Selling on Amazon: Fitting Amazon into the Direct Sales Model

Jun 5, 2021
By Julie Cabinaw, Vice President of Marketing, Tastefully Simple

In 2018, while many companies had made the move to sell directly to clients on their websites, few were selling on Amazon. Tastefully Simple’s leadership team made the bold decision to sell on Amazon and lay the foundation for a modern multichannel brand, offering more ways to meet customers where they are to learn about and purchase Tastefully Simple products.

To launch this channel, Tastefully Simple had to deeply understand how selling on Amazon really works and what resources were needed to manage the channel. We also had to proactively prepare our field for the Amazon launch and address fears they had about our commitment to them. Would it truly be possible for a direct sales channel to coexist with an Amazon presence?

Spoiler alert: the answer is yes.

The Amazon Machine: How It Works

Selling on Amazon is not a “set it and forget it” proposition. You’ll need to determine what success looks like for your business and dedicate both strategic and operational resources to the effort. You’ll need to work through your marketing strategy, product offerings and pricing, and decide which Amazon programs are right for your brand. Developing a plan to optimize your marketing presence on Amazon is critical.

On Amazon, your goals are to:

1) Own the Buy Box

2) Get great reviews

3) Be top of the first page for branded search terms 4) Work to get top of the first page for non-branded search terms

The Buy Box: For most items, there will be several buying options. When a buyer selects “Add to Cart,” the seller who has the Buy Box wins the sale. Eightythree percent of Amazon sales come from the Buy Box. Even if you are not selling your brand on Amazon, someone likely is, and by owning the Buy Box, you can make it far less appealing for unauthorized sellers to sell your products.

Would it truly be possible for a direct sales channel to coexist with an Amazon presence? Spoiler alert: the answer is yes."

Reviews: Reviews are essential to the Amazon flywheel. Higher numbers of reviews, and the overall rating of your products, play a huge role in consumer purchase decisions. Persistent and focused efforts toward gaining reviews increase your product’s ranking and presence to potential customers.

Organic and Paid Search: Just as you invest in both organic and paid SEO efforts for your website, plan to invest 8–10 percent of your forecasted sales in marketing your brand, and most of that budget will be in paid search. It is easy to own branded searches, such as your product names. It requires focused effort to increase ranking for non-branded search terms. For example, Tastefully Simple developed a campaign to get to the top of the first page for the term “Seasoned Salt.” Within a space of about three months, we went from being on the third page of results to being the second result on the first page, second only to a major CPG brand. For a smaller brand like Tastefully Simple, the legitimacy conferred by being positioned next to a top brand results in increased sales of the specific product and additional consumer exploration of other products.

Amazon Brand Registry is the first step-up for a basic Amazon seller to build and protect their brand."

Product Selection and Pricing: Will all your products be available on Amazon? For Tastefully Simple, we chose to offer a subset of products on Amazon. For pricing, we priced products at a premium compared to the cost to purchase the same item through a consultant. This helped provide an easy message for consultants to share with clients who might mention seeing the brand on Amazon. “You’re right! It is on Amazon. It’s great you found us there. When you purchase through me, you’ll be able to purchase about forty additional products you can’t find on Amazon and save up to 30 percent, even with Amazon’s free shipping!”

Overall, you will find that there is an overwhelming array of potential programs offered to Amazon sellers. Take it slow and understand what will truly provide the return on investment you need. Will you offer coupons? Lightning deals? Free shipping through Prime? Will you fulfill the orders yourself or will you use Fulfilled by Amazon (FBA)? How much effort will it take from your marketing team to support? Will your packaging need to change to fit retail consumer expectations? What opportunities might you have to market your brand on your packaging (within Amazon guidelines) to make them aware of your website and the business opportunity?

TOP TIP: Select an agency to help you understand the ins and outs of Amazon and avoid pitfalls.

Amazon Brand Registry and Brand Gate

You may have heard of Amazon’s Brand Registry and Brand Gate programs. It’s easy to get these programs confused and think they are interchangeable, but they are not. If managed properly, they can be a tremendous resource in helping to ensure your company is the top seller for your brand, but you must truly understand how the programs work for your specific situation.

Amazon Brand Registry is the first step-up for a basic Amazon seller to build and protect their brand. Benefits include “locking down” product listings to ensure accurate product information, enabling you to take advantage of unique marketing opportunities available only to brand owners, and leveraging both automated and manual reporting tools to remove infringing or inaccurate content. It’s free, but you do have to apply and demonstrate brand ownership to Amazon to participate.

Amazon Brand Gating is a second step-up. You must participate in Brand Registry to be eligible for Brand Gating. You must own trademarks for the products or brands you wish to protect, and you will need to prove that sellers have been selling counterfeit or inappropriate versions of your product. Because there is not a lot of detail on Amazon’s website about how Brand Gating works, and because they have changed this program a lot over time, it pays to understand the current terms as it applies to your business. Amazon used to charge a fee for this program; it now appears they are no longer doing so. The process will require the support of your legal team to present and defend your brand. Once approved, brand gating restricts third-party sellers. They will have to go through an approval process (through you and Amazon) to be allowed to sell and pay a fee for each product they want to sell (in March 2021, it was $1,500 in the US).

TOP TIP: Brand Registry is key to a serious presence on Amazon. It is the best way to expand your presence and protect your product listing content. For companies seeing an increase in counterfeit offerings, the effort to participate in Brand Gating may be worth it.

Preparing the Field

Another key step is a strong change management and communications plan to announce your launch on Amazon. In the absence of clear communication, representatives will fill in the blanks.

Differentiating Amazon from their businesses and how it can support them is key. Will you offer just a limited selection of products on Amazon? Will you price them higher? Will you offer a revenue share to top consultants?

An Amazon presence for many businesses is not a zero-sum game where presence on the channel takes considerable revenue away from your direct sales channel."

As with any large change, communicate as plainly as possible why you are doing it, and what the risks and benefits are. Engage your consultant advisory councils early to understand concerns and questions. In addition, you can reinforce how awareness of the brand on Amazon can support their businesses.

For Tastefully Simple, many consultants have commented on clients they gained who found the brand on Amazon first and then saw the product locally. We have also seen the benefit of creating awareness in underdeveloped markets for the brand. For instance, we did not have a strong consultant presence in a few states, yet those markets are in the Top Ten for us on Amazon. That enables us to do target marketing to those states to grow sales through consultants.

TOP TIP: Engage your leaders and advisors early and often. Their understanding and ability to supply answers to their teams to calm fears will be the difference between success and failure.

In the end, the Amazon decision is unique to each company. An Amazon presence for many businesses is not a zero-sum game where presence on the channel takes considerable revenue away from your direct sales channel. By building your Amazon presence, you may well increase the overall revenue potential for all channels.

  • Highlights
  • June 2021