March 30, 2018

What could really happen if you are the sole seller of your brand?

“Your Selling account has been suspended”

Consider the Amazon marketplace. You are selling your product, optimize your listings, and have full control of sales as you increase your market share through the amazing Amazon customer reach. And then, disaster strikes, and your account is suspended. A quick search online and on any Amazon seller forum will reveal countless stories of Amazon account suspensions. Amazon Terms of Service are long and not always intuitive, and reasons for suspension range from the obvious (e.g., horrible customer service, multiple products sold that don’t match the Amazon listings) to the obscure.

For instance, consider the story of the seller – let’s call him John – who had excellent seller metrics and a very popular product. His product was so popular that he began getting targeted by hijackers. These hijackers would sell inauthentic claims on his listing without his permission, and generally creating havoc on his listing, such as changing his pictures and listing information.

One random day John’s account got suspended.  It turns out this hijacker had managed to take over the listing and change the brand name (through illegal hacks that are still available as off this article), and had claimed that John was the inauthentic seller, getting his account suspended.

John was able to appeal Amazon’s decision, and eventually able to reopen his seller account… 10 days later.

10 days. That’s a long time to be without what for most eCommerce brands is a significant portion of their revenue, and he was able to reopen his account much faster than the average suspension period.

What would it mean to you to be without your Amazon sales for 10 days?

How much revenue would you lose over the 10 days?

This is one story of many that can be often heard in Amazon, and account suspensions aren’t limited to smaller sellers – in 2017, one of the top 10 third-party sellers in the US had to deal with account suspension.

What are the risks of Amazon suspensions?

Loss of Revenue Due to No Amazon Sales

This is the obvious one and is discussed above. Getting your account reinstated can occasionally be a quick process but usually takes days or weeks, and in some cases, accounts are permanently closed.

Loss of Revenue Due to Drop in BSR

John only lost his account for 10 days, but the results of this suspension ended up affecting his sales in the long run, and today he’s still struggling to go back to the sales velocity he had before his suspension.

If you are the only seller of your product and your account is suspended, your listings automatically run out of stock, or worst yet, your hijacker is sells inferior products tarnishing the hard work you’ve done to build your brand. This leads not only to loss of revenue in the short term but can lead to a significant drop in Best Seller Rank (BSR).

Even once you’re back in stock, this lower BSR can in turn lead to lower sales, generating a negative feedback loop that can be difficult to break.

You may end up having to spend a significant sum on Pay Per Click (PPC) to raise your BSR back to where it was – assuming you even can!

Inventory Management

Each seller will want to maintain stock no matter how many sellers are on a listing, but if there is only one seller, it’s crucial that that seller remains in stock – otherwise, you will have again a loss of revenue due to a drop in BSR (see above).

A second seller significantly buffers against the risk of running out of stock, even if there is a small issue on the supply end.

To guarantee your products stay in stock even as sales fluctuate, the single seller will need to maintain a much higher level of safety stock. This leads to additional cash invested in excess inventory as well as higher storage fees (and in 2017 Amazon raised 4th quarter storage fees drastically, so this isn’t insignificant).

In-House Expertise

When the single Amazon seller is the brand themselves versus a dedicated Amazon seller, the brand needs to – in one way or another – attain the expertise in selling on the Amazon platform, either by training, hiring internally, or hiring a consultant.

  • Who is the Amazon listing expert?
  • The Amazon PPC expert?
  • Who will stay current on Amazon Terms of Service?

The cost of this internal expertise is often underestimated by brands who don’t consider the true cost of hiring, training, and payroll burden. There’s also the issue of being back at square one if the brand loses their internal expertise – which you inevitably will at some point because people don’t stay with one company for long these days.

Smart brands focus on what they excel at and outsource what they don’t.

Now, it’s also worth noting that there are many benefits to having limited sellers of your products.

Benefits of Having Limited Sellers on Your Amazon Listings

If your brand relies on 3rd party sellers to sell your products on Amazon, it’s critical to understand how the number of sellers on any given product listing will impact sales, pricing, customer service, and brand equity in general.

Generally speaking, the larger the number of sellers, the less control your brand will have over pricing, content, promotions, advertising, and customer service.

Brands who limit the number of sellers on their Amazon listings have made a wise move in many respects.

With limited sellers:

  • pricing control on the Amazon marketplace is simpler
  • it is easier to control the content (images, text) on the Amazon listing
  • the brand doesn’t have to work with numerous sellers to coordinate consistent promotions
  • the brand can be represented with a consistent level of customer service

All of the above are even easier with only one seller, but are all very manageable when the brand sells alongside one or two responsive brand partners.

Is It Worth the Risk?

In the end, the decision whether to have a single Amazon seller – or act as your own Amazon seller – is up to you.

If you have a single 3rd party seller on your listing, there is really no benefit. If you’re acting as your own seller, there can be a benefit in terms of profit – assuming, of course, you don’t get your account suspended.

Only you can answer the question, is it worth the risk?

We Can Help

At The Goven House, we have proven experience helping brands mitigate the single seller risk.

In addition, we provide Amazon expertise – we’ll optimize listings and provide PPC services, and there’s no charge for those services. We’re happy to discuss further; give us a call at (305) 223-1555. We strive in becoming partners with our suppliers, and we will work along side you to make sure you increase your Amazon footprint as far as we can take it together.