When it comes to competing for promotional product sales against an e-commerce giant, it’s easy to feel overwhelmed.
If you’re feeling like you are swimming in deep water, you’re certainly not alone. That said, there is really only one question to ask yourself, and your customers, when it comes to competing against Amazon; and it is this: Who is more concerned about promotional product safety?
Whether or not your client purchases direct from Amazon, they want you to think they do. It’s a leverage tactic as old as selling itself — and I know you’ve likely heard these lines many times: “I can buy the same thing online for less” or “I can buy smaller quantities and still get the same unit price.”
Amazon, once little more than a seller of books online, has grown into a behemoth, selling pretty much everything under the sun to anyone who wants to buy it. In fact, the list of industries being disrupted, or in danger of being disrupted, by Amazon grows on a daily basis. And those of us in the promotional products industry can ill afford to ignore the Amazon elephant in every room.
However, if you learn a little about the Amazon sales funnel, and then choose to pass that along to your clients, your position as a value-added seller may still win the day. Let’s take a look.
For starters, it’s very crowded at the top of the funnel. If you follow Amazon’s business at all, you likely have heard that there are two million businesses selling on Amazon worldwide. That’s a number shared widely by business pundits talking about the online retail universe in general. But, as research from Marketplace Pulse reveals, Amazon actually has many more sellers than widely thought, and the reality of just how well those sellers are doing may surprise you.
First, the actual number of Amazon sellers is actually about three times larger than what is commonly shared. The ecosystem of all sellers in the Amazon marketplace numbers a whopping six million, which includes both active and inactive sellers. Note that simply selling on Amazon does not equate to success for many businesses. For instance, despite the fact that there are a million new sellers signed up every year, less than ten percent of all sellers achieve $100,000 annually in sales, and only one percent sell more than $1 million per year. For last year, there were fewer than 24,000 sellers achieving the million-dollar benchmark. Turns out it’s much like the promo industry, a small fraction of sellers make up the bulk of volume sales.
So, what does a glut of online competitors being less than successful in the Amazon marketplace mean to you and your clients? That answer comes from an investigation by CNBC earlier this month. It seems that the rush to create more sales listings and widen product selection in the Amazon marketplace comes with a potential sacrifice of product safety. This comes on the heels of an earlier investigation by the Wall Street Journal in August that already found over 4,000 unsafe or federally banned products for sale in the marketplace, including certain children’s toys with high lead levels.
The third-party Amazon marketplace is where independent sellers sell directly to Amazon customers, representing 60% of all sales volume, and potentially attracting your current clients looking for a lower price. But, as revealed in the CNBC investigation, some sellers are not asked to produce safety documentation until after products have already been on sale for weeks. In fact, this posting from a third-party seller in a online forum disclosed documentation requested by Amazon by the end of the month, and at the same time expressing confusion over the product being miscategorized in the rush to make it available for sale.
This new cart-and-horse gap — the placing of products for sale and then later (if ever) checking for safety compliance could contribute to a new round of unsafe products sold by way of the Amazon ecosystem, experts say. “This really speaks to Amazon’s ‘move first and fix later’ mentality,” said Garrett Bluhm, founder of Vendient, a consulting agency for online sellers. An Amazon spokesperson told CNBC that the company requests safety documentation ‘very shortly’ after a product is listed by a third-party seller. “All products offered in our stores must comply with applicable laws and regulations,” said Amazon. “We regularly contact selling partners to request safety documentation to help ensure the products in our store meet the Consumer Products Safety Commission’s safety standards.”
As we have discussed before, clients procuring safe products - for their own companies and for their end users - matters a great deal. That’s where your company can establish a key point of differentiation. Dedication to doing the right thing, to supply chain transparency, and to providing safe products can be a significant sales differentiator in a market driven almost entirely by price. If you are confident that you can document your commitment to a product safety initiative for every product, every time, that’s something that can lead the discussion rather than simply dropping to the lowest price. That, and the fact that you ask about whether a product is safe before you sell it. Now, that’s putting the cart and horse in the right order.
Jeff Jacobs has been an expert in building brands and brand stewardship for 40 years, working in commercial television, Hollywood film and home video, publishing, and promotional brand merchandise. He’s a staunch advocate of consumer product safety and has a deep passion and belief regarding the issues surrounding compliance and corporate social responsibility. He retired as executive director of Quality Certification Alliance, the only non-profit dedicated to helping suppliers provide safe and compliant promotional products. Before that, he was director of brand merchandise for Michelin. You can find him volunteering as a Guardian ad Litem, traveling the world with his lovely wife, or enjoying a cigar at his favorite local cigar shop. Connect with Jeff on Twitter, LinkedIn, or Instagram, or reach out to him at jacobs.jeffreyp@gmail.com.