Sep 21, 2023 12:00AM
Distributors on Amazon can be your rivals. Monitor indirect sourcing; if over 5%, act fast. Limit bulk discounts and geographically restrict products. Thanks, Martin.
Most manufacturer brands work with distributors. But these can quickly become your biggest competition on #Amazon.
After all, distributors often receive volume discounts in exchange for large bulk orders.
The problem with this?
Distributors are often vendors to Amazon themselves and pass on the volume discounts as part of their cost price. Which allows Vendor Managers to benchmark the cost prices they receive from you as the manufacturer.
So here are some quick tips on how to manage distributors in your home market with Amazon in mind:
🔎 Review your indirect sourcing share on Amazon
If your indirect sourcing share is higher than 5%, your alarm bells should go off. Chances are, your cost prices aren't competitive enough, and you'll either lose the Buy Box or POs will be routed to your distributor.
🚩 Beware of bulk discounts for distributors
Distributors likely pass these discounts to Amazon to win the POs if they're 1P or lose you the Buy Box if they sell via 3P. Make sure your Amazon cost prices are competitive.
🌏 Geographically restrict access to products
Where legally possible, introduce distribution agreements or reseller policies. They ensure you don't compete with your retail partners.
What other tips can you think of to reduce your indirect sourcing share with Amazon?
Let me know in the comments!