them as our own. Give us a call and we’d be happy to discuss it with you. 

“Outbound prospecting is all about quality, not quantity.”

— Aaron Ross, author of Predictable Revenue