66: How Amazon 3P Sellers are Disrupting Specialty Retailers & Brands, Part 2 of 2

“Offer consumers the option they want. Consumers don’t like Amazon; they love Amazon.”

– Fred Dimyan

EPISODE PREVIEW:

Product offered as “Prime” on Amazon have a 250 percent higher conversion rate than those not listed as Prime. If a higher point of conversion exists in any capacity in any channel, I haven’t found it yet.

I open with that statistic because it’s abundantly clear to see why sellers flock to Amazon. We already know that 55 percent of all online product searches start on Amazon. From my guests on this episode, we learn that across all of its platforms, the retailer has over 550 million items for sale. Three thousand five hundred (3500!!) anonymous resellers join Amazon every day. Globally, Amazon is blowing up! In India, ALL of the sellers on Amazon are third party.

And guess what? If you’re a global brand, you may be able to establish MAP policies. But it’s standard practice that you can’t always assert control if a seller in one country chooses to sell online (ahem….on Amazon) in a different country.

These points are why I’ve partnered with Snews for a two-part, four-interview series on anonymous 3P sellers. (Part one is here.) It is an incredibly complex problem and it’s only growing in scope. Expecting someone else to solve it or burying our heads in the sand just allows it bloom bigger. This is an industry-wide (cross-industry, actually) challenge.

Luckily, there are people like my guests today, Jon Rockefeller from Petzl America, and Fred Dimyan from Potoo Solutions, who are attacking it from the brand side and outside management side, respectively.

By virtue of their anonymity, these 3P sellers can wreak havoc with pricing, branding, customer experience, warranties, and distribution. If you’re not managing this channel, you’re giving away money and risking your brand integrity. But if you are, the anonymous aspect can make it feel like a whack-a-mole game.

By the end of this episode, retailers (online and brick and mortar) will understand this is a threat they need to be actively interested. Brands may decide to go it alone on channel management or hire an outside company, like Potoo. And everyone will be asking, “Can we beat them? Or do we need to join them?” And what, exactly, would that look like?

GUEST PROFILES:

JON ROCKEFELLER

Jon is managing director of the sport business for Petzl America and a 30-year veteran of the outdoor industry.

FRED DIMYAN

Fred is CEO of Potoosolutions.com, a firm that specializes in protecting brands on online marketplaces.

TOPICS COVERED:

Third party sellers, 3P, unauthorized 3P, price parity and channel conflict issues, price versus value, 3P sellers affecting forecasting, complexity of channel enforcement and cleanup, not warrantied sales, counterfeit products on marketplaces, online reviews

SELECT QUOTES:

[Jon] “As the internet has enabled a lot of different ways to sell, the channels tend to get blurred very quickly. It’s made it super complicated for us to police this environment. Policing is simply just to try to be a healthy community for everyone.”

[Jon] “From the creation of the product all the way through to the retail price point, there is only so much margin inside that entire chain.”

[Jon] “Brands certainly have a huge impact on the experience, but the channel has a huge impact on that experience as well.”

[Fred on outsourcing channel management] “If we have 500 brands, our learning is going to help our clients 500 times quicker than what they could learn on their own. When you’re managing one brand, you can’t see a pattern. When you manage 500 brands, you can see a pattern, you come across a seller multiple times, and you know their behavior.”

[Fred] “There’s a lot more transference of traffic from [brand] websites to Amazon, than the other way around.”

[Fred] “Many brands that want their items off Amazon. More often than not, we convince them to get their items on Amazon, because typically they’re already on there anyway.”

[Fred] “Offer consumers the option they want. Consumers don’t like Amazon; they love Amazon.”

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