How to Get Ahead of Channel Conflict on Amazon
Despite Amazon Business hitting $60 billion in annualized gross sales this year, many B2B manufacturers have stayed on the sidelines of Amazon over fears of channel conflict. Fear over price erosion, unauthorized resellers undercutting the brand, and distributor anger over being undercut are among the top concerns manufacturers cite when justifying their decision to avoid selling on Amazon.
But what many manufacturers fail to learn is that these fears are largely unfounded. In fact, channel conflict more often occurs when a manufacturer doesn’t take a proactive approach to Amazon.
The truth is that companies that treat Amazon as a strategic channel will more likely capture revenue and profit without upsetting the distributor and retailer relationships they've built over years.
To achieve that, though, requires some groundwork. This includes building a foundation of channel control, using Amazon's own tools to protect your brand, and choosing your selling model deliberately. Get those three right, and channel conflict is managed before even listing a single product.
Let’s take a closer look at channel conflict and how to proactively avoid it when starting an Amazon program.
What Actually Causes Channel Conflict?
Before we understand how to manage channel conflict, it’s essential to first understand where it comes from.
It's easy to point a finger at Amazon as a source of channel conflict, but the marketplace itself is rarely the root cause. Most channel conflict traces back to a go-to-market strategy that prioritizes traditional sales channels over digital ones. Yet, B2B buyers have shifted their own preferences to digital channels, particularly Amazon.
What’s more, Amazon has built its business on price competitiveness. Sellers compete on price, and Amazon's own algorithms often—but not always—reward sellers that can deliver the lowest price. This often gives the impression that manufacturers have no way to control price on the platform, and that it will always be a race to the bottom.
But that is simply not true.
Once Amazon’s pricing algorithms are planned around and steps are taken to prevent resellers from selling products for too low a price, the threat of channel conflict generally disappears.
Three Methods to Get Ahead of Channel Conflict on Amazon
1) Build the foundation of channel control
Before a manufacturer even lists a product on Amazon, they need to lay the same groundwork that all channel control has always required: an Internet sales policy, a minimum advertised price (MAP) policy, and clear ownership of trademarks and other IP tied to the brand. Without that foundation, there's no mechanism to act when a reseller undercuts price or a product is being sold by an unauthorized resellers.
The other piece is visibility into your end users and sales. It’s essential to know who’s selling your products and who’s buying them. Without that information, the factors that create channel conflict will go undetected until after it's already damaged a distributor relationship.
It’s important to note that this groundwork isn't specific to Amazon. It applies to all of a company’s distributor or reseller agreements.
2) Use Amazon's tools to protect your brand
Once the foundation is in place, Amazon gives brands tools most companies underuse, namely Amazon Brand Registry.
Many manufacturers don’t realize that Amazon actually wants listing authority to sit with the actual brand owner, not with whoever happens to list a product first. And Brand Registry enables a company to claim authority over its IP and products.
Once registered, manufacturers can control the content appears on any product listing for its products on Amazon. They can flag unauthorized or inaccurate content and verify that products sold under its brand are genuine.
This enables manufacturers to maintain control over how its products are sold on the platform. It’s worth some time to better understand what Brand Registry actually does and doesn't do.
3) Be deliberate about the selling approach
Amazon offers two main selling approaches:
Vendor Central (1P) is essentially a wholesale relationship with Amazon, where Amazon buys products directly from a manufacturer and resells them on the site.
Seller Central (3P) allows manufacturers to sell directly on Amazon, but they maintain ownership and control over pricing and other aspects of product listings.
(NOTE: Check our website for more information on the differences between 1P and 3P.)
Channel conflict is manageable under Amazon’s Vendor Central (1P) approach, but it's easier under Seller Central (3P), because 3P sellers can set retail prices themselves. Combined with control over who can sell your products, selling 3P enables brands to set minimum pricing on the platform.
None of this rules out 1P. A manufacturer can manage channel conflict there too, but it takes more rigorous pricing discipline and tighter channel control to hold the line, since the brand doesn't set the retail price directly. Companies weighing the two models often find it useful to see the tradeoffs side by side before committing to one.
Channel conflict has kept good B2B brands off Amazon for years. But it's solvable. Enceiba has helped hundreds of B2B manufacturers build channel control programs across 1P, 3P, and hybrid models. If channel conflict is what's held you back, let's talk.
