Selling products has never been easier, with multiple online marketplaces and brick-and-mortar stores offering businesses the opportunity to reach a wider audience. We will examine the pros and cons of widely distributing your offers across various marketplaces. 

We will explore the key factors businesses must consider when expanding their sales channels.  This blog will provide valuable insights and guidance on what to expect when selling products on multiple platforms and physical locations, regardless of whether you are an established business looking to grow or a start-up exploring your options. 

Rules of Amazon

It’s frequently regarded as the best practice to go wide – when it comes to retail. The ultimate goal is to distribute your products across as many stores and channels as possible.  Why? The answer is simple: the more places your products are sold, the more exposure they receive and the more opportunities you have to make sales.  The strategy is slightly different when it comes to selling on Amazon, though. 

While wide distribution may seem like a valuable strategy for increasing sales and exposure for your brand, it can also lead to several challenges that can negatively impact your brand’s Amazon presence.

So why is this the case on Amazon specifically? The reason is due to the way the Amazon platform operates. Amazon gives control of the Buy Box to one seller for each product. The Buy Box is the product page section where customers can add the product to their cart and proceed to checkout. Having control of the Buy Box is crucial for sellers on Amazon, as it significantly increases the chances of making a sale.

 

 

 

Wide Distribution and the Effect on Your Amazon Presence

Selling products across various channels, including Amazon, can help a company grow sales and reach new customers.  However, when selling on Amazon, you must comply with their policies and play by Amazon rules regarding product pricing and availability of your products. The punishment can be very severe, including account suspension or termination. Moreover, lowering prices to compete with other vendors on the marketplace can hurt profit margins. When a brand distributes its products widely, it increases the number of sellers offering the product and competing for the Buy Box. This can lead to price erosion and unhealthy marketplace competition, as each seller may engage in a race to the bottom on pricing.

Let’s dive deep into the pros and cons of wide distribution and how it affects your Amazon presence. 

Benefits of Wide Distribution: 

• Increased reach: By selling on multiple platforms and physical locations, you can reach a larger and more diverse customer base, increasing your potential for sales and growth.

• Diversification: It can reduce your dependence on any platform and minimize the impact of changes or disruptions in any marketplace.

• Improved brand recognition: You can increase brand recognition and establish a strong, recognizable brand image.

• Better customer data: By selling on multiple channels, you can gather more comprehensive data on customer behavior and preferences, helping you make informed business decisions.

• Flexibility: By having an omnichannel presence, you can establish greater flexibility in reaching wider audiences and serving your customers, allowing you to adapt to changing markets. 

• Increased credibility: You can increase your brand’s credibility and perceived trustworthiness by having a presence on multiple marketplaces.

Drawbacks of Wide Distribution

• Increased management complexity: Selling on multiple channels requires significant resources to manage listings, inventory, and shipping, making it more complex and time-consuming than selling on a single platform.

• Higher costs: Wide distribution requires investment in multiple systems and processes, increasing your overall expenses.

• Inconsistent branding: Maintaining consistent branding and messaging across multiple channels and physical locations can be challenging, potentially diluting your brand and confusing customers.

• Inventory management challenges:  It might take a while to keep track of inventory levels and ensure that products are accessible through various channels and physical places, which can result in overstocking or stock shortages.

• Customer service demands:  Delivering consistent customer service across a variety of channels and physical places calls for a sizable investment in personnel and infrastructure, which can be difficult and expensive.

• Increased competition: You may increase competition with other sellers by selling on multiple channels, potentially reducing your profitability and market share.

• Potentially lower margins: It may result in lower profit margins due to increased costs and fees associated with selling on multiple platforms.

When selling products on Amazon, wide distribution can pose significant challenges such as price erosion and unhealthy marketplace competition. With multiple sellers offering the same product across various marketplaces and countries, maintaining a consistent price becomes difficult and can lead to price wars and reduced profit margins. In addition, unhealthy competition can negatively affect brand reputation and lead to a decline in perceived value. Furthermore, managing logistics and customer service becomes more difficult with the widespread product availability, making it harder to control the supply chain and ensure timely and consistent fulfillment.

 

Narrow Distribution and the Effect on Your Amazon Presence

Narrow product distribution and selling your products solely on Amazon can significantly impact a brand’s success on the platform. When a brand chooses to limit its product distribution and only sell on Amazon, it can majorly impact its success on the platform. This decision may result in missed sales from other channels like physical stores or other online marketplaces, but there are ways for brands to compensate for these losses. By comprehending the advantages and difficulties of restricted product distribution, brands can make smart choices regarding their distribution strategies and optimize their performance on Amazon.

Benefits of Narrow Distribution 

• Huge customer base: One of Amazon’s key strengths is its vast customer base of more than 300 million active customers, offering a significant opportunity for sellers to market their products.
  

• Convenient and easy-to-use platform: Amazon’s platform is user-friendly and straightforward, making it easy for sellers to manage and list their products.

• Fast shipping: With Amazon’s Fulfillment by Amazon (FBA) program, customers can enjoy fast and reliable shipping, which can lead to increased satisfaction and trust.

• Increased visibility:  Amazon’s search engine optimization and product recommendations can help increase product visibility and attract more customers.

• Access to valuable data: Amazon offers valuable customer data and insights and allows sellers to make informed decisions about their product offerings.

• Improved credibility: Selling on Amazon can increase your brand’s credibility and perceived trustworthiness.

• Growth Potential: You can take advantage of Amazon’s various growth and expansion opportunities, such as Amazon’s global marketplace.

Drawbacks of Narrow Distribution

• Dependence on Amazon: Relying solely on Amazon may lead to vulnerability to changes in policies or algorithms, which could have a negative impact on your sales.

• Competition: The highly competitive nature of Amazon makes it difficult to distinguish your brand and grow your business.

• Limited control over pricing and branding: Amazon sets the rules for pricing and product presentation, giving you limited control over the customer experience and brand image.

• Fees:  Various fees such as FBA, referral, and storage fees can reduce your profit margins.

• Reduced customer loyalty: Your customers may not have a direct relationship with you, leading to reduced loyalty and a tendency to shop around for deals.

• Lack of direct customer feedback:  By selling exclusively on Amazon, you may miss out on valuable customer feedback and insights that could help you improve your product and customer experience. 

• Brand recognition:  Building brand recognition and customer loyalty is more challenging on Amazon as customers may associate the brand with Amazon rather than with you.

Selling exclusively on Amazon can expand a brand’s reach to potential customers it may not have reached otherwise since the platform has over 300 million active customer accounts and millions of products for sale. This approach enables brands to have better control over their pricing strategy, ensuring their products are competitively priced.

How do I know what approach I should take? 

The approach that’s best for an established business looking to grow, or a start-up exploring its options, depends on several factors, including the phase of your business, the business’s goals, resources, and target audience. Here are some factors to consider:

• Business goals:  When deciding on your sales channels, it is important to keep your business goals in mind. If you aim to increase your brand exposure, reach a wider audience, and boost sales, utilizing multiple channels may be a suitable option. Alternatively, if you prefer to cater to a specific, narrower audience, a single channel might be a better choice.

• Resources: Consider the time and resources required to manage multiple channels effectively. Do you have the capacity to handle increased management complexity and the costs associated with selling on multiple platforms?

• Target audience:  It is crucial to consider the shopping preferences of your target audience. If they primarily use one platform, it is more efficient to focus your efforts on that platform. On the other hand, if your target audience is diverse in their shopping habits, using multiple channels may be more appropriate.

An established business may generally benefit from selling on multiple channels, as they may have the resources and brand recognition to manage the increased complexity and competition. A new business may find it more effective to concentrate on a limited number of platforms in order to establish its identity and obtain customer information before venturing into various channels. Ultimately, the most suitable strategy will vary depending on the enterprise’s distinctive objectives and assets.

 

How to implement wide distribution across all channels while minimizing the adverse effects on Amazon’s presence? 

While wide distribution can present several challenges on Amazon, there are steps you can take to minimize the negative impact on your brand. Here are some tips to help you effectively navigate wide distribution on the platform:

• Control pricing: To prevent price erosion, consider implementing a minimum advertised price (MAP) policy for your products. This will help you to maintain control over your pricing and prevent other sellers from undercutting your prices.

• Manage the supply chain:  To mitigate the adverse effects of extensive distribution on logistics and customer service, it is advisable to engage a third-party logistics provider (3PL) for effective supply chain management. This will guarantee the consistent and timely sale and fulfillment of your products. 

• Monitor your brand reputation: It is crucial to periodically monitor your brand reputation on Amazon and implement measures to prevent negative impact or reviews.

But how can I grow if I limit myself only to Amazon? 

Continuous growth and expansion is the goal of every business. Limiting your offers only on Amazon should not present a roadblock, especially if you are in a small or medium-sized business phase. Here are some suggestions on how you can still grow your brand without expanding further than Amazon: 

• Diversifying product offerings: Expanding product offerings by introducing new products, entering new markets, or venturing into new product categories is a way to diversify. To ensure that there is demand for your products in each area, it is essential to conduct research on your target markets. This will enable you to focus your efforts and resources on the countries and marketplaces that are most likely to boost sales and growth for your brand.

• Optimizing pricing strategies:  This can include adjusting prices to be more competitive, offering promotions and discounts, or offering bundled products. The seller with the lowest price typically wins the Buy Box. However, pricing consistency and competitiveness are also important, as sellers with fluctuating or significantly higher prices than other sellers are less likely to win the Buy Box.

• Improving product information: Improving product information, such as product descriptions, images, and customer reviews, can help increase visibility and drive sales on Amazon. Optimizing your product listings for each market is essential to maximize the impact of wide distribution. This includes translating your product titles, descriptions, and images and ensuring that your pricing and shipping options are competitive and meet customers’ needs in each region.

• Expanding globally via Amazon opportunities:  Expanding distribution worldwide via several Amazon global selling programs can increase visibility and drive sales in new markets. When you offer your products in various countries, you exhibit your dedication to catering to customer requirements and catering to a worldwide audience. Amazon, which operates in numerous countries and markets, has a worldwide customer base. As a seller, you can enhance your influence and capitalize on fresh markets by making your products available in these regions. This can lead to higher sales and more visibility for your brand, enabling you to connect with a broader audience and develop your company.

• Enhancing marketing efforts: To compensate for lost sales, brands can strengthen their marketing strategies by initiating focused advertisement campaigns, establishing a powerful social media presence, or utilizing influencer marketing. 

In Conclusion

Each business is different and has a different placement and different needs and goals.  Whether you decide to sell on multiple channels or focus on a single platform, it’s essential to understand the unique opportunities and challenges involved and make an informed decision that aligns with your business goals and resources. 

BellaVix is here to help you navigate through your eCommerce journey at any step of the way. Don’t hesitate to contact the BellaVix team to discuss your growth potential. 

 

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