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Why having FEWER sellers makes more $ense.

 

Does your brand have or plan on having multiple 3rd party sellers? If you answered "yes" consider the following!

 

 

Why having more 3rd party sellers is a negative
 

Generally speaking, the more sellers, the less control. Imagine, 10 sellers selling the same exact item, how do they compete? How about customer service? How good or consistent would your customer's support be if they had to contact multiple sellers? Then there is advertising, who would take on responsibility for marketing and growing your brand? These should all be valid concerns when entrusting your brand's reputation to random authorized 3rd party sellers.

 

But more sellers means more sales, right?

 

Wrong. This is far from accurate. Think of Amazon sales as a pizza, a nice big round tasty pizza! 

The 3p sellers represent the slices. Now, just because we add more sellers doesn't mean the size of the pizza will increase but rather the slices will shrink.

 

This pizza has 8 sellers and therefore each slice represents 12.5% of total sales.

 

 

 

 

This pizza has 4 sellers and therefore each slice represents 25% of total sales.

 

 

 

Now, whether we add or remove sellers this will not affect the customer's behavior of going to Amazon.com and typing in the search bar "garlic press". Instead, more sellers who sell the same product brings saturation to a listing. The top pizza with 8 sellers each offer the same item but only make half of what the bottom pizza sellers are making. Now, when it comes to reinvesting profits back into your brand, which pizza is more likely to have additional revenue for advertisement? Spoiler - The bottom!

 
Speaking of the bottom

 

What happens when too many sellers selling the same item have nothing to compete on but price? You guessed it, a race to the bottom! Sellers begin to liquidate and violate M.A.P agreements. Price wars break out and begin to effect your brick & mortar relationships. Retailers begin to ask for heavier discounts in order to stay competitive or even worse, drop your product line all together. This could be prevented by having fewer sellers, less sellers means equity is plentiful.

 

Who's in charge anyways?

 

When you have multiple authorized sellers, who is accountable for maintaining your brand's image online? How about promotions? One seller? All sellers? You can imagine how chaotic it could get if all sellers are trying to make "optimizations" to the same listing. The opposite is also true, if there are 10 sellers why would 1 seller take the time to do all the work and have the other 9 benefit from his or her labor? Or worse, which is what happens in most cases, nobody does anything for the brand.

 

In closing

 

If your company has worked hard to build a great reputation, why let a few amateur sellers impact your brand negatively? If you could avoid price wars, inconsistent customer service and the headaches of bad Amazon sellers, would you? In the end, ask yourself "Does it makes more sense to work with everyone, or a strategic partner?".

 

 

 

 

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