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Top 5 Reasons B2B Manufacturers Fail on Amazon

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When we talk about Ecommerce and how it’s evolved over the past 20 years or so, it’s pretty safe to say that Amazon has conquered the industry. With its unparalleled reach and assortment, Amazon has transformed the shopping landscape, offering a vast array of products to billions of customers worldwide.

For B2B manufacturers, Amazon is not just a platform; it’s an enormous opportunity. Amazon Business, which focuses on B2B products, reached $35 billion in gross merchandise volume (GMV) in 2022, up about 30 percent from 2020. And it continues to grow, with experts projecting $43.4 billion in sales in 2024

It should be no surprise that B2B buyers have been flocking to the marketplace, particularly in the wake of the pandemic. Back in 2021, 85 percent of B2B buyers said they were forced to move more of their procurement activities online as a result of the pandemic. But that wasn’t just an anomaly or unusual blip. These changes have become permanent, with 91 percent of buyers saying they were likely to continue conducting business online. 

However, navigating the Amazon marketplace is not without its challenges, and many B2B manufacturers find themselves struggling to find success. Having worked with a wide variety of large B2B manufacturers here at Enceiba, we’ve noticed a handful of areas where they commonly struggle. Let’s take a look at the top five reasons B2B firms fail on Amazon. 

Reason #1:  Starting with too Narrow of an Assortment

Too often, B2B manufacturers will initially approach Amazon with a conservative mindset. They try to validate the concept of selling on Amazon, despite the overwhelming evidence of its success. They will frequently list a handful of products, hoping to test the waters before diving in.

While that might seem reasonable, this approach can limit their opportunities for success. Amazon is a marketplace of billions of products. Top selling products on Amazon may not necessarily be top sellers elsewhere, and vice versa. By only offering a few products, manufacturers do not give themselves enough chances to succeed. 

Remember, Amazon is essentially a search engine where B2B customers use to find and discover products. Having a broader representation of your product portfolio increases the chances of your products appearing in search results, thereby increasing visibility and potential sales. 

The Solution:  Start with a broader representation of your product line. Our experience in operating programs for leading manufacturers has shown that it’s critical to give yourself the opportunity to appear in search results. If you manufacture 2,000 products, launching with a selection of 100 – 200 products will likely yield more success than just a few. This approach will give you a better shot at success in the vast and competitive marketplace that is Amazon.

Reason #2:  Failure to Understand Amazon Pricing Dynamics

There’s a common misconception among B2B manufacturers that simply being on Amazon and offering Prime-eligible products allows them to charge any price they want. This assumption, however, is far from accurate. 

Amazon is a competitive marketplace where you’re vying for customers’ attention with other manufacturers selling similar products. Many of these competitors, particularly those based in Asia, have mastered the art of selling on Amazon, selling products at highly competitive price points, which poses a significant challenge for manufacturers to overcome.

We often observe traditional manufacturers overpricing their products on Amazon (e.g. offering products at significantly higher prices than they are sold for in other channels). This makes them less competitive and handicaps sales. It’s important to remember that while Amazon has a vast customer base, it also hosts an enormous range of products. Buyers aren’t always brand loyal, and if they can find a similar product cheaper, they’re going to buy the less expensive one. 

However, this doesn’t mean that premium products can’t command premium prices. If your products offer unique features or superior quality, customers may be willing to pay a higher price. For instance, it is possible to sell individual items on a per item basis at higher prices through Amazon than what customers would pay for bulk purchases from a distributor. 

The Solution: Take a reasonable pricing approach that avoids channel conflict, but also doesn't scare off buyers. The key is to strike a balance between competitive pricing and value proposition to maximize your sales potential on Amazon.

Reason #3: Not Investing in Resources

It’s common for B2B manufacturers to approach Amazon with the assumption that they can succeed without any prior experience with the platform or its tools, and by only dedicating a small portion of a single employee’s time to manage the channel. This, however, is a misconception. Amazon is a highly complex ecosystem that requires sellers to be more than competent in Ecommerce, marketing, and fulfillment best practices. Navigating these complexities without the necessary specialized expertise will likely lead to failure.

Take Amazon advertising as an example. It’s as intricate as running Google ads. Successful campaigns often involve thousands of keywords and are managed by highly sophisticated teams using advanced software solutions. It’s not something you can put an intern on to just to “figure it out.” 

Without the proper expertise, manufacturers are unlikely to realize their full revenue potential on Amazon. We often find that companies launch their programs internally, only to realize six to twelve months later that their approach isn’t working. This highlights the importance of having a thorough understanding of Amazon’s ecosystem and the expertise to navigate it effectively. Without this knowledge and skill set, manufacturers put their entire program at risk.

The Solution: To succeed on Amazon, B2B firms need to put appropriate resources behind their program. If it's done internally, they will have to hire several full time employees and license technologies to support the channel. This route is perfectly fine, but it’s important to know that it requires a significantly long go-to market period. 

Alternatively, companies can hire Enceiba to build and optimize an Amazon selling program. Our team of experts can develop a strategy and get companies up and running—and turning a profit—faster and at a lower risk than deploying an internal team. In fact, many firms hire us to help get their program off the ground first and later hire their own team (we call this “graduating”). 

Reason #4:  Poor Content

The foundation of a successful Amazon program lies in great content. This includes well-crafted product listing pages, high-quality imagery, compelling product descriptions, and strategically chosen keywords. Failing to use brand tools such as Enhanced Brand Content (EBC) and a well-designed storefront is also a frequently overlooked opportunity.

Think of it this way: Would you send your sales team out to a client meeting without product samples, some good looking catalogs, brochures, and other sales collateral? Of course you wouldn’t! 

Failing to produce high-quality content for Amazon is like not putting your best sales foot forward. It’s crucial to tackle all aspects of your Amazon presence to avoid being at a disadvantage. Key metrics such as traffic and conversion rate are integral to driving conversions, and those both are dependent on having great content. 

The Solution: Invest in content! While this seems like a no-brainer, it’s surprising how many B2B manufacturers don’t pay attention to this critical aspect of selling on Amazon (and through other digital channels, we should add). 

Great content should include (but is not limited to): 

  • High-quality images that are optimized for mobile

  • Branded content

  • Product videos

  • Keyword-rich product descriptions

  • Technical specs and compatibility information 

Lastly, it’s critical to solicit product reviews on an ongoing basis, which can also help with visibility within Amazon search results. 

Reason #5: Inadequate Operational Execution

This is the silent killer of B2B Amazon programs.

B2B manufacturers on Amazon frequently underestimate the importance of operational health. Operational health encompasses multiple aspects of how you work with Amazon, from meeting fulfillment requirements to communicating effectively with customers. Falling down in these areas can lead to rapid failure of your Amazon program. 

Amazon's standards for fulfillment and operational response times are often higher than what most manufacturers are accustomed to. For instance, companies that handle fulfillment themselves when selling via 3P Seller Central are required to respond to customer inquiries over the weekend. Amazon grades your performance in multiple aspects using an Account Health Score. Ignoring these factors will put your Amazon program at a significant disadvantage, or even at risk of Amazon suspending or ending it.

The Solution: There are no quick and easy fixes for operational challenges like these, but there are two things you can do to improve. 

First, if you’re selling through the 3P Seller Central model, your firm can leverage Amazon's Fulfilled by Amazon (FBA) program. Using FBA, Amazon will handle every aspect of fulfillment: Warehousing, packing and picking, customer service, returns, etc. Using FBA also makes products eligible for Amazon Prime, which will increase conversion rates. This is why we often lean into recommending FBA because it limits the risk of operational challenges. Using FBA doesn't completely alleviate your responsibilities, but it's a lot easier than having to figure out fulfillment yourself, especially if your fulfillment operations are set up to only handle bulk orders.

Additionally, and just as crucial, is making inventory available for Amazon. B2B manufacturers are notorious for being slow to replenish or even get products into the Amazon to begin with. But to be successful, you have to be ready with inventory for the channel. 

Is your B2B Amazon program stuttering? Give it a boost with Enceiba! We can help you analyze and optimize your program or get it up and running quickly and effectively. Contact us to schedule a strategy session today!

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