The Big Problem Brands Selling on Amazon 1P Don’t Know They Have
Amazon 1P and FBA is the gateway to the online world for many brands and third-party sellers. But there is a big problem that brands selling on Amazon 1P or FBA don’t know they have: relying exclusively on one of these fulfillment methods can severely limit exposure to their brand’s products.
Amazon 1P won’t carry your brand’s entire product line – only fast-moving products they know will sell well. The same principle applies to FBA. Amazon doesn’t want slow-movers sitting in their warehouses … and they charge high monthly and long-term storage fees to try to keep it that way.
Brands or third-party sellers that want to expose long-tail products to Amazon’s customers are forced to pay FBA fees – which can reduce gross margin – or not list them for sale at all.
This video reveals a way around this problem. Etail’s CEO Michael Anderson recently sat down with Web Retailer’s Alex Knight and chatted about this issue.
You’ll find out how to sell your entire product line and even offer new products … without having to manage inventory or a warehouse … or pay any more than you already are.
Instead of sending inventory to Amazon 1P or FBA, you’ll discover where you should send it. Not only that, you’ll also learn how this move will allow you to sell more and higher priced products without increasing your SKU count or inventory levels.
Click here to watch the video or continue reading below.
Opportunities Brands Are Missing By Only Using Amazon 1P or FBA
Many brands rely exclusively on Amazon 1P or FBA. Many third-party sellers rely exclusively on FBA or drop shipping. The reason is simple: they don’t want to manage inventory or a warehouse. This would require them to learn a whole new set of skills instead of knowing just one skill – buying or making stuff and sending it somewhere else to be stored and sold.
There’s no question that Amazon 1P and FBA are good ways to get started selling online. But when you put all your eggs in one of these baskets, you pay a big price in the form of missed opportunities.
For one thing, Amazon 1P won’t carry your brand’s entire product line. They will buy only what they know or think will sell. From what we’ve seen, this amount can be as low as 2-3% of your assortment. Amazon 1P has also been known to throw their buying power weight around to try to get better pricing.
Many brands attempt to get around this by turning to FBA. However, as many third-party sellers already know, Amazon hates dead inventory sitting in their warehouses. Because Amazon’s monthly and long-term storage fees are so high and always going up, the only products that make sense for FBA – whether you’re a brand or third-party seller – are fast-movers.
So, if Amazon 1P will only buy what they know will sell and FBA discourages brands and third-party sellers from offering long-tail products by charging and arm and a leg for storage – then there’s a good chance many of your products aren’t getting seen or sold!
How to Self-Fulfill Orders Without Managing Inventory or a Warehouse
But what if there was a way to solve this problem?
What if you could sell ALL your products and even offer new ones … without having to manage inventory or a warehouse … or pay any more than you already are?
You might think you have to take a big step, but you don’t.
Instead of sending your inventory to Amazon 1P or FBA, send it to a third-party logistics provider (3PL). Inventory and warehouse management is all they do and they do it well. Why not leverage their strengths to overcome your weaknesses?
The reason so many brands and third-party sellers are drawn to Amazon 1P or FBA is because it’s easy for them. They either can’t control – or they want someone else to be responsible for controlling – their inventory. But because they are unwilling or unable to deal with the challenges that come with inventory and warehouse management, they are knowingly or unknowingly limiting exposure to their products.
How to Sell Your Brand’s Entire Product Line on Amazon
To prevent this from happening to your brand or business, you need to diversify your fulfillment portfolio. Take a baby step toward self-managing inventory by using a 3PL. This will allow you to offer your entire product line, or at least as many products as you want. Imagine the impact that would have on your sales!
If you’re averaging $250,000 a month in sales, and your listing to SKU ratio is 0.5 to 1, what would your sales look like if it was 2 to 1 – or 3 to 1? Sales wouldn’t exactly double or triple due to the Pareto Principle – 80% of your sales come from 20% of your items. But you’d definitely see a big lift! More listings mean more sales. Best of all, it doesn’t cost you anything but the effort you put in. You’re more effectively leveraging the products you already have access to.
Using a 3PL will also open up new opportunities that you might not have had a chance to take advantage of before. You’ll be able to sell more and higher priced products while carrying the same number of SKUs and the same amount of inventory by buying individual units and offering them in different quantities and combinations.
When you create multi-packs and bundles you usually get to add new listings to Amazon’s catalog. This increases your chances of being the only seller of the item and dominating the Buy Box. You will also be able to get rid of underperforming products by bundling them with fast-movers, which frees up working capital without deep discounting.
What You Need to Do Next
Is your brand or business currently at the mercy of one fulfillment method? Do you need a system that will allow you to diversify how you ship so you can expand what you sell? Our sales and supply chain management platform currently supports seven different fulfillment methods, including third-party logistics providers (3PLs). What kind of impact would selling your entire product line on Amazon and offering new products in different quantities and combinations have on your business? Click here to get in touch with us today to find out.