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Unlocking Brand Success: Learning & Insights

The Hidden Dangers of Amazon Vendor Central

Your primary goal as a brand is to grow and maintain your brand’s reputation and long-term success. While selling directly to Amazon through the Vendor Central program may seem like a promising opportunity, there are significant drawbacks associated with this approach. This card outlines the reasons why the 1P program may not serve your brand’s best interests and suggests considering alternative options to ensure your brand’s long-term success and integrity on Amazon. 

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Key Concerns with Amazon’s Vendor Central Program:

  • Pricing and Brand Integrity: Amazon’s practice of breaking MAP and not honoring pricing agreements can undermine your brand’s value and damage its reputation.
  • Diminished Margins: Amazon’s focus on profitability and obsession with being the cheapest price online can lead to decreased margins for your products, impacting your brand’s financial health. The 1P Vendor Central model offers narrower wholesale margins compared to the larger retail margins available through 3P.
  • Inability to expand the catalog: Amazon limits your ability to easily offer new products, create bundles & sample packs. Amazon only purchases the parts of your catalog that make sense for their business and neglects large swaths of products that could be attractive to consumers. Additionally, there can be extended periods of time to introduce new products and get them live on Amazon.
  • Listing and Promotion Inflexibility: Inability to have control of your listings, promotions, and the number of units you want to sell, few product launch capabilities and opportunities to incentivize conversions, accelerating the sales velocity of new products.
  • Contract Negotiations: Amazon’s inflexible contract terms can cause significant financial strain on your business, leaving you with little room for negotiation and adaptability.
  • Inconsistent Purchasing: Amazon’s sporadic purchasing can hinder your catalog’s growth and hurt your brand’s visibility. They tend to focus only on top-selling products without considering the wider range of your offerings. If the product runs out of stock on Amazon, the listing could potentially drop in ranking, and it would require significant investment in terms of money, time, and effort to regain its sales velocity.
  • Competition and Inventory: Amazon’s focus on profitability may lead to selective purchasing and liquidation of your products. They may lower the price to sell out your inventory and then purchase less of it, while also selectively choosing SKUs based on their own profitability.
  • Listing Maintenance: Amazon does not actively address and fix listing problems, such as incorrect information, descriptions, or images. This can lead to poor customer experiences and ultimately hurt your brand reputation.
  • Advertising Misalignment: Amazon’s advertising initiatives often prioritize their own profits, potentially neglecting your brand’s objectives and equity. To ensure long-term success, it is crucial to partner with a collaborator that aligns advertising strategies with your brand’s goals and budget..
  • SEO and Competitor Pricing Limitations: Amazon doesn’t actively improve listing conversion rates through SEO, nor monitor or adjust pricing against competitors. They don’t focus on increasing your sales, market share, and organic position, potentially restricting your brand’s growth on the platform.
  • Limited Control Over Customer Experience: With Amazon’s 1P program, you relinquish control over customer service and returns, which can result in negative customer experiences. and negative reviews on products that could be avoided if properly handled as the issues arise 
  • Increased Reliance on Amazon: By selling through Amazon’s 1P program, your brand becomes increasingly reliant on Amazon’s purchasing decisions and platform policies. Sudden changes can leave your brand exposed and unprepared, affecting your capacity to adapt and sustain a stable presence on the platform amidst evolving listing requirements, policies, or packaging guidelines.
  • Chargebacks: Unlike the Amazon Vendor program, which can impose chargebacks on brands when they have difficulty maintaining stock levels or fulfilling orders on time, the Amazon 3P marketplace does not subject sellers to such penalties.

Given the challenges and risks associated with selling through Amazon’s Vendor 1P program, it is essential for brands to consider alternative options that better support their growth, long-term success, and integrity. By exploring other sales channels or partnering with a third-party seller on Amazon’s 3P marketplace, brands can maintain greater control over their pricing, inventory, customer experience, and overall brand reputation. Don’t let your brand’s potential be limited by the constraints of the Amazon 1P program – consider alternative solutions to unlock the full potential of your brand on the Amazon marketplace and beyond.

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Is Your Current Agency Meeting Your Expectations?

Are you satisfied with your current Agency? Are you looking for a change to accelerate your brands’ growth? Does your current agency provide:

  • Transparency of your inventory numbers, where your expenses are and how they can be reduced? 
  • Arm you with information to understand areas of growth and opportunity?
  • Competitive analysis? 
  • Proper forecasting for peak season? 
  • Clear understanding of how your advertising dollars are being spent and reporting to support those choices?
  • A holistic view of the profitability of your ecommerce channels? 
  • FBM and Dropship options? 
  • Storage fee breakdown and how to minimize amazon’s fees?
  • Management of ecommerce channels like Walmart, Houzz and more?  
  • Focus on keyword acquisition for your most important branded terms?

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Most Agencies: 

  • Only choose to focus on a targeted selection of already proven top selling product lines while neglecting the rest. This leaves untapped potential for growth in so many additional categories
  • Promise sales targets that are not met or expense budgets that overspent
  • Use additional channels and promises of international growth because they can’t expand your brand in domestic markets?
  • Only seem to have a very generic plan for growth of your brand on amazon
  • Talk a lot, have slick presentations, but do not produce desired results
  • Provide vague reporting that is difficult to understand or take appropriate action

Founded in 2006, Lijo Decor has made a name for itself as a trusted go to retail partner for brands that want to take their business to the next level in the ecommerce space. We specialize in working with brands with luxury lines that truly care about their brand image and understand the value of MAP and pricing controls. Under one roof, we have a disparate team of marketing specialists offering services such as EBC, PPC management, seller performance gurus, logistics and FBA fulfillment, as well as channel management and best in class reporting. At Lijo, brands can expect a unique approach blending the best in human expertise with cutting edge technology. Brands can expect a true partnership focusing on a holistic approach toward growing their brand presence across a spectrum of domestic and international channels. We focus on transparency and true growth as opposed to slick marketing and churn. Our success is built around your success. 

What are your concerns with your current agency or brand partners?  We can answer your questions and provide honest insight on your brand through our many sophisticated tools and softwares we use to understand your brand on amazon. Feel free to reach out to us for a consultation.

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What is Brand Registry
Brand registry is a free Amazon program that allows brands or brand representatives the ability to ensure that a brand is protected and accurately represented on the Amazon platform. It provides the capacity to register brand trademarks on amazon, verify the brands existence and effectively manage branded amazon content. With the program, brand owners can identify and deal with potential infringement by other brands and sellers and deal with counterfeit listings. Many brands are not equipped to handle this process and appoint registered agents to do this on their behalf. We do this for quite a few brands and would be happy to send you some references.

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Brand Registry Requirements:
    • Active registered trademark in the country where you want to enroll
    • Text- or image-based trademark (image-based trademarks must include words, letters, or numbers)
    • List of product categories where your brand should appear
    • List of countries where your brand’s products get manufactured and distributed
Advantages of having Brand Registry:
      1. Ensure a good customer experience: ensure content is accurate on Amazon. This can include product details, set information and that the marketing material matches the listing
      2. Stay ahead of the competition: Fixing content (like images or categories) to help make the items searchable and therefore sellable. This allows you to grab more market share with a wider catalog.
      3. Listing Compliance and Infringements: Ensure that the brand and listings are clear of account health issues and listing infringements that could remove a listing from sale or cause amazon to suppress a listing.
      4. Enhanced Brand Content: Ability to post additional content like image content, video etc.
      5. Protect against infringement: Handle counterfeit product, counterfeit sellers, surface infringing seller information
      6. Maximize your visibility: Amazon prefers brands that are registered and places their items higher in the algorithm

Here is Amazon’s link to the program. It includes some further information about Brand Registry.

https://brandservices.amazon.com/

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Amazon offers comprehensive reporting through SQP, which delivers in-depth insights into your brand's keyword performance, competitor activity, and market trends. This data empowers brands to make informed decisions, optimize strategies, and enhance their visibility on the platform.
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