Now, more than ever, popular brands are under attack from bad actors on the Amazon marketplace.
If a manufacturer is the sold seller of their products on Amazon, they are exposed to some pretty significant risks.
In the worst case, should a seller central account be suspended for any reason, reinstating that account can take from as little as a few days, to as long as several weeks or months.
Why would your account get suspended, you ask? Well, it could happen for any number of reasons… and the worst part is that Amazon won’t be very specific in telling you why.
To gain a better understanding of what all these risks are, we strongly encourage that you read this article.
Mitigating the Risk of Being the Sole Seller
Over the years, we have learned that the brands who choose to be the sole seller of their products on Amazon do so for two primary reasons:
- They want control
- They want to maximize cash flow
The good news is that we have designed our SafeGuard program to address both of these issues.
Control: When you enter into a SafeGuard agreement with TLK, you maintain just as much control as you have today. We’ll never be priced lower than you and your MAP will never be violated as a result.
Cash Flow: Thanks to our only being authorized to sell along side you (share the buy box) for approximately 2 weeks out of every 90 days, the impact on your cash flow is minimal. For the other 10 weeks in the quarter, our inventory will be priced well above yours, so it will just sit in Amazon’s warehouses, ready to be sold, in the event that your selling privileges were to be suspended.
How Does It Work?
In order for the product(s) in SafeGuard to stay in stock during the primary seller’s suspension or out of stock period, TLK Sourcing will need to have stock equal to or greater than the amount expected to sell during a typical product lead time (the time between TLK Sourcing placing an order and that order being received by Amazon).
So, if your lead time (including Amazon receiving time) is 2 weeks, and you sell 100 units per day, TLK would need to have 1,400 units already in Amazon’s warehouses to ensure that sales could continue without interruption.
Further, if you decide to put your top 9 SKUs into SafeGuard, TLK would then be eligible to be in buy box contention (by matching your price) for just ⅓ of your SKUs each month. For the other SKUs, we’d have our price set to 20% higher than yours so that we would no longer be in buy
To make that happen, we’d buy two weeks worth of inventory for each of your SKUs and over the following 3 months, we would match your buy box price only during approved selling windows. This means that the impact on your share of the buy box (and your profits) would be minimal – for only two weeks of each month you would be making wholesale margins vs Amazon retail margins.