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"So much of the work I do today is working with brands to help them evolve the way they think about their overall go-to-market strategy. It's not just, 'I sell a bunch of stuff on Amazon, and I want to sell more.'
It's actually recognizing that — because there's this large marketplace called Amazon, brands need to rethink how they go to market in every channel."
— James Thomson, Chief Strategy Officer, Buy Box Experts
To succeed in an omnichannel world, you need to have an effective marketplace strategy, especially on Amazon. With unauthorized and third-party sellers, even when you aren't directly selling on Amazon — you're still selling on Amazon.
As chief strategy officer at Buy Box Experts, an Amazon account management and branding agency, James Thomson says brands could put several strategies in place to improve channel and distribution compliance on Amazon and other marketplaces.
"As a brand owner, you want to control your brand. You want to make sure consistent messages are put in place for consumers no matter where they're shopping. These are big, important, ugly issues for brands to tackle," Thomson says.
In a recent episode of the "Unpacking the Digital Shelf" podcast, "Controlling Your Brand in the Age of Amazon," Thomson shared a three-pronged approach to developing a more holistic channel strategy and better control their brand image and customer relationships on Amazon.
With these tactics, brands should be better positioned to conquer existing and emerging marketplaces.
In the world of ecommerce, Amazon is a sandbox with a different set of constantly evolving rules.
"Back in the day, you could show up on Amazon and start selling there. There wasn't a lot of competition on specific listings," Thomson says. "If you fast-forward 20 years, Amazon has become a highly desirable destination for unauthorized sellers. Companies that find ways to get their hands on products can come to Amazon and leverage the huge demand that exists for so many brands."
Thomson adds that many brands haven't kept pace with this evolution. They haven't figured out how to adapt their channel strategy or their relationships with traditional distributors and retailers to prevent brand and price erosion of their products.
"So much of the work I do today is working with brands to help them evolve the way they think about their overall go-to-market strategy. It's not just, 'I sell a bunch of stuff on Amazon, and I want to sell more.'
It's actually recognizing that because there's this large marketplace called Amazon, brands need to rethink how they go to market in every channel."
— James Thomson, Chief Strategy Officer, Buy Box Experts
Though brands are still making a wholesale margin on diverted units sold on Amazon, they are trading incremental revenue for a larger branding and customer relationship challenge.
With third-party and unauthorized sellers proliferating on Amazon and other marketplaces, a brand may not even recognize who is selling their products. These sellers also compromise the brand’s image with subpar product content, like low-grade product listings, pixelated product images taken on a smartphone or basic product descriptions that don't compel consumers to hit the “Buy Now” button.
Thomson, whose recent book is aptly titled, “Controlling Your Brand in the Age of Amazon: The Brand Executive's Playbook For Winning Online,” says companies need to start looking at Amazon holistically as part of their overall channel strategy and distribution efforts.
“You need to control your content. You need to make sure your brand message is on point everywhere — to the extent that you can control who's representing you and ultimately try to stabilize prices across channels. These are big complicated issues, but they can be solved,” he says.
Thomson says his firm often leads with data to show brand executives how much they are hemorrhaging on Amazon and how more effective brand control can boost their top- and bottom-line revenue.
While the revenue risks associated with marketplaces are clear, brands also face the risk of eroding their relationships with retailers if they don't rethink their distribution model and get a better handle on Amazon.
"The moment you start to create a situation where consumers actually prefer buying your products on certain channels because the products are cheaper or because there's more price erosion in certain channels, that's a bad situation," Thomson says.
"You don't want to drive consumers to certain channels, and typically those channels are ecommerce channels. All of those long long-term relationships you have with retailers — the physical inline retailers — those are getting hurt because consumers know they can get the product for 5% or 10% cheaper in an ecommerce channel," he says.
Thomson adds that although sales are important, brands shouldn't give consumers the wrong incentive to shop on certain channels, especially if their purchasing decision is solely based on price and not product quality.
"So, let's stabilize pricing. Let's stabilize the brand message, and let's be everywhere customers are. That's a much better long-term model, but it requires discipline," he says.
To achieve all these things, Thomson said brands must embrace a three-pronged strategy.
Controlling your brand on Amazon requires better channel governance, brand and content control — and putting mechanisms in place to ensure your brand gets its fair share of voice on each channel.
Thomson boils his strategy down to three crucial tactics:
"The most important tool you're going to need is to learn how to say 'no.' 'No' to some retailer you've done business with for a long time. 'No' to your head of sales, who may be trying to push as many short-term units out the door as possible, when in fact that's not the right idea for the brand," Thomson says.
"The more you learn how to say 'no,' the more you're going to end up with consistent pricing, consistent inventory availability, and that's all going to flow," he says.
While Thomson’s first piece of advice focuses on principles, the second part of his three-part strategy is more tactical.
Many brands have a minimum advertised policy (MAP), which is only really useful with authorized resellers. However, it does nothing to stop unauthorized resellers from selling products online, leading to even more price erosion. To combat this, Thomson says brands should create an online reseller policy, a legal document that establishes guidelines for authorized resellers around what they can and can’t do when they sell your products.
“Part of the online reseller policy development is also rethinking what kind of quality controls you’re going to put in place for authorized resellers to go through,” Thomson says.
“From the time they take your products to the time they put it in front of the consumer, there are about 65 or 70 different ways you can put requirements on the reseller to handle the products in certain ways so by the time it gets to the consumer, you, the brand, know a consistent experience and consistent quality product is being put in front of that particular customer,” he says.
Thomson says this policy could include requiring resellers to share Amazon seller data or feedback data. An online reseller policy is also beneficial for circumventing the first-sale doctrine, or federal case law that currently enables unauthorized sellers to sell products without permission from a brand.
“The only way around that — as far as we can tell from a legal perspective — is to change the way you enforce your trademark. An online reseller policy is one effective way,” Thomson says.
Along with these legal mechanisms, brands also must change their internal processes. Thomson said some of these process improvements could include:
This effort also should include — if your brand hasn't already done so — using RFID codes or serial numbers to evaluate how products are moving through the supply chain.
"That's all important stuff for helping you figure out how this product ended up on the shelf being sold by an unauthorized seller," Thomson says.
For companies to better control their brand on Amazon (and elsewhere), they'll need to lead with data, have difficult conversations with their sales team, distributors, and retailers, and make difficult decisions about improving their distribution model and channel strategy.
Enforcing these changes won't be easy, so companies also will need to incentivize their partners.
You have to "start with the belief that even though you have to cut off certain limbs, certain distributors or certain retailers — the demand is there, and someone else is going to fill the demand," Thomson says.
"If you're working with companies that are representing your brand properly, they're going to end up increasing the amount of product they buy from you, and they're going to do it in a way that's consistent with what you're trying to do as a brand," he says.
Or put more simply, as Thomson says, you'll need to have "a big stick for the bad guys and a big carrot for the good guys."
Listen to the full podcast episode to learn more about leveling up your marketplace strategy to keep control of your brand.
