16.01.2024 | by Lili
Direct selling, or direct sales is steadily on the rise. Not to be confused with multi-level-marketing (MLM), direct sales (D2C) occurs when a brand sells directly to the end-user without any middlemen involved.
The numbers are impressive. In the US alone, direct e-Commerce sales surpassed $128 billion in 2021, and grew to around $182 billion by 2023.
It’s easy to see why this form of sales is growing in popularity. In the era of widespread online fraud, consumers find it increasingly hard to place their trust in random unfamiliar sellers. However, when a product comes straight from the manufacturer (especially if it’s a brand they know), trust is much easier to establish.
According to a recent study by KPMG, 60% of consumers feel that manufacturers treat them better than sellers.
No wonder that several well-known brands are experimenting with adding a D2C channel to their regular sales channels, including P&G, Nike, Pepsi and Quill.
Screenshot of amazon.com displaying the Pepsi Store’s homepage
The advantages for brands are clear. For example, cutting out the middlemen usually results in higher profit margins. In addition, you can take control of the way your products are presented to customers, strengthening your reputation and brand image.
There are various ways to include D2C into your operations, like opening your own physical store or launching a webshop. However, the easiest option is simply going with Amazon.
Setting up your own store usually comes with various obligations that your brand may be unfamiliar with. These include marketing, shipping, customer service and a whole series of other tasks that manufacturers with little to no experience in retail may find hard at first.
Some online marketplaces offer help with these tasks, but no other platform provides such a wide reach of audience paired with so few obstacles in your way than Amazon. The size of the marketplace and the scalability of their services makes it the ideal partner for brands experimenting with D2C.
Before setting up shop on Amazon, you have to decide whether you want to become a seller or a vendor on the marketplace.
Vendors are merchants who sell their products to Amazon and let the marketplace take care of the rest. Vendors are selected and invited by Amazon, so if you want to go down that route, it’s best if you contact an agency that can connect you to the marketplace.
Sellers, on the other hand, act like classic retailers and sell their own products on the platform. Being a seller doesn’t mean that you’re on your own; in fact, Amazon’s fulfilment service (FBA) can assist you with warehousing, shipping, customer service and more.
Although these can be immensely helpful, one of the biggest advantages of selling on Amazon is definitely their marketing services.
Amazon is one of the largest online marketplaces in the world, which means that competition on the platform is steep. Sellers and manufacturers compete with each other for the elusive attention of potential customers, which makes marketing all the more important. And not just any marketing, but the right one.
Amazon’s wide offer of marketing services relies on their unique ability to collect data from customers. Every single movement customers make on the marketplace is recorded and analysed, including how long they spent on a product listing page, what ads they looked at and what they eventually purchased.
Illustration of data charts pictured on a tablet
This data is invaluable when it comes to marketing. Instead of making an educated guess about your target market’s preferences, you’ll know exactly how to approach them to close a deal.
However, you’re not the only one making use of Amazon’s services. Millions of other brands and sellers have access to the very same advantages, which is why you may find your listing buried in a sea of offers from competitors, including even fraudulent ones.
This is why investing in marketing is not enough. Instead, you have to ensure that your listings appear in a fair marketplace clean from fraudulent and infringing offers.
Another thing to consider is that despite all their services, you can’t solely rely on Amazon’s data and offers. If you want to ensure a smooth and successful market entry, you have to find a clean environment for your products - and for that, you have to take matters into your own hands.
For example, conducting your own market research is inevitable, and our sales tracking service is perfect for the job. We can assist you with invaluable data including sales numbers, most popular products and sellers in your product category, giving you a clear picture of the current state of the market and your entry options.
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Besides unchecked and potentially unfair competition, depending too much on Amazon has other drawbacks as well.
Using only one sales channel is not without its dangers, even if that channel is mighty Amazon. Diversifying your options is a necessary safeguard against unforeseen events, which is why you shouldn’t give up your existing sales channels in favour of D2C on Amazon.
Instead, take the opportunity to evaluate the performance of your business partners and sales outlets to optimise your selling channels. Take a look at their results and behaviour, and keep the ones that outperform the rest.
This is not a straightforward task, which is why our partner compliance service is invaluable for uncovering potentially harmful behaviour and exposing breaches of contract. To learn more about your sellers’ performance on various marketplaces, we recommend our sales tracking service.
Assisted by our reports, you’ll get invaluable insights into which business partners to rely on for an optimal distribution network, and who to say goodbye to.
As we mentioned above, our sales tracking and partner compliance services are excellent for paving your brand’s way into direct selling. However, these and other services are also crucial for protecting your brand’s valuable IP rights on the marketplace.
Next to the services above, we definitely recommend marketplace monitoring to ensure the complete protection of your intellectual property rights. Our service detects product listings by unauthorised vendors, fraudulent sellers, counterfeiters and any other provider infringing on your IP rights.
Marketplace sales tracking gives us an insight into the volume of sales by each fraudulent seller, allowing us to prioritise our counteraction and target those first that cause your brand the most harm.
Finally, we offer to enforce your rights and ensure the removal of any fraudulent listing from the marketplace.
Direct selling is a profitable sales channel and Amazon makes it easier than ever for brands to experiment with it. If you choose to go down this alley, remember to keep an eye out for the drawbacks and don’t let fraudulent sellers infringe on your IP rights.
If you have questions about our services or any concerns about protecting your IP rights on Amazon, get in touch with us.