Passively “watching” your products’ performance on Amazon is impossible. Many vendors decide to do this, but trust me, it’s a bad idea. 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 3 choices:
(1) 1st Party (vendor) Agreement
vs
(2) 3rd Party (seller) Agreement
And as a vendor, you can choose to be either
or (3) do nothing.
The difference is this:
3rd parties are sellers and compete for customer sales, in some cases 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 regard 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 directly when the customer base is effectively unknown and the partner play isn’t obvious.
However, this has consequences that 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 my Own Partners!
David Porter
CEO, TPC Global
PriceMark eCommerce, PriceMark Amazon