To be or not to be… on Amazon FBA…??!!
I have a customer who is a manufacturer of lifestyle products. Even though I am not one of his employees I gained very trustworthy and influential position with his company. We sell his products very successfully in the US for half a decade.
Our market consists of independent retail stores in the US and selected online platforms. We purposely didn’t aim at big box retailers and other mass market channels to avoid threatening competition (as I refer to a competition form giant retailers).
I am very involved in all matters related to the business in the US with major focus on sales and marketing. While discussing 2021 plans, my customer mentioned that he is VERY interested in selling on Amazon FBA.
My instinctive reply to him was that this is a red line that we should not cross. When, he insisted in pursuing that route I advised him that I’ll not be able to serve him anymore and my contract with him will have to discontinue.
Have I given him an ultimatum? | Not at all!
It is not a mistake to sell on Amazon. Small and large businesses sell their products on Amazon and grow their business.
There is a golden rule in the US retail market; Follow your channel and distinguish between two major market channels: 1) Mass Market with big box retailers and large online sellers and 2) the independent retail stores with Mom-and-pop stores, small boutique stores, local and brick and mortar stores and selected online stores.
We CAN’T sell similar product at the same time to both channels. It will harm the smaller retailers. Independent stores can’t always give the same discount on the same product, like the big box retailers and lose the competition.
Competing with Amazon is not any different than any other large retail chain. Many people firstly look at Amazon for price references and compare with other channels. For its most part, they return to Amazon for a purchase and the small retailers are left out of the competition.
I also added that I had many discussions with our (independent store owners) customers and realized how critical it is for them to sell our product exclusively and avoid competing channels, mainly large retailers and Amazon (per say). Selling to mass market channels will result in dropping our line from our market. Thus, regaining the loss of sales will be painful and time consuming.
Have I been confusing my customer with this assessment?