Embracing Amazon: A Make-or-Break Decision for Direct Selling Organizations

A recent study highlighted by Insider Intelligence revealed that a substantial 57% of product searches in the U.S. begin on Amazon. Customers are actively searching for your products there, so why are direct selling organizations hesitant to fully embrace this retail channel? For many direct selling organizations, the answer is fear–fear of how a strong Amazon presence will impact their distributors.

At Pattern, we have over ten years’ worth of experience working with brands. We’ve seen repeatedly that inaction surrounding your Amazon strategy hampers the long-term credibility and positioning of your brand on the world's largest product search engine, ultimately hindering the potential success of your distributors and broader brand perception. So, how should direct selling brands approach Amazon? Let's start by examining two extremes: a controlled presence versus taking no action and allowing the Amazon game to unfold on its own.

Controlled Presence vs No Action

Controlled Presence

‍Content and imagery is on-brand and optimized, ensuring that traffic is directed to your listings instead of your competitors’.

Pricing remains consistent and aligned with your minimum advertised price (MAP) policy.

Only new products, packaged and shipped to your standards, are sold.

‍Customers are promptly taken care of by your authorized agents.

‍Organic and paid search advertisements are optimized to ensure your product appears at the top of relevant search results.

‍

No Action

Your brand language and images are controlled by the lowest-priced seller, usually resulting in poor quality and frequent changes.

‍A bidding war between distributors and gray market sellers ensues, leading to inconsistent pricing and price erosion.

‍There is no quality control, potentially resulting in outdated, damaged, or counterfeit products.

Customers must chase down the seller they purchased from for support or may come to you directly. They will have experiences with your branding and products you can’t control.

A ranking strategy is absent, allowing competitors to potentially rank higher, even in brand-specific searches.

A Case Study for Control

Pattern is the largest third-party seller on Amazon and represents brands across major online marketplaces in over 60 countries. Last year, we partnered with AdvoCare, a direct selling dietary supplement company, to help them take control of their Amazon presence.

Through this partnership, Pattern became AdvoCare’s only authorized distributor on Amazon U.S. With the assistance of our legal partner, Vorys eControl, we also addressed their pervasive issue of unauthorized sellers. The difference between AdvoCare’s performance on Amazon a year ago compared to now is remarkable. Below is the current state of one of their best-selling products, AdvoCare Spark Vitamin & Amino Acid Supplement.

• The number of unauthorized sellers has decreased from a high of 39 to an average of 2.
• The product price no longer fluctuates and is now only available for purchase at AdvoCare’s MAP price of $59.95.
• The average product review rating has increased from 4.2 to 4.7 stars
• In the Sports Nutrition Endurance & Energy Powders category, their average ranking improved from #81 to #5.

These results are even more apparent when examining the charts below. In 2022, you can see the stabilization of the Buy Box Price at $59.95, the improvement in Category Sales Ranks, and the sharp decline in Number of Sellers.

What About Your Distributors?

Many direct selling organizations are leveraging revenue from Amazon sales to fund additional incentive programs for their distributors, including profit sharing or bonus programs. This doubles the benefit for distributors through increased rewards and a strong online reputation associated with the products they sell.

By taking control of their products on Amazon, direct selling companies can maintain MAP online while offering discounts through their distribution channels, enabling them to stand out against public pricing. Even without these incentives, the value proposition to the distribution channel far outweighs the challenges brands face from doing nothing at all. As you take a controlled Amazon approach, open communication and positioning benefits to your distributors will help with success. Here are some tips for presenting the changes effectively to your distribution teams:

• Communicate any changes in advance to reduce distributor anxiety about how a company-led Amazon presence will affect their business. The news is often better delivered from one of your leading distributors who is excited for the change and can clearly articulate its benefits.
• Show why a controlled Amazon presence is a positive move for the company overall. A strengthened brand presence, price control, better quality control, optimized ratings and rankings, and excellent product images help both the company and distributors to succeed.
• Consider implementing profit-sharing or other bonus programs from your Amazon revenue so distributors can directly see new benefits from your intentional Amazon approach.

Partner with Pattern for Amazon Success

Embracing Amazon is a make-or-break decision for direct selling organizations. The dominance of Amazon in product searches cannot be ignored, and the platform presents an immense opportunity for direct selling companies. We've witnessed the transformative impact of taking control of Amazon through our partnership with AdvoCare and many other similar companies. The number of unauthorized sellers has significantly decreased, product review ratings have improved, and overall rankings have soared.

These success stories serve as a testament to the potential benefits awaiting other direct selling organizations. You have the power to conquer Amazon and shape the direct selling industry and your company’s ecommerce future for years to come. If you have any questions or would like to learn more about Pattern’s offerings, contact us here or reach me directly at mike@pattern.com.