Recently, I have been involved in an increasing number of meetings with sports nutrition and fitness CPG brands to talk about J. Schall Consulting helping them build their digital channel strategy. We love this type of work so its always fun to have brand’s reach out to us to discuss this potentially huge project. The due diligence calls go all over the spectrum of this channel but usually the conversation shifts to Amazon quickly as I am always curious about what the leadership team of the brand thinks about this MASSIVE customer. The vast majority answer this way…”we don’t like to deal with them because all the third-party resellers (3P resellers) don’t follow our minimum advertised pricing (MAP) policy.” They usually add comments about how Amazon creates friction with some of their bigger retail customers like GNC or the Vitamin Shoppe, so they don’t focus on it because of the brand issues.
I don’t fault a brand for thinking that way, but is it 100% correct? Is Amazon the bad guy in the sports nutrition and fitness CPG industry (and pretty much every other one)? Amazon has been getting a lot of heat in the past months/years for their general “don’t give a fuck” attitude when it comes to helping brand owners manage pricing, distribution, and more. Whether it’s sold by Amazon directly or one of their 3P resellers, brands are very quick to point at Amazon as the catalyst behind many of their brand’s pricing issues and channel conflicts.
If you have conversed with me or are a regular reader of my blog, you probably already know my thoughts on Amazon. Simply put, I LOVE Amazon!! I am not saying they are prefect so I understand that Amazon is an easy target for frustrated brand owners. Firstly, Amazon is notoriously difficult to work with. Secondly, they make it crystal clear that they do not enforce MAP policies or exclusive distribution agreements. Finally, Amazon has no interest in helping you build your brand and has recently transitioned to a more cost effective “self-service” vendor model. They now expect brands to take direct ownership over marketing, content, and operational optimizations. To be honest, Amazon is a tough channel initiative to effectively execute.
If you are a smaller or medium-size brand, it could be too much to handle. Amazon leaves brands to fend for themselves when it comes to managing their brands on the marketplace. So when faced with increasing pressures from larger retailers to address the online brand issues like pricing, it’s easy to blame Amazon. But is this right?
You want to know who created all those brand issues? It was YOU! Remember all of these?
- Years of “Me too” product development
- Aggressive pricing to get “new business” when sales or cash was tight
- Over forecasting that leaves you with tons of inventory that leads to liquidations
- All those discounts you give your distributor to push your products
- Volume discounting to your biggest accounts
What I am here to tell you is that Amazon is not the problem. If brands were being honest with themselves, they would say they hate Amazon because they are transparent. Amazon didn’t cause these brand issues, they exposed them. So stop blaming them and start getting back to work to clean up your brand.