This article is intended to identify Amazon product life cycle phases. You’ll learn how to protect your brand within Amazon’s ecosystem. It’s directed toward medium manufactures in niche categories that have successful products on Amazon currently and are in the process of expanding their brand image.
Successful Products Defined
A successful product on Amazon is defined by:
- A product with lots of reviews
- 3.5 stars or more
- Ranked below 50,000 in its product category
Does your product fit this definition? If not, and it’s listed on the Amazon market place then back up. Your first step is to spend time improving product rank and clean up your listings.
Read this article for more information about cleaning up your product listings.
Amazon Product Life Cycle Phases Identified
Here’s what you can look forward to once you work so hard on getting your product reviewed and well rated:
Amazon Product Life Cycle Phase 1
Random businesses call and request pricing. They may claim to specialize in selling products like yours and they might even have a fake website which lists products in your related category. They’ll tell you what you need to hear in order to feel comfortable selling them your precious brand. Your sales team will approve several because these randoms are skilled at maneuvering through your company’s sales barriers. Read more about how unauthorized sellers get ahold of your products here.
Amazon Product Life Cycle Phase 2
Amazon saturates with sellers of your product within three to six months if you’re hustling hard offline. There’s no way to identify the sellers because Amazon doesn’t require store names to match legal business names. Here are some real life examples: Toys and Games, Etailz and Kitchenista.
This becomes an issue for multiple reasons:
- Quality businesses do not want to sell in saturated markets. Your product has peaked and they’re probably talking to your competition.
- Random sellers don’t care about your brand as long as they’re moving product and they have the buy box (insert link to article on how to win the buy box).
- You become a spectator in your products full blown price war.
Amazon Product Life Cycle Phase 3
You know those retail partners you spent so much time and money building relationships with and make up the bulk of your sales? They’re pissed and threatening to DC your product. Their customers are looking at your product in stores and price comparing with Amazon from their smartphones. Customers decide against purchasing the product at retail price and order it from Amazon when they get home. This is an issue for online and brick and mortar. We only sell online and we have DC’d several products due to price competition.
Amazon Product Life Cycle Phase 4
The reviews, excellent ratings and mass order numbers have now put your company on Amazon buying teams radar. Congratulations! They might even be calling you right now but finish reading first. They say, “Amazon wants to sell your product(s). You are going to sell your product to us for $5 a piece instead of $10 normal wholesale and in return we’ll wire a down payment of $250,00 for our initial order.” You think, “Wow this is amazing. Selling direct to Amazon is going to pull us out of our cash flow issues this year.”
Walmart Case Study
Ever heard of the Walmart? Walmart is massive with hundreds of locations. If Walmart wants to carry your product you’re sure to be rich AF, right? This is true, however, companies learn they’re screwed with ‘em and screwed without them!
Walmart wants to be known for selling products lower than any other store out there. One of the ways they’re able to do this is by strong-arming the manufacturer to sell at razor thin margins. Manufacture realizes at some point that Walmart accounts for over 80% of their revenue and they’re being suffocated due to low margins. Manufacture doesn’t want all their eggs in one basket because if Walmart cuts their item, the manufacture goes out of business.
So they look for other retail partners but are unsuccessful at getting any for these reasons:
- The market is saturated.
- No one can compete with Walmart’s pricing.
- Brand image is ruined with low selling price. It’s easier to get customers to pay less but not so easy to get customers to pay more for the same item.
How does this relate to Amazon?
Amazon is the Walmart of the online sphere. Amazon wants to be known for selling products lower than any other market place (this includes online and retail stores). When Amazon sends you that check they’re strong-arming you with their buying power just like Walmart.
When your product is listed under “sold by Amazon” you better believe the only thing they care about is being the lowest listed price. As a customer, you can even report to Amazon that you found the product listed for a lower price elsewhere. Amazon will ask where you found it for cheaper and how much it cost.
Two things can happen thereafter:
- Your retail partners stop ordering because they can’t move product.
- New quality retail partners refuse to add your product because they see it selling far below what they can buy it for. This puts your company in a shitty situation because having your product in retail stores is free advertisement. Retail helps get eyes on your brand an on your product. Retail allows caring sales people to nurture a relationship between the customer and your brand.
If you’re somehow unaffected by the two scenarios above take some other things into consideration. Amazon constantly changes the name of the game. It’s difficult to keep up with their requirements and rules when working with them directly. I’m sure you’re dedicating time to sales and customer service among other things. Staying on top of the ever changing Amazon platform is a full time job in itself.
So should you avoid Amazon?
Of course not. One in three people go to Amazon first so there’s no doubt your product should be there. Be smarter about your products relationship with Amazon.
Learn about your options, don’t be in shock when Amazon calls you with their offer and come from place of being educated about what really is going to happen.
Base your decision off the long-term vision you have for your company, not the short-term. Although it’s possible to reverse damages, it’s a headache and a lot easier to proactively prevent.