Now is the time to make changes

Amazon recently announced that the online retailer in Western Europe is reviewing its business with various distributors. In many cases, the company wants to bypass the dealers as an intermediate station in order to achieve better product prices and “keep the cost structures attractive for the customers”, as the company explains to the media.

In fact, it is not new that Amazon is trying to attract brand manufacturers as direct suppliers (vendors) instead of sourcing their products through distributors. However, Jan Bechler, founder and managing director of the e-commerce agency Finc3, sees this as a change for many retailers and distributors, which has been apparent for some time, as Amazon has been trying to optimize the margins for years.

He therefore believes that brand manufacturers should immediately start creating the conditions for their own Amazon vendor business. Because many private label owners and brand manufacturers underestimate how significantly business with Amazon differs from business with retailers such as Mediamarkt or Obi. “Amazon, for example, is comparatively transparent when it comes to data – but also expects that this data will be used. For example, most retailers only know their own outgoing goods to the retailer. Amazon, on the other hand, informs vendors about Amazon’s outgoing goods to end customers.”

In addition, Amazon continuously delivers the search volume for its own products. As a result, you can plan inventory, promotions and advertising very precisely – and avoid slow sellers that you would otherwise have to sell at the end of the day.

The difficulty that arises for Amazon as well as for other platforms is the dual role – on the one hand as the largest retailer that you are, on the other hand as a platform operator. As critics have often remarked in the past, this is a conflict of interest that is difficult to eliminate.

Finc3 recently presented a software solution to support the vendor business, which is intended to map all structures. With Catapult, as the tool is called, for example – as is usual with brand manufacturers with a complex product range – management is based on regions and product groups and not on individual items. “Because in the future other retailers will also be much more data-driven and we can provide a good basis for this,” explains Bechler.

However, it is also clear that the Amazon Marketplace remains important from other points of view – because brands can use it to define content for their own products and thus also reach customers who are only looking specifically at Amazon or who use Amazon as the first point of contact for research. And that is known to be around 30 to 45 percent depending on the study, in the USA it is more. Amazon is therefore not only to be seen as a sales channel, but also as an important marketing authority and advertising space.

Bechler also believes that distributors should open up the marketplace for themselves. “It’s a false rumor that only companies with their own brands are successful there. There are very successful companies that offer classic branded products on the Amazon Marketplace – from Lego to Adidas.” The recipe for success is to be better in your own niche than the classic brand manufacturers and, for example, to know certain peaks with which the manufacturers: don’t calculate inside. “If you understand very well how to perfectly combine the strengths of different marketplaces, retailers, countries, such a niche with Amazon’s mega reach can be quite a profitable playing field,” explains the agency boss.

Many e-commerce experts agree that Amazon offers more than many other platforms and the right data to ensure optimal sales control. Companies and brands that draw the appropriate conclusions from this benefit twice over – through optimal visibility and good utilization of the advertising budget.