Let’s face it: No one really wants competition. Even more to the point, no one wants competition from the biggest, baddest competitor in the game! So, is this something that can be prevented?
Not always, but it’s definitely possible.
The primary thing we have to remember is WHO Amazon is. Why does Amazon do the things they do? Who does their policy serve?
Amazon’s focus is and always has been customer experience. More than anything else they want to deliver massive value and a seamless shopping experience to their customers. They aren’t a true profit-driven company, they are customer-driven. There was a famous example of this with Amazon cloud computing. If I recall correctly they lowered their price more than thirty times over a couple of years, during a period where they had no competition. They weren’t trying to make more money (as they were the defined market), instead focusing on delivering a better value to their customers.
Amazon is famous for losing money while making their customers very happy. Many of us KNOW and SAY that, but, it’s almost like the statement loses relevance when it applies to us. It’s as if blinders cover our eyes when Amazon’s commitment to the customer experience comes at our expense.
Here are the reasons I believe Amazon retail targets products to carry them.
1) Your price is too high.
Amazon doesn’t care about your profits.
They want you to be successful (in the abstract) as that can deliver great value to their customers. However, your success cannot and will not come at the expense of the customer experience.
I believe it is important to understand this: Amazon makes more money when you sell a product than when they sell a product. It makes much more sense for them to allow you to be the seller, because:
– if they carry a product, they carry debt.
– products are risk, whereas your sales are guaranteed profit.
– their retail margins are razor thin
I will repeat, they aren’t profit-driven. Why do you think they don’t sell that super hot toy for more than retail at Christmas? They know it sells at that price (they literally have ALL of the data to support it), but, they care more about making sure customers are happy.
If your prices don’t create a great customer experience, they will find the product and compete with you. This is SOLELY to force you to become better and be more competitive.
Oftentimes we lose sight of the game Amazon is playing, as our focus is solely on being competitive within the Amazon marketplace, but it’s important to keep in mind they aren’t only looking at how you stack up to other competitive sellers (competitive sellers are simply a tool to control prices), but they are comparing you to the world of retail.
For example, if you sell a product for $25 and that same product is available from Walmart at $15, they will be trying to source the product. This happens because Amazon’s goal is to be the first choice for shoppers. They want to provide customers with the best deal and best experience possible, as they realize providing those things makes people want to come back over and over.
2) Your stock levels are inconsistent.
If you consistently run out of a product, that creates a poor customer experience. Even if your price is competitive, it doesn’t help if customers can’t buy it.
Look at it from this perspective: if a customer comes to purchase a product and that product isn’t in stock, Amazon loses a sale, but more importantly it trains customers to look elsewhere, which Amazon can’t have.
Your goal should be to provide consistent stock and replenish your product to meet demand. If you can’t – they will. They want customers to always be able to find products, and find them at great prices.
3) Poor product prep.
If Amazon identifies a higher than expected return rate, it is assumed you are failing to properly prep and ship your products.
Returns create a poor customer experience, and having a high return rate will prompt Amazon to source your products.
Amazon’s focus is on providing value to their customers. When they start carrying products, it isn’t to target you. On the contrary, it is likely you have fallen short in one of the three areas mentioned, or possibly in some other way they believe promotes a worse shopping experience than they can provide. If you want to prevent Amazon from jumping onto your SKUs, make your focus the customer experience. Go above and beyond the minimum expectations:
-Price your products competitively (look for ways to improve your sourcing practices and lower your associated costs)
-Make sure you send your products well protected (follow the Amazon prep guidelines to make sure your products can survive the online sales process)
-Streamline your restocking process (make sure your stock is sufficient to meet customer demand).
Amazon wants to challenge us to be better retailers, to focus on what actually matters, and provide that level of care to their customers. That means we have to take responsibility for our actions, and realize we control our own destiny. More often than not when Amazon jumps on a product it’s because we fell short in our attempts at being a great retailer.
I think the ability to control your own destiny is comforting. While sometimes it means we have to take responsibility for some of the bad things that may happen in our business, it also means we have unlimited potential in growing it.
Before I shut this article down, I want to dispel a myth. We receive this question all the time: Should I send my products direct to Amazon, or will they steal my source? First, the thought of Amazon stealing your sources is preposterous. If you truly believe that is possible, you give yourself far too much credit.
When your products are shipped to Amazon:
1) Stock checkers could not care less where products come from. Their metrics are centered around speed and accuracy. If they stopped to check your boxes, they would be fired within the week.
2) if you think a company, especially one with all the resources Amazon has, could not find and source your product…you are sorely mistaken. They have hundreds, possibly even thousands of buyers and product researchers. Even if you are better than all of them individually, you aren’t better than the “army” of them.
Instead of concentrating on this, focus on delivering value. Focus on improving your craft, and focus on operating above the minimum acceptable standards. If you do those things, you will have a much better time selling on Amazon.
I will say this has happened to us six times, in just over three years of wholesale sourcing. We were carrying a product and doing well, then Amazon came onto the listing. I believe the realization that that this was our company’s fault for failing to deliver the Amazon standard has made us better sellers for the other incredible products that we carry.
Accept responsibility. Relentlessly pursue perfection. Deliver the ultimate customer experience.
They now accept students a couple times a year to teach them The Wholesale Formula, a blueprint of the exact steps they used to build their multi-million dollar Amazon business.