It happens sometimes, where your items are selling faster on Amazon faster than you imagined, and everywhere you go you notice price erosion on products, lower margins in the company, and distribution headache. Sales on Amazon can increase problems for you as a company. If you’re struggling to get your products to move in sales as you want to, you might wonder if too much success is a bad thing. The answer is yeah it can happen. that’s because Amazon is complicated, since there are multiple different sources for selling on Amazon, and it’s hard to anticipate the problems of quick success. When you have rapid growth, it causes issues with other distribution channels, especially if you’re an independent e-commerce site.
The success of Amazon can cannibalize the sales from your e-commerce site, which has higher margins for those who make it. Amazon has built up a lot of consumer trust, and when you combine that with the use of Amazon Prime, and the low friction process of checkout that’s used, it’s essentially a preferred shopping experience and many may not even buy if it’s not on Amazon. About 50% of households have amazon prime, and it’s definitely an expensive proposition to completely ignore Amazon.
But, there are ways to actually help reduce the impact of success n amazon to the website sales. The first is price control, where you control the price on Amazon when compared to the commerce site keeping the price sensitive buyers and the loyal existing customers getting directly from you. You do this with promotions and coupons to the site.
The second is distribution control, which is controlling the amount of a product on Amazon, and who is actually selling it. Protecting this will allow you to simulate the adverse effects that come from price erosion on the Amazon platform.
Before recently, the price parity clause used to be a big part of Amazon sales, but one of the simplest ways to beat out the Amazon erosion is to make your price slightly less than that of Amazon. Prime customers are so loyal to making purchases on Amazon that they will rarely check the lowest price outside of Amazon, but if they’ve been buying from you, you can get them to purchase directly. You can stay at or above the minimum advertised price and the website prices on Amazon.
But, with all of this alone, you need to have a plan. Being able to capture the people on this is a key part of having a successful e-commerce site, and you should think about the consequences of selling, have a clear and concise plan, and understand what is pushing the prices on the market.
You need to make sure that you have your product t on Amazon, but also understand that you avoid the pitfalls that are there, and also make sure that you represent the product correctly on Amazon so that you can get the best customers that’s possible.