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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Sept 27, 2022

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/)
Sept 22, 2022

How an Amazon SEO Agency Should Be Serving Your Brand

If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.

Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.

At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise  are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead. 

What is an Amazon SEO Agency?

An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.

A great Amazon SEO Agency partner will:

Prioritize Your Success

Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance

Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS. 

To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.

Provide Detailed Competitive Insight

A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.

It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.

Reduce Your Ad Spend Over Time

Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins. 

Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.

Amazon SEO Optimization and More

As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.

Contact us to learn more about our SEO optimization services.

Sept 20, 2022

4 Ecommerce Marketplace Consultant Must-Haves

Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces. 

Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.

So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.

Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products. 

What is an Ecommerce Consultant?

An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.

An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.

Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.

1. Brand Obsession/Specialization/Passion

At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services. 

2. Proven Results

It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.

3. Wide Range of Marketplace Expertise

It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.

4. Network of Resources

The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.

Achieve Your Ecommerce Goals With Pattern

Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces. 

With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.

Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.