By David Porter, CEO, TPC Global
Almost all vendors who operate an indirect channel model, no matter how broad, have at one time or another felt that they have this channel “thing” solved. It’s easy. It’s working. Great set of distributors. Strong partner base. Programs – tick. C-SAT – tick. Tweaks and twists required but no major overhaul. Market share is palatable, Pressure is starting to subside.
But no sooner does your channel model seem perfectly calibrated, all of a sudden, it isn’t.
Disruption is a well-bandied word within IT channel organizations but it’s normally applied to competition, of course. When you yourself are disrupted, it’s uncomfortable – you’re forced into action, you’re behind the curve, you hope that knowledge and data exists to hand which can help you decide what to do (It does! Keep scrolling!).
For many vendors, Amazon are a figurehead of this disruption and discomfort. They look at their Amazon seller community and the Marketplace model and they get feverish.
Let’s throw the problems out there so that we can deal with them. Vendors do not like Amazon, simple. Why?
No-one in business likes to be dominated. Vendors have commonly fought against unauthorized selling, pricing violations, inaccurate brand information, and how to enrich sales data in the indirect channel space, and that was before marketplace selling became a route to market in it’s own right. Apart from informing sales targets, having a handle on these areas provides opportunity to improve the programmatic side of your sales operations – how authorized partners are best supported to make a profit and to protect the integrity of your operation with notable improvements. Not only this, but by actively correcting disruptive elements of your channel operation a natural by-product occurs – the discovery of a rich set of net-new partners not previously tapped, and the opportunity to make new and improved targets, to name but two.
But Amazon are the elephant in the room for many vendors. Granted, a good set have now recognized the problem, even put good budget down to focus efforts on Amazon sales, but there is not one vendor that I know of today, who looks glowingly on their Amazon RTM.
So, starting from the top: What problems exist with Amazon that vendors must overcome and what decisions must be made along the way?
Firstly, vendors need to participate. How does this work?
Passively “watching” your products’ performance on Amazon is impossible. Like all other channel routes, vendors have to take control of the route to the most influential point possible. Vendors must push for what’s right for them, and this decision boils down to one choice:
1st Party (vendor) Agreement vs 3rd Party (seller) Agreement
As a vendor, you can choose to be either, or none. The difference is this. 3rd parties are sellers and compete for customer sales, in some case vs the OEM vendor and Amazon themselves. For vendors, they have the right to become a seller of their own products and look to control the sales strategy “from the inside”, competing directly against sellers.
1st Party agreements differ greatly from 3rd party agreements. Vendors enter a protected agreement with Amazon which includes restricting their brand(s) (known as “gated brands” in Amazon-speak). The philosophy here is that this approach serves to support a typical vendor channel model by giving power back to the vendor with regards to unauthorized vendors. Under this agreement, authorized sellers using Amazon are confirmed and unauthorized sellers will be instructed to drop stock and will not be able to purchase their products going forwards.
The natural instinct is to become a seller and use Amazon marketplaces as an extension of your own direct sales motion. for example, if you sell computer peripherals and generate incoming leads via your own websites you have a choice to try and close that business yourself or distribute qualified leads to partners in-country for customer development and the better potential to close locally. Many vendors will take the opportunity to sell direct when the customer base is effectively unknown and the partner play isn’t obvious.
However, this has consequences which are almost certain to alienate a portion of your resellers.
Why? Because the amazon seller community is made up of your traditional resellers who have reinvented themselves, in part or in whole, as Amazon sellers, to take advantage of the customer base and utilize their vendor partner agreements to win sales, predominantly on price.
If you make a decision to go toe to toe with your own partners you are either deliberately disbanding a set of partners from your program, and must do so properly, or you are violating a “sacred channel vow”: Thou Shalt Not Compete With Mine Own Partners!
Participating the right way – tick! But what are you, and Amazon, supposed to do under a 1PM agreement?
There are terms and conditions, as ever, and it’s about knowing what Amazon expect of you, and you expect of them.
- Amazon need you to commit to a certain amount of product listings. A major global vendor might have to commit 500 products in volume categories (in reality, many of these listings will not sell, and many products in this list will exist elsewhere continuing to be listed by sellers, but let’s get there in time!).
- New ASINs (Amazon’s unique product identifier – Amazon Standard Identification Number) may be created, “owned” by the vendor, you could say.
- Amazon Seller data will need to be cross-referenced with Vendor Reseller data to ascertain a baseline of authorized vendors, with unauthorized sellers being subsequently informed by Amazon that this brand is now becoming restricted (to them).
- The 1st Party vendor can expand their portfolio of products as required, but will require a good handle on Amazon analytics to understand which products are worth the introspection and development – there has to be uptake and associated profit.
- All of the above should happen, but this is just the start of a new sales motion and sales operation as a whole which requires trust in Amazon and their marketplaces to perform their side of the bargain.
There is a presumption that Amazon marketplace locales are well-organized, well-managed, well-categorized, well-maintained and setup to support customers to satisfactorily search and purchase any product they desire.
However, I’m afraid to say this is not the case and it’s only through deeper analysis that real all-round improvements can be made. I’ll give some examples:
- Should a unique product have one ASIN or many ASINs?
Despite the obvious answer, a huge number of unique products have multiple ASINs and therefore multiple listings. This undermines the marketplace concept and frustrates customers and the majority of sellers. The reason for multiple listings are this: a seller setup a new ASIN thinking they were selling a new product on the platform (searched product in Seller Central and didn’t find it), or is deliberately circumventing the competition by creating their own version of the product and hoping to drive enough customers to their page where they are the single seller.
Should Amazon close these down, or combine ASINs where they are clearly the same product? Yes! Do they do it? No….
And what are the implications around unauthorized selling, Minimum Accepted Price (MAP) violations, customer warranty support and customer SLAs?
- Should product data be correctly categorized and identifiable on each product so product references can be maintained for vendors and customers alike?
Again, I’m being a little rhetorical here, but the fact is that there are huge inconsistencies across product pages that cause concern for customers, especially in the B2B space (what exactly am I buying?) and difficulties for vendors (which product/version is this?). and if you think vendors and customers might be confused, what does this do for the sellers, do you think?
Should these issues be identified and raised, and by whom? Well, Amazon doesn’t appear to do it in any significant way so it’s up to you.
So what can vendors do to get a handle on their Amazon business, get ahead of the competition, best support partners and ultimately drive a measurable ROI from Amazon investments, incorporating Amazon sales into their forecasts?
A New Solution for Vendors:
When we at TPC Global look at channel pain points we’re always looking at the vendor’s perspective. Granted, there are many use case variations and we have to discover these and be flexible in the tools we build for the vendor community.
We built PriceMark IT – the competitive pricing and performance tool, used by a number of top global vendors, and based on data from traditional eCommerce platforms (Insight, CDW, Bechtle, etc.), however, as a marketplace model, Amazon posed a different problem.
A second layer of data existed – the seller community, beyond the product listing page. This is the most important layer of all Amazon marketplaces and is where the real tangible information lies, information-rich for vendors to utilize in their decision-making.
So we built PriceMark Amazon.
PriceMark Amazon provides daily visibility and analysis covering:
- Every single one of your products AND your competitors products existing on Amazon locales today and their pricing, ASIN, product and vendor/brand identifiers
- Full visibility on who the Amazon sellers are selling these products including buy box winners, historical pricing trends vs one another and their seller portfolio and profile – who else do they sell, what else do they sell
- Where multiple ASINs exist, which unique product they map to and which sellers are selling under each ASIN
- Amazon Seller analytics:
- Are your sellers concentrating solely on your products or do they preferentially sell your competitors?
- Are they price-testing on like-for-like competitive products and hedging for customers or all-in with you?
- Do they sell the right mix of potential cross-sell and up-sell products to satisfy your customers’ business outcome needs?
- Are you not working with quality (re)sellers who appear to have the knowledge, focus and sales that could benefit a partnership
To review the NPI alert here on LinkedIn click here.
PriceMark Amazon has been built focusing initially on technology products, accounting for over 400,000 products across the Amazon locales, from the US to Germany to India to Japan to Australia. It’s an incredibly data-rich tool and it’s our hope that the insights provided today, combined with new use cases derived from each new customer, can give every interested vendor the opportunity to win the Amazon space, inspire confidence in the continuous development of their channel strategy and convert this into operational best practice supporting partnerships on the seller side and with Amazon.
PriceMark Amazon is almost certainly the first Amazon tool collating and analyzing this data specifically for vendor needs.
If this is the type of support you’re looking for, feel free to get in touch.
David Porter is the CEO of TPC Global, a channel analytics business in it’s 5th year of operation. In recent years he has pivoted the business to become software-focused and tool-based now providing 4 vendor-centric channel tools: PriceMark IT, PriceMark Amazon, Reseller Analytics and Distribution Optimization. David is a big advocate of the channel and built up his knowledge-base from his time at Cisco influencing Distribution strategy and approaches to data and tool-building for WW Distribution.