the seller, product pricing will be pushed down. It’s
good for consumers but bad for brands and bad for
brick-and-mortar retailers that carry the product.
On the other hand, if the brand is the seller, or
if the brand tightly controls a reselling partner,
control of pricing on the Amazon platform is retained. By not selling to Amazon, brands eliminate
the competition with the repricing technology. The
drawback is that brands own the inventory and
might not drive as much volume. At SodaPup, we
are willing to accept lower volume in order to protect our brick-and-mortar partners.
EXCLUSIVES ELIMINATE SHOWROOMING
There are few things an independent pet retailer
hates more than a shopper who comes in, finds
what they’re looking for and then buys it on Amazon—while standing in the store. But what if the
product were only available in that store? What if
shopping for it on Amazon wasn’t an option?
In the sporting goods world, brands such as
Nike and Under Armour face a unique challenge in
malls, where they might sell to Nordstrom, Macy’s,
Dick’s Sporting Goods, The Finish Line, Foot Action
and Foot Locker—all of which are located in close
proximity. Because price wars devalue brands and
hurt retailers, brands such as Nike would select key
footwear and apparel styles that all retailers wanted
and create slight color variations for each retailer.
While the underlying product was the same, the
colors and the SKUs were different. This allowed
all of the mall retailers to be successful.
At SodaPup, we’ve developed a similar “special
make-up” strategy that allows us to slightly modify
some of our most important products so that retailers with 20 stores or more can have a unique aesthetic and unique SKUs—not available anywhere
else—not even on Amazon. By creating exclusivity,
this program allows retailers to maintain full pricing, free from competition.
Creating special make-ups might not be possible
for many brands, but offering exclusives should be
an option that any brand can offer. For example,
brands can withhold some SKUs from the Amazon
platform, reserving them only for pet specialty retailers. By segmenting within their current product
offering, they can achieve the same objective of protecting their pet specialty retail partners.
RECOMMENDATIONS FOR BRANDS
There are several things brands can do to protect
their independent pet retailers while also selling in
the Amazon marketplace.
• Implement a minimum advertised pricing
(MAP) policy: When you implement a MAP policy,
ensure your pricing is high enough to support your
independent pet retailers. If your MAP pricing is
too low, it won’t protect your independent retailers.
• Don’t sell direct to Amazon—this would
activate its repricing algorithms, causing price
• Leverage the Amazon platform by being the
seller yourself or by using a reseller who respects
your MAP policy.
• Create exclusives for your most important
retail partners or segment your product offering,
making some SKUs off-limits for the Amazon
RECOMMENDATIONS FOR RETAILERS
While the growth of Amazon is daunting, there are
many steps you can take to ensure your success.
• Don’t support brands that discount on Am-
azon—or discount on other online e-commerce
platforms. If their distribution practices hurt your
business but you continue to purchase their prod-
uct anyway, why would they stop?
• Provide a premium shopping experience that
can’t be replicated online—great service, knowledgeable staff, an interesting selection of new
and exciting products, and helpful and attractive
• Ask for exclusives if you can purchase
enough to support a standalone SKU. Otherwise, ask brands to segment their product offering so that you can buy the SKUs that aren’t
offered on Amazon.
Neither brands nor retailers are helpless in the
face of Amazon. On the contrary, we all control
our own destinies with the choices we make to
run our businesses. At SodaPup, we’ve made decisions that support a strategy of brand building
in the pet specialty channel. While we do sell on
the Amazon platform, we do so at full price so
as not to undermine our brick-and-mortar partners. We also have the ability to offer exclusives
to larger independent retailers. These strategies
have been effective for us and could be for other
brands as well.
Adam Baker is the founder and CEO of Denver-based
True Dogs LLC, maker of SodaPup brand dog toys.
© 2017 by Rolf C. Hagen Inc.
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