The State of E-Commerce for Brands: How Manufacturers Work with Amazon

November 9, 2015

Recently, ChannelAdvisor collaborated with Retailing Today to survey 347 branded manufacturer representatives on a range of issues related to the changing retail landscape, new methods of distribution and key operational challenges. A full report on the survey can be found here. However, we also want to dig into the nitty-gritty of the results and share more details here on the blog.

In this post, we’re going to dive into aspects of the survey relating to how consumer brands work with Amazon.

Amazon as a Retail Partner

In the last post in this series, we saw that 93% of respondents sold their products online — directly or through resellers. Amazon is an authorised reseller for 85% of those brands selling online, with smaller brands less likely to use Amazon than their larger counterparts.

But how much of each manufacturer’s catalogue does Amazon typically sell? Based on the responses we received, there seems to be no standard answer to that question. Only 9% of brands indicated that Amazon sold their entire product catalogue. And about a third of brands have Amazon selling 75% or more of their catalogue. On the flip side, Amazon sells less than 5% of the product catalogue for more than one in five of the brands we surveyed.

consumer brand catalog sold by amazon

When segmenting by category, brands in the food and consumables market were less likely than brands in other categories to have Amazon carrying a high percentage of their catalog. In the food category specifically, Amazon carried less than 5% of the catalog for nearly 28% of surveyed brands and more than 75% or more for about 13% of brands. For non-food brands, Amazon carried more than 75% of the catalog for a third of brands. This discrepancy makes sense, as Amazon — despite selling consumables and rolling out programmes such as Amazon Pantry — is vying for the grocery business only in a handful of markets through Amazon Fresh.

catalog sold by amazon

Amazon as a Marketplace

Now, let’s take a look at the Amazon marketplace and see how brands and their resellers are using Amazon as third-party sellers.

32Nearly one in three manufacturers claim to sell on Amazon as a third party. There’s likely a degree of variability in the answers to this question, as some respondents may have heard “Amazon” and said “yes” without considering the difference between selling wholesale to Amazon and selling on Amazon as a third party. Conversely, it’s also possible that some individuals whose companies sell third party said “no” if they weren’t directly involved in or aware of their company’s third-party efforts on Amazon.

Nearly half of brands indicate that authorized resellers are selling their products on Amazon, while 41% indicate that unauthorised sellers do so. Just over 13% indicate that no third-party resellers sell their products on Amazon. And over 19% admit to having no idea what third parties are doing with their products on Amazon.

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The diagram below takes a closer look at those companies that a) have products sold online, b) sell wholesale to Amazon and c) have survey respondents that know about third-party sales on Amazon (i.e., we eliminated those saying “don’t know”). Whether these companies sell as third parties or not on Amazon makes little difference in their response to whether authorised or unauthorised sellers sell their products via Amazon. However, there’s a stark contrast in the survey response to third parties selling their products on Amazon: Brands that don’t sell on Amazon as a third party are nearly five times as likely to say there are no third parties selling their products on Amazon.

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The Bottom Line

Don’t keep your head buried in the sand. If you think that nobody is selling your products on Amazon, our recommendation is to double check. If you don’t know what’s happening on Amazon, now is the time to figure it out. Recent studies show that more consumers start their search for products on Amazon than on any other source, so it’s imperative that brands understand how their products appear on Amazon and who is selling them.

head in sand

In future posts, we’ll take another look at consumer brand manufacturers selling direct and explore impressions of pricing on Amazon.

 

Blog post by Mike Shapaker, VP of brands and manufacturers, Managing Director, Europe, ChannelAdvisor


Branded Manufacturers