It is important to understand that Amazon has a marketplace designed to make selling easy for anyone look at this. This includes brands. FBA’s capabilities allow businesses to easily manage operational complexity that may not have been possible before. The fact that Amazon’s Buy Box algorithm favors lower priced offers over those of higher quality can lead to margin competition among sellers. This could quickly turn into a race against the bottom. Before we get into the details about how to sell stuff on Amazon, let’s start by learning more.
We often see sellers underestimating the extent to which they can lower their prices, while still making a profit. This is because too many must properly account for all costs in their pricing decisions.
Amazon brands that are direct-to–consumer resellers have an edge over resellers, as they can reduce retail prices while still maintaining profitability.
It becomes even more difficult for resellers to offer clients real value if
1. It is rare that there are many resellers who can sell identical goods.
2. Resells must be more competitive to win the Buy Box.
3. They often need to be aware their all-in costs.
4. Resellers can now offer their products to other brands.
This method works best for resellers that have an exclusive sourcing relationship with brands and where brands also agree to not become resellers. With the increasing awareness of Amazon, there are fewer companies that need to be prepared to make such a deal.
As a result, we have seen two significant shifts within the base of Amazon resellers during the past three-to four years.
1. Resellers work hard to be their sole Amazon resellers.
2. Resellers create their own private label brands to become exclusive resellers of the brands they love.