Ah, resellers. For some manufacturers, they can be incredibly helpful at getting a product out there on the market. For others, they’re just another obstacle to the Buy Box and great brand image.
Here’s the thing though: whether or not you like them, resellers exist. Think of them as insects: they are an undeniably large part of the ecommerce ecosystem, sometimes helpful, sometimes harmful, sometimes just plain annoying.
This week, we’ve put together a list of the pros and cons of working with resellers. Keep in mind, this is geared towards manufacturers who are considering voluntarily selling their items to resellers. If you’ve already got resellers (by choice or from a leak in your supply chain), you might check out one of our older posts, which talks about the effects of resellers on your product.
The Upsides of Resellers
For many manufacturers, working with resellers feels like a good option, especially in the early days of trying to get established in ecommerce. In fact, most of the benefits you’ll see from resellers will come to ecommerce newbies. Here are some positive impacts that resellers can have:
- Established Customer Base
If you’re just getting started with your ecommerce, resellers could provide you with an established customer base. They may already have received product reviews, so you could start with a healthy product listing instead of from scratch. These reviews will stick with your product, not the seller. While product reviews aren't everything, a lack may still put customers off, and can also impact your organic searchability and product ranking. - Experienced with Sales and Marketing
Larger resellers are often very experienced on Amazon, so they may know some good strategies to get your item out there and to increase sales. These might include things like keyword optimization or ads. Obviously, quality varies from reseller to reseller. - Speedy way to get your product out there
Especially if you’re just getting started, resellers will get your products out on the market right away. There’s also some potential for regional and national expansion – chances are, resellers have a wide presence across the country (although, honestly, Amazon tends to solve narrow regionality anyhow). - A lot less work
Storage, inventory management, customer service, etc. is handed off the moment you sell to someone else, including Amazon themselves. Since you no longer own that item, you won’t be responsible for all the fees and management associated with it. Resellers are definitely a “hands-off” approach, and might seem similar to selling through some brick and mortar stores. - Quick Cash for you
You could get money right away, or within days depending on your payout terms with that particular seller. When you sell through Amazon yourself, there will be some delay in payment as well.
The downsides
So, now that we’ve gone through some of the possibly good stuff associated with using resellers, it’s time to face reality. If we return to thinking about insects, it could be that working with resellers is sort of like opening your window, yelling "Come on in, all you adorable lady bugs!" and then being surprised when you end up with a bunch of mosquitos and gnats instead.
Resellers can be, in the long run, pretty damaging to your product and your sales. Here’s why:
- No control over how resellers brand you
While they may be experienced with sales and marketing, they might not be doing this in the way you want them to. This is especially problematic with premium brands, which rely heavily on branding to bring in customers.
Also, if you look back at last week’s blog to see one of the best places to sell – your website. One of the main reasons for this is complete control over branding. Resellers are basically at the complete other end of the spectrum. On Amazon, they can easily change product descriptions, photos, and more - even if you are selling the product yourself! - Smaller margins
Even though you will make quick cash, it isn’t going to be nearly as profitable as if you sell it yourself. Obviously, the extent to which this is true will depend on how you price your product, and how much it costs to ship it. - They will become a competitor in the future
While resellers might be a quick and dirty to get started, what about when you want to sell yourself? Well, it’s not good news… These are just a few things:
- They will be competing with you for the Buy Box & for salesn that would otherwise be yours.
- You will probably ALREADY have to deal with this some of the time, especially if you sell through brick and mortar stores like Costco.
- You will need to reach out to each reseller to request they stop selling your products online, or choose to no longer sell to them all together. You may also have to draw up an MAP agreement. - Issues with quality control
Depending upon the type of product, this might include: expiration issues, missing parts, broken items or even counterfeit items. These may tarnish your products overall rating on Amazon – which can affect sales even BEYOND Amazon. In fact, 82% of people check their phones for reviews before buying a product in store (and you can bet a chunk goes right to Amazon). - Bad seller reviews might become bad product reviews
As we’ve mentioned before, many product reviews have to do with the experience with the seller as well. When you manage your sales, you can actively work to have these removed and improve the customer experience overall to limit those in the future. Your resellers sell so many different products that they may not care enough to do this to protect your product's reputation.
Our conclusion tends to be this: resellers might work well for a short time, and may even help you build up some customers and brand recognition. In the end though, they tend to do more harm than good. Keep an eye out for next week's post, which will explain how working with Whitebox is different than working with resellers.