Maintaining vendor autonomy in the era of Amazon
Companies like UpstartWorks aim to be ambassadors for brands and vendors that sell on platforms like Amazon and Wal-Mart
It’s hard to believe that in the year 2020, any vendor would have to be convinced to sell their products on Amazon, given its unfathomable marketplace reach.
According to data released by Amazon, the company brought in over $200 billion in revenue in 2019 and boasts over five million marketplace sellers, making it the largest online retailer in the world. But many concerned vendors are asking figuratively and literally, at what cost?
Some of the pitfalls for vendors working with Amazon are actually quite glaring in regards to maintaining competitive prices and safeguarding against copy-cats and non-authorized sellers. For boutique vendors in particular, competing against such a vast number of sellers can be daunting and even detrimental to growing a business.
“Why wouldn’t you want to control the narrative of your brand story to people that are using your product everyday to make a living?”
In an interview with The Sociable, Thambrahalli, who has a background in e-commerce, spoke about the need for vendors to be able to control their own product’s narrative and have a say in fair pricing.
“If you’re a manufacturer, why wouldn’t you want to control the narrative of your brand story to people that are using your product everyday to make a living?” Thambrahalli asked rhetorically.
“Why would you let somebody else control the integrity of the product that’s out there in the largest catalog that’s sitting in your end users pocket, which is their smartphone?”
By asking these questions for their clients, UpstartWorks acts as an ambassador for vendors who see the potential of selling on major platforms like Amazon, but are also wary of losing autonomy over their brand’s identity and profit margin.
“We create a framework for what a brand should stand for, what category they want to play in, what the customer experience looks like, the pricing strategy for the brand,” Thambrahalli said.
In a similar way that Amazon offers customers the opportunity to review a product and customize their shopping experience with products from a variety of vendors with a variety of price offerings, UpstartWorks provides vendors and sellers the opportunity to shop which platforms would best suit their business needs.
At times this work can be grueling, Thambrahalli admits. Without disclosing the client’s name or company, he recalled a particular launch with Amazon which involved a 90-day vetting process of all of the third party sellers of that particular product.
“For 90 days we cleaned out the channel and Amazon lost out on those sales. But once we were successful and rolled out the program, in less than 90 days we had shipped over one million dollars worth of product to Amazon. We had successfully improved customer experience and negotiated fair pricing for the product.”
This type of win-win-win for the vendor, the customer, and the platform are what Thambrahalli and UpstartWorks aims for.
In findings released by Marketplace Pulse, Amazon would be the 50 largest economy in the world if it were a country–not quite New Zealand, but beating out Qatar.
In terms of e-commerce, it’s nearly impossible for vendors and sellers to circumvent the magnitude of marketplace behemoths like Amazon or Wal-Mart, but with services in place like those that UpstartWorks provides, that aim to restore autonomy to vendors and sellers, at least they can be empowered to play by their own rules.
Disclosure: This article includes a client of an Espacio portfolio company.