Why Reliable Sellers Insist on Removing 3P Sellers on Amazon
Managing an e-commerce website is a huge responsibility, more so if it has sellers and customers from all over the world. This has been Amazon’s everyday routine, being the hugest online retailer by far. Since day one, it has to remain at the forefront of every brand’s eCommerce strategy.
However, Amazon’s game is not always a fair one for some. Hard-working first party sellers are usually left without a choice but to compete with third party sellers selling their very own products.
Why Other Sellers Insist on Removing 3P Sellers on Amazon?
In Amazon, sellers are categorized into three: first party seller (1P), second party seller (2P), and third party seller (3P).
- First Party Sellers are brand manufacturers that sell products directly to Amazon which makes the latter their customer. Since Amazon is the new official owner of the product, it owns the merchant of record (MOR) before the product gets shipped to the consumer.
- Second Party Sellers are not manufacturers but suppliers of products to Amazon. 2P sellers are technically the reseller of products that Amazon is selling. Typically, 2P sellers are who Amazon ask help to, to ensure enough inventory.
If you are shopping, you would know that the item is either from 1P seller or 2P seller if its listing has a note that says “Ships from and sold by Amazon.com”.
- Third Party Sellers are neither brand manufacturer nor reseller of products Amazon is selling. From the name itself, they are 3P sellers merely using Amazon as a market place to sell goods directly to its customers after acquiring them from brand manufacturers, resellers, or from the black market selling counterfeit and stolen products.
Most of the products 1P sellers manufacture are oftentimes sold by 3P sellers on Amazon long before the former joins. As a result, for new 1P sellers specifically, the search algorithms of Amazon more often than not suggest 3P sellers’ listings higher since they usually have more customer engagements through reviews and likes, and higher sales.
The good news is, 1P sellers have some unique competitive edges which they can utilize to cleverly deal with 3P competition and invite customers to trust and prefer their listings more.
The Buy Box Advantage
Buy Box is Amazon’s approach to separate reliable sellers from risky ones. It serves as a cart where Amazon customers can add their purchased items, in the form of a white box that can be found on the right side of Amazon’s product listing page.
Only reliable sellers with positive seller metrics can apply for a buy box mark. If the seller has got excellent reviews, he will stand a chance to get his market share. While customers are not mandated to buy only through the buy box, more than 80% of sales in Amazon are transacted through it.
The buy box privilege is open for all types of sellers: 1P, 2P, and 3P. Comes with it is the connotation that the seller is Amazon-approved, and thus, trustworthy – which they call as the “buy box bias”.
The buy box advantage is not indefinite; it can be lost under one of the two conditions:
- The seller is unfairly undercutting the price.
- The item is out of stock.
Amazon officially tags the sellers who have committed the first condition as “Lost Buy Box due to price”. To do away with this, the seller must follow a price rate of 3% or above. Meanwhile, sellers under the second condition will have lost control of the buy box to the 3P sellers because according to Amazon, if a particular seller is not able to fulfill an order, someone else is welcome to take the role. On that note, one way of removing 3P sellers on Amazon that works is by taking and maintaining marketplace control.
Maintaining Supply Chain Control
If you belong to the 1P or 2P categories, to contain competition against 3P sellers, you must know how to keep close control over the supply chain. This can be done, first, by checking out which 3P sellers are preying on your products on Amazon. Then, start identifying who sourced their stocks.
- MARKETING PROMOTIONS – Amazon’s 3P sales depict a common pattern – they rise after a promotional period. They frequently offer steep discounts, inviting resellers to buy in bulk at significantly reduced prices. In other words, 3P sellers are essentially selling your products at the cheapest rate possible and come the time you start promoting, the market will no longer respond with the same thrill. To address this, you have to set purchase limits per customer such that individual shoppers will not be able to buy unreasonably enormous quantities.
- KEEPING AN EYE OUT ON COUNTERFEITERS – Another threat that can make supply chain control harder is counterfeit merchandise. This is why as a 1P or 2P seller, you have to check the Amazon search page from time to time against intellectual or copyright infringements and when you notice one, report it to Amazon right away.
- GATING THE BRAND – Brand gating is the last but viable solution to gain control of the supply chain. This can be done by negotiating with Amazon to set a wall or barrier around your brand or products to prevent 3P sellers from making sales through your listings which work most of the time in discouraging them to counterfeit or resell your brand.
Controlling Your Product Variants
If there is one thing Amazon prevents, it is to see duplicate listings in page results. However, it depends on the brand to report and have the said duplicates removed. As a 1P seller, one way to promote your brand and take your search rank to a higher spot is by combining your product variants with varied colors, pack sizes, and flavors onto a single product listing to make it easier for your customers to browse.
This enhances your market’s experience by allowing them to shop conveniently on a single page. Moreover, to improve your search rank, you can request that Amazon merges the duplicate listing made by the 3P seller into your detail page. This also gives you tighter control of your brand, ensuring that all listing directing to it has good content and updated images.
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