How to Handle Existing Distributor Relationships While Transitioning to an Exclusive Seller

John LeBaron

January 13, 2021

Amazon is designed to work best for exclusive seller relationships. When multiple distributors are fighting for a single product’s Buy Box, things get messy and chaotic, and you start to see problems like price erosion, loss of control, and customer dissatisfaction.

The solution should be simple then, right? Companies should just start working with competent partners, cut off their inventory from other sellers, and leave behind the days of a chaotic Buy Box? Not so fast. While working with one distributor is the ideal situation for brands wanting to maximize their performance on Amazon, it’s tricky to cut off existing, loyal distributor relationships to make that happen.

You can avoid backlash for cutting off loyal distributors

A brand may face backlash if it suddenly stops selling its products to its loyal distributors to switch to an exclusive seller relationship. In many cases, these distributors started selling the brand’s products in brick-and-mortar storefronts before starting to sell them on Amazon. Distributors could be largely responsible for the brand’s present-day success, and it doesn’t sit right with brands to repay distributors for their loyalty by cutting them off and slashing their revenue.

It’s a complicated situation that many brands find themselves facing. Even though switching to a single Amazon seller is best for the brand and the consumer in the long run, it’s tempting to put it off to avoid any conflict with loyal distributors—especially if these distributors are still selling the product in brick-and-mortar stores (and could easily stop selling it if they’re upset with the brand.)

Handling this situation well will require forethought and strategy, but we believe that brands can switch to an exclusive seller relationship without having to sacrifice the relationships that they’ve spent years establishing with existing distributors. Below are four tips to help you handle this awkward situation so everyone—including your brand, your previous distributors, and your consumers—is happy in the end.

1. Set up a transition period

Many brands opt to set up a transition period so they can warn their distributors of the upcoming change and give them time to adjust to the news. Brands can use this time to optimize their channels by polishing their listings, updating their ad spend, and standardizing their pricing and customer service.

It’s a good idea to give your distributors sufficient notice about your decision to transition to a single seller—a season or two would be best—and explain to them your reasoning for doing so, including the many benefits to both your business and theirs. You may tell them that switching will help you create a more consistent buyer experience, streamline the return process, and make it easier to keep inventory available and prices consistent.

If you have Amazon distributors who also sell your product in their brick-and-mortar stores, tell them how they can benefit from this decision even if they won’t be selling your product on Amazon anymore. When your brand works with a single distributor, prices stay more consistent. This means that customers won’t be walking into their brick-and-mortar stores, finding the product they want for cheaper on Amazon (likely due to the price erosion caused by having multiple sellers), and opting to buy it online instead. Yes, they’ll no longer generate revenue from selling your product on Amazon, but they’ll likely increase their sales of your product in-store.

2. Consider profit-sharing a portion of your revenue

Some brands who transition to a single Amazon seller may go as far as profit-sharing a portion of the proceeds from their channel with their top distributors. This replaces some of the distributors’ lost revenue while also simplifying the distributors’ business operations, since they don’t need to worry about handling Amazon listings and distribution for your products anymore.

Even though this may not be a viable option for all brands, it may be worth it in some situations. Brands benefit from the local representation they get when brick-and-mortar stores carry their products. Consumers may go to a storefront to learn more about a product, try it on, or see how they like it in person before finally deciding to purchase it on Amazon. If distributors are regionally based, your brand could regionally share profits from Amazon sales with those distributors.

It may also be helpful to allow distributors to continue selling your product on marketplaces like eBay, Walmart, or Target even while you transition to a single seller on Amazon. You can explain that Amazon US is so important for your brand that you’ve decided to work with a specialist to maximize your success on the platform, but that they’re welcome to continue selling your products on other marketplaces.

3. Divide the assortment up and give each distributor an exclusive segment

While the ideal situation is to turn over your company’s entire inventory to one seller, it’s still a step in the right direction to divide your inventory and give each of your distributors an exclusive segment to sell. That way, you’re reducing the issues of managing a network of sellers without damaging your relationship with your distributors or drastically reducing their Amazon revenue associated with your brand.

Explain to the distributors that it just isn’t efficient to sell your whole catalog to them anymore, but that they can have exclusivity on one segment of your assortment. You can encourage the distributors to do their very best with their exclusive assortment, which helps you function at the highest level on Amazon while eliminating the fight for the Buy Box.

4. Give retailers promo dollars based on performance

If dividing up your assortment isn’t right for your brand and you want to fully transition to one seller, you can still offer other olive branches to your distributors in the form of samples, rebates, or other incentives. These programs can serve to thank your distributors for their consistent loyalty and partnership.

Distributor rebate programs offer distributors money back when they meet certain requirements or goals related to loyalty, order size, or any other metric. You can also start customer rebate programs that encourage consumers to buy your products, which in turn makes it easier for distributors to sell said products. Both types of rebate programs can help maintain your delicate relationship with your distributors while also improving your product sales in their stores.

SPIFFs (Sales Performance Incentive Funds) are another type of incentive you can offer to your distributors. According to Channel Mechanics, these short-term incentives can include dollar rewards, prizes, or loyalty points. You can offer them to reward any type of behavior you’d like, but the main goal is to increase your product’s sales.

Ready to start the transition?

It can be intimidating to transition to an exclusive seller relationship on Amazon when it’s important for your brand to maintain a positive working relationship with distributors. But that doesn’t mean you’re doomed to deal with the drawbacks of multiple sellers forever. With a little bit of tact and planning, it’s possible to maximize your Amazon presence with an exclusive seller relationship without jeopardizing your relationship with your existing distribution network.

Keep in mind that it does little for your brand to switch to a single seller unless that seller is experienced and committed to your brand. Otherwise, it can be risky—you don’t want to put all of your hard-earned eggs in an unreliable basket. This is where Pattern can help. We’re a best-in-class marketplace seller, and we’re eager to use our data and expertise to help you take your brand to the next level. Contact us using the form below to learn more.

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Amazon's Sponsored Product ads
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What Are Amazon’s Advertising Products? Sponsored Product, Brand, & Display Ads

What Are Amazon’s Advertising Products? Sponsored Product, Brand, & Display Ads

Utilizing Amazon sponsored ads can be a smart way for a brand to drive greater traffic to a product listing and start increasing sales. While many brands still struggle to manage their advertising strategies, 30% of Amazon brand sellers increased their advertising budgets in 2022. As ecommerce executives (or even on the nose with VPs of ecommerce?)  approve their 2023 advertising budgets, it may be worth it to take a look at Amazon’s advertising products and the benefit they may have on increasing conversions. 

​​Pattern is the premier ecommerce accelerator with all of the expertise, data-driven insights, and technology brands need to gain control on Amazon and maintain their competitive niche. We know the high value of and how to utilize Amazon’s advertising products to drive the most traffic and conversions to benefit and accelerate your brand.

Here are Amazon’s three main advertising products you should know about in order to drive listing traffic to your products and increase conversions: 

For a brand executive who is selling their product on Amazon, you may not already know the differences between campaign type, so we will walk you through the differences and uses for each of these three ad campaigns.

Sponsored Product Ads

Sponsored Products are a mid-funnel advertising strategy that gives visibility to products above the top organic listings (see example below). This strategy uses custom keywords to get products in front of the consumers who are searching for them, however it can be used to capture new audiences as well.These cost-per-click (CPC) ads require no additional copy or images, but usually receive the most interaction of the campaigns and need to be monitored closely.

As you can see, these ads look just like an organic listing, however they say, “Sponsored,” on them. These types of ads can be especially effective forms of advertising because they tend to blend in with the organic results around them. With Sponsored Products, you can get your products in front of qualified customers who are searching for your product in such a way that doesn’t make them feel like they are being served an advertisement.

Sponsored Brand Ads

Sponsored Brand Ads are a top-of-funnel brand awareness tool and function on keywords. This ad format helps show a customer what they may be in need of and where to get it.  Commonly used to promote product lines or best sellers, a Sponsored Brand ad shows up as a banner above the search results (see example below). This type of ad requires that the brand showcase at least three separate products.

Unlike other campaigns used on the Amazon platform, Sponsored Brand ads require ad copy and a unique logo. These ads also can take customers to a custom landing page, or a page on the brand store, that way they get a clear and overall picture about who your brand is, what other products you sell, and why they can trust your brand

Sponsored Display Ads

Sponsored Display ads can be a tactic for top, middle, or bottom of the advertising funnel due to its varying targeting abilities. Although most commonly found under the bullet points of a detail page, these ads can also show in emails, newsletters, and even more locations off platform.

Unlike the previous ad campaigns discussed, sponsored display ads can target shopping behaviors, like repeat purchasers, similar product purchasers, and even people who viewed the detail page but did not buy. Sponsored Display ads help customers discover your brand, drive awareness, and create loyalty. 

The example above shows just one of the many placements Sponsored Display has.

Accelerate Your Sponsored Products With Pattern 

Rather than competing with each other, each of the three sponsored ad products focus on a different section of the sales funnel, allowing you to target your customers and hit your sales numbers, all while edging out possible competitors. When brands use these advertising campaigns, they can better optimize their ad budget to improve ROAS and build revenue. 

At Pattern, we have all the resources to help your brand build successful advertising and digital marketing campaigns on Amazon so you can increase traffic and conversions, which will in turn increase your revenue

Global Ecommerce Weekly News: 27th September 2022
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Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)

Top 5 Ways to Prepare for Peak with Google Ads
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Top 5 Ways to Prepare for Peak with Google Ads

Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.

1. Go Early

In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.

From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.

2. Get Ready for Privacy Changes

 According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.

From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.

It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.

3. Ensure Consumers Can Discover your Brand

A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.

Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.

The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)

4. Get Moving with Performance Max

Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.

Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.

5. Flight Budgets Accordingly

Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.

Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.