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on March 11, 2021 by Drew Kramer in Marketplaces

The Top Pros and Cons of Resellers

Two Women Speaking Over a Meal in a Cafe

Ah, resellers. For some manufacturers, they can be incredibly helpful at getting a product out there on the market. For others, they’re an obstacle to the buy box and a great brand image.

Here’s the thing though: whether or not you like them, resellers exist.

Keep in mind, this is geared towards manufacturers who are considering voluntarily selling their items to resellers. If you’ve already got resellers (by choice or from a leak in your supply chain), you might check out one of our older posts, which talks about the effects of resellers on your product. 

Resellers Are Not A Long-Term Solution

Illustration of the buying cycle showing two business mens' hands shaking in the middle of the image. Surrounded by the buying cycle online/ecommerce showing a blue t-shirt (top) pointing to a gold coin representing income on the bottom of the graphic

For many manufacturers, working with resellers feels like a good option, especially in the early days of trying to get established in ecommerce. For one, storage, inventory management, customer service, etc., are handed off the moment you sell to someone else, including Amazon. Since you no longer own that item, you won’t be responsible for all the fees and management associated with it. But, resellers are definitely a “hands-off” approach, which can lead to a lot of issues.

If we return to thinking about insects, it could be that working with resellers is sort of like opening your window, yelling, “Come on in, all you adorable lady bugs!” and then being surprised when you end up with a bunch of mosquitos and gnats instead.

Resellers can be, in the long run, pretty damaging to your product and your sales. Here’s why:

Two rounded rectangle boxes showing the same illustrated blue t-shirt, one showing a better product description (left) one showing a worse product description (right) of amazon/online/ecommerce product boxes

1/ No control over how resellers brand you

While they may be experienced with sales and marketing, they might not be doing this in the way you want them to. This is especially problematic with premium brands, which rely heavily on branding to bring in customers.

Also, if you look back at last week’s blog, we discuss one of the best places to sell: your website. One of the main reasons for this is complete control over branding. Resellers are basically at the complete other end of the spectrum. On Amazon, they can easily change product descriptions, photos, and more – even if you are selling the product yourself!

2/ Smaller margins

Even though you will make quick cash, it isn’t going to be nearly as profitable as if you sell it yourself. Obviously, the extent to which this is true will depend on how you price your product, and how much it costs to ship it.

3/ They will become a competitor in the future

Illustration of a woman (left) and man (rights pulling on a rope in opposite directions. Two chat bubbles above with illustrated shirts (identical)

While resellers might be a quick and dirty way to get started, what about when you want to sell your products yourself? Well, it’s not good news… These are just a few things:

  • They will be competing with you for the buy box and for sales that would otherwise be yours.
  • You will probably ALREADY have to deal with this some of the time, especially if you sell through brick and mortar stores like Costco.
  • You will need to reach out to each reseller to request they stop selling your products online or choose to no longer sell to them all together.
  • You may also have to draw up a MAP agreement.
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4/ Issues with quality control

Depending upon the type of product, this might include expiration issues, missing parts, broken items, or even counterfeit items. These may tarnish your product’s overall rating on Amazon – which can affect sales even BEYOND Amazon. In fact, 82% of people check their phones for reviews before buying a product in-store (and you can bet a chunk go right to Amazon).

Illustration of phone with three review pop out thought bubbles the first saying 2/5 stars, the second 1/5 stars, and the third 2/5 stars being held in a hand illustrating the importance of reviews within the ecommerce/online/internet marketplace

5/ Bad seller reviews might become bad product reviews

As we’ve mentioned before, many product reviews have to do with the experience with the seller as well. When you manage your sales, you can actively work to have these removed and improve the customer experience overall to limit them in the future. Your resellers sell so many different products that they may not care enough to do this work to protect your product’s reputation.

Our conclusion tends to be this: resellers might work well for a short time and may even help you build up some customers and brand recognition. In the end, though, they tend to do more harm than good.

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