This post answers why medium sized manufactures must have their own Amazon storefront. Do you want to remain specialized or do you see your products carried in almost every home across the country? Is Walmart a feasible dream for your brand or is it a better fit for Williams Sonoma?
Medium sized manufactures are still working on growing brand awareness and expanding into new markets, that’s why we focus on them in this post. Brands need traction for Amazon success. We recommend small manufactures work on gaining traction. For larger manufactures, the bubble has already burst. Meaning, products are carried at Walmarts, Targets and by Amazon. These products aren’t affected by price competition because they function more like household commodities. Retail prices are automatically reduced when the market saturates. Medium sized manufactures need to maintain their brand image, quality and control of the market.
Take the medium sized manufacture quiz
Do you have 15 employees or less?
Is your company privately held?
Do you manufacture 10 SKU’s or less?
Do your products retail for $30 or more?
Are your products sold in specialty stores?
Do your products cater to small group needs, hobbyists, prosumers, etc?
There are always exceptions but if you answered “yes” to most or all of the questions above then you are a medium sized manufacture. Sometimes your product is priced below $30 and we think that it’s still a great idea to start your own store since you’re the only one that can profit off your product being on Amazon. After shipping, fulfillment fees and commission it’s difficult for third party sellers to make money off products priced below $30.
Why Medium Sized Manufactures Should Have an Amazon Storefront
Profit margin at full retail
Pretty self explanatory but instead of getting wholesale pricing for your products you get retail.
Buy box 100% of the time
Read this post on why winning the buy box is winning the jackpot. When you’re selling your own products on Amazon you’re winning the jackpot 100% of the time. Doesn’t that sound nice?
Control over MAP, control over brand, control over product listings, control, control, control! Can you tell, I’m kind of a control freak? In this case, control is a good thing. Amazon is a volatile marketplace and the more control you have, the better. Read this article on how selling direct to Amazon means giving up control or this article on what to expect if you leave the health of your brand up to fate.
Deters others from selling on Amazon
Price competition is not the name of your game but lets get inside the heads of other Amazon sellers for a sec. Due to buy box rotation, third party sellers can still profit off a product if a manufacture has their own Amazon store. But manufacture stores deter other sellers from wanting to sell the product.
Third party sellers think like third party sellers, meaning having the buy box is of the utmost importance. Sales, sales, sales! Third party sellers test the viability of a product to see how competitively they can price on Amazon. Every seller on Amazon is expecting a price war at some point (even if they sign an agreement to not break MAP).
Products sold by the manufacture (or Amazon) are practically wearing scarlet letters in the eyes of third party seller. Third party sellers will gloss over your products and move on to the next. There’s no competing with shipped by sold by manufacture or Amazon. In a price war, the manufacture and Amazon always win.
Maintain trust with brick and mortar partners
Brick and mortar businesses are constantly walking on thin ice due to Amazon and online sellers. They go out on a limb to carry your products hoping they’ll be able to sell. When you can show them that you have stabilized online pricing and taken the proper precautions against counterfeiting then brick and mortars will have more confidence in your brand. They are more likely to carry your products.
Promotes long term sustainable growth
Not only do you get to witness demographics, analytics and consumer habits first hand but the numbers are more honest and true. Why’s that? Because third party sellers don’t know exactly what’s going on, how often to stock your product and they certainly aren’t tracking your marketing efforts on the ground to see what’s affecting sales. Third party sellers remain in the shadows constantly hoping they’re not cut off from their lifeline money supply. More third party sellers means more inaccurate numbers.
While opening and managing your own store can be great for your company and brand, there are two sides to each story. It can be a long and challenging road of learning and adapting to the ever changing ecosystem. Although operating your own storefront can be challenging, nothing worth doing is easy. For a different perspective, read this article on major factors to consider before opening your own store.