FBA / e-commerce models..... continued
By Julie Čolan
So what do I mean by "distribution"?
I'm not sure if it's the best term for what I am trying to explain but I am really just talking about coming to more formal / repeatable agreements with suppliers for a continued supply of stock (i.e. becoming a "distributor").
So far the RA and OA models have not really required any negotiations or the building of relationships with suppliers but this is where, I think, you can drive some real value in you business (as well as through branding - more on that later).
So instead of simply visiting stores (high street or online), step 3 requires you to get out there and actually talk to suppliers of goods that you may want to sell - there are a few different types of supplier you will want to talk to and I would generally categorise these as:
- Niche retailers
- Wholesalers
- Distributors
- Manufacturers / brand owners
- Liquidators
I'll give a quick summary of each as follows:
Niche retailers are people that are selling items not widely available on the High Street. They may be fairly local in geography or simply only sold through catalogues / direct marketing / events etc. By getting these types of products on to Amazon you may just be opening them to a much wider market. The reason I distinguish this from RA is that you are much more likely to want to build a relationship with the retailer to secure continuity of supply on favourable terms.
Wholesalers seem to be the logical step for those graduating from RA / OA but, in my experience, most wholesalers are not going to provide you stock at a price you can make work on Amazon unless you commit to a very significant volume. I have had some product lines that have worked and been supplied by commercial wholesalers although I would say that they have been few and far between. As a rule of thumb, the more difficult a wholesaler is to do business with you, the better the opportunity. Any wholesaler who will give you access to their pricelist at the drop of a hat (e.g. just on provision of your e-mail address) is unlikely to have any compelling offers.
Distributors are essentially wholesalers but tend to have exclusive (or near exclusive) deals with manufacturers / brand owners to sell the products wholesale in specific territories. This is almost as good as dealing with the brand owner themselves but does take a lot of time and energy to build up a relationship and credibility with this type of seller. Distributors tend to be a bit wary of FBA sellers as they don't necessarily perceive that we bring a lot of value to the table but they can usually be persuaded. Personally I tend to prefer to deal with manufacturers / brand owners directly (especially as there are tools you can bring in to play to demonstrate value - more on that below) but distributors can be a lucrative source of products.
Manufacturers / brand owners are my favourite supplier! Most people confuse manufacturers and brand owners as the same thing but they often aren't. I'm pretty sure that Nike don't own the factories in the Far East where there products are made, in fact that same factory probably makes Addidas in the evening shift (brands used for illustration purposes only - I have no idea on the manufacturing of either one). Anyway, most manufacturers just want to make stuff and not get involved in all the marketing and sales palaver that follows and the brand owners don't necessarily want to own the factories. This is the dynamic that can help us all move into the "private label" space (for another day) but it is important that you understand the difference, Anyway, locating either manufacturers or brand owners is easy, the difficulty is persuading them to let you be the owner of their Amazon listing, marketeer and online sales lead - all stuff that they need (badly) but just don't know about it. The way I have approached this is to seek out local(ish) brand owners, firms that have been producing products for years but aren't tuned in to the magic of e-commerce as yet. It is surprising how many firms you will find that are local to you with a bit of research. I started with Google, simply asked around and ended up driving around commercial / industrial parks in my local vicinity to find target suppliers.
The people you really want to find are those with a good product but an established "old school" route to market - probably through wholesalers. There are many many business owners out there creating great products but without the knowledge of e-commerce to understand that they are missing out on a huge market place. So how do you persuade such companies to partner with you? You don't own a shop (in the physical sense at least), haven't been in "the trade" since 1952 and so may have little credibility in their eyes. So now you're really in the heart of business, selling the benefit and trying to demonstrate how YOU can really help them as business owners. Hopefully by the point you are at this stage you have mastered the RA and OA models and have learnt a thing or two about Amazon. Demonstrating to the brand owner that you understand how Amazon works, the sheer volume of sales that are processed through it and the turnover of similar products (Jungle Scout can be a great way of concisely demonstrating this benefit - another topic for another day I guess) can be particularly compelling stories. You can also start to bring into play how you can optimise their product listings to drive more traffic and better conversion rates, and manage follow-up comms with customers to help build brand awareness and develop follow-on sales.
Anyway, I'm starting to realise that I have tried to tackle a huge subject over a few blogs and all of this stuff needs much more depth to do it justice - that will follow I promise. For now though I hope you're enjoying my insight - I really do welcome your comments (even if not wholly positive) and questions. I will complete this series of blogs on the overview of approaches to e-commerce / FBA to talk about Private Labelling / building a brand in the coming days.
Distributors are essentially wholesalers but tend to have exclusive (or near exclusive) deals with manufacturers / brand owners to sell the products wholesale in specific territories. This is almost as good as dealing with the brand owner themselves but does take a lot of time and energy to build up a relationship and credibility with this type of seller. Distributors tend to be a bit wary of FBA sellers as they don't necessarily perceive that we bring a lot of value to the table but they can usually be persuaded. Personally I tend to prefer to deal with manufacturers / brand owners directly (especially as there are tools you can bring in to play to demonstrate value - more on that below) but distributors can be a lucrative source of products.
Manufacturers / brand owners are my favourite supplier! Most people confuse manufacturers and brand owners as the same thing but they often aren't. I'm pretty sure that Nike don't own the factories in the Far East where there products are made, in fact that same factory probably makes Addidas in the evening shift (brands used for illustration purposes only - I have no idea on the manufacturing of either one). Anyway, most manufacturers just want to make stuff and not get involved in all the marketing and sales palaver that follows and the brand owners don't necessarily want to own the factories. This is the dynamic that can help us all move into the "private label" space (for another day) but it is important that you understand the difference, Anyway, locating either manufacturers or brand owners is easy, the difficulty is persuading them to let you be the owner of their Amazon listing, marketeer and online sales lead - all stuff that they need (badly) but just don't know about it. The way I have approached this is to seek out local(ish) brand owners, firms that have been producing products for years but aren't tuned in to the magic of e-commerce as yet. It is surprising how many firms you will find that are local to you with a bit of research. I started with Google, simply asked around and ended up driving around commercial / industrial parks in my local vicinity to find target suppliers.
The people you really want to find are those with a good product but an established "old school" route to market - probably through wholesalers. There are many many business owners out there creating great products but without the knowledge of e-commerce to understand that they are missing out on a huge market place. So how do you persuade such companies to partner with you? You don't own a shop (in the physical sense at least), haven't been in "the trade" since 1952 and so may have little credibility in their eyes. So now you're really in the heart of business, selling the benefit and trying to demonstrate how YOU can really help them as business owners. Hopefully by the point you are at this stage you have mastered the RA and OA models and have learnt a thing or two about Amazon. Demonstrating to the brand owner that you understand how Amazon works, the sheer volume of sales that are processed through it and the turnover of similar products (Jungle Scout can be a great way of concisely demonstrating this benefit - another topic for another day I guess) can be particularly compelling stories. You can also start to bring into play how you can optimise their product listings to drive more traffic and better conversion rates, and manage follow-up comms with customers to help build brand awareness and develop follow-on sales.
Anyway, I'm starting to realise that I have tried to tackle a huge subject over a few blogs and all of this stuff needs much more depth to do it justice - that will follow I promise. For now though I hope you're enjoying my insight - I really do welcome your comments (even if not wholly positive) and questions. I will complete this series of blogs on the overview of approaches to e-commerce / FBA to talk about Private Labelling / building a brand in the coming days.
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