top of page

Why Hiring an Amazon Agency is the Best Approach to Launching and Growing an Amazon Presence

There should be no doubt that Amazon has dramatically changed how products are bought and sold online, and B2B firms are now starting to recognize the need for a robust Amazon strategy. 

What's causing this awakening?

One reason: changes in buyer preferences. Amazon has emerged as the #1 search engine for product searches, outpacing even Google. What’s more, more than 60 percent of B2B buyers prefer shopping on marketplaces, though brand or manufacturer websites are still largely popular. 

It should be painfully clear to B2B firms that an Amazon strategy is no longer a luxury—it’s a necessity.

However, successfully navigating Amazon’s complex systems requires significant expertise and experience. It’s easy to make mistakes that can have serious, long-lasting consequences. Meeting fulfillment requirements, listing quality metrics, and responsiveness to customer inquiries can be challenging for firms not accustomed to dealing with these matters, and the potential for missteps is high. 

At Enceiba, we’ve witnessed numerous large companies experience account suspensions and penalties due to avoidable mistakes. For example, B2B sellers new to Amazon will often place test orders and subsequently cancel them prior to fulfillment, which immediately flags the seller’s account in Amazon’s system as untrustworthy. Similarly, advertising on Amazon is a particularly powerful tool that can propel a brand’s success on the platform when managed correctly. However, we’ve seen clients both underspend and achieve lackluster sales results, as well as overspend and achieve low profitability. Advertising on Amazon is highly technical, requiring sophisticated tools and high levels of expertise that most B2B companies do not maintain internally.

Most importantly, channel conflict is a sizable obstacle that many B2B manufacturers find themselves facing. If not carefully addressed and proactively managed, channel conflict can upset traditional channel partners and sour even long-term relationships. When not approached correctly, Amazon can be a primary source of channel conflict, driving retail prices on a brand’s products through the floor. In today’s digital world, mitigating these risks is a necessity. 

If B2B firms want to overcome these obstacles and continue to serve their buyers, they must tackle Amazon proactively. Without an Amazon presence, B2B manufacturers often find themselves with their back against the wall, with channel partners becoming frustrated with price erosion caused by uncontrolled, opportunistic resellers. And with more buyers migrating and preferring Amazon over other channels, it’s clear that maintaining a controlled Amazon presence is the best option. 

There are multiple ways to resource and execute an Amazon program, each with its own benefits and tradeoffs. Options include building a team internally, leveraging a reseller/distributor to operate the channel on their behalf, or hiring a consulting agency (such as Enceiba). While we believe hiring a consultant is the way to go 99 percent of the time (we’re a little biased, of course), we thought it’d be a good idea to explore all three approaches so you can make the best decision for your business. 

Internal Resourcing

Building an internal team to manage your Amazon channel can be a viable option, especially for a company that already maintains a sophisticated Ecommerce operation. A mature team operating an Amazon channel typically consists of 2-3 full-time employees, supplemented by technology and data analytics tools that make it possible to manage the channel at scale. 

Operating almost like an in-house agency, this approach represents a significant investment in both technology and personnel. It also requires developing a number of fulfillment and accounting processes that ensure products are correctly entered into Amazon, orders are fulfilled properly and in a timely manner, and customer service issues are resolved within Amazon’s stringent requirements. Additionally, the Amazon team will need to deliver regular reporting to the executive suite with the right metrics to hold the team accountable.

If a company is starting fresh on Amazon, building such a team can be a lengthy and costly process. Amazon specialists are not only hard to find, but also expensive, with talent in high demand (we know because we hire these people!). The hiring process is highly competitive, and companies often need to offer remote or hybrid remote work arrangements to attract younger, more technically skilled employees. From our experience, the typical time frame to build a full internal team is 1-2 years.

The technology needed to manage the channel at scale can also come with a hefty price tag, underscoring the complexity and investment required to build and maintain an effective Amazon presence internally.

Outsource to a Distributor or Reseller

Outsourcing Amazon management to a distributor or reseller can seem like an attractive option, particularly for traditional B2B manufacturers that lack experience or Ecommerce capabilities. This approach mirrors the wholesale model, where a distributor purchases the manufacturer’s products in bulk and the manufacturer grants them exclusive (or semi-exclusive) rights to manage and sell their products on Amazon. Ideally, manufacturers following this model should look for a distributor with proven expertise in selling on the Amazon channel.

However, this model has its own set of challenges. While it may seem convenient and can reduce the risk associated with managing Amazon internally, it also cedes almost all control over the Amazon channel to a third party. This results in less revenue, lower profitability, and can lead to unresolved channel conflict. It isolates the brand owner from the Amazon channel, making it difficult to assess success while obscuring the pricing dynamics that are often the root cause of channel conflict. The fact is that the appointed reseller(s) will need to be price competitive on Amazon, and may not be able or willing to honor the manufacturer’s Minimum Advertised Price (MAP) policy or other agreements, leading to downward pricing pressure. 

Even more importantly, resellers cede most of their rights over the Amazon channel to the distributor/reseller, which we believe is not sustainable economically. Over time, reseller margins get squeezed (Amazon’s costs of operating the channel continue to rise), putting downward pressure on the manufacturer’s pricing. This can result in both lowering profitability and an increase in risk on the channel. 

Given these pressures, Amazon resellers also typically limit the portion of the manufacturers’ product line to products they can profitably purchase, reducing the brand’s presence on Amazon. Diminishing margins at the reseller also often result in a deteriorating relationship between the brand and the reseller and increased pressure on wholesale pricing as the reseller attempts to pass margin erosion on to the manufacturer. Finally, taking advantage of Amazon Business, where tiered and bulk pricing options for buyers is a requirement for success, becomes impossible under this margin-constrained situation; the brand ends up being left out of the B2B opportunity on Amazon. 

Ultimately, we believe that the reseller-centered model is not sustainable for manufacturers to either effectively capture their potential or control the Amazon channel. While outsourcing to a trusted reseller may seem like a simple solution, it clearly comes with its own set of complexities and trade-offs that make it a high risk and low reward arrangement.

Hiring an Amazon Consultant

We know we’re biased, but we firmly believe that for manufacturers, especially those without advanced Ecommerce capabilities, leveraging the expertise of an agency is the best way to go. With this approach, manufacturers can have a direct line to selling on Amazon without ceding control while still capturing higher revenue and greater profitability. Additionally, this model provides significantly better channel control and the ability to take full advantage of Amazon Business, among other benefits. Using an agency significantly reduces risks and beginner mistakes, while greatly decreasing the time needed to get up and running.

At Enceiba, we exclusively focus on B2B and crossover B2B2C manufacturers on Amazon. Our experience in building content, optimizing operations, avoiding account health issues, and managing the financial side translates to reduced risk and accelerated results for our clients. 

What’s more, we understand that Amazon needs to be considered within the overall go-to-market strategy, not in a silo. We have extensive experience in managing channel conflict, including establishing the foundational framework for success, which starts outside of Amazon with internet selling policies, distribution agreements, and other best practices. Properly leveraging Amazon programs such as Brand Registry is also critical to effectively gain control of the marketplace. Doing this right takes experience and expertise. 

Lastly, agencies like Enceiba maintain deep industry connections, including relationships with Amazon that are often difficult, if not impossible, for brands to achieve on their own. Not only do our relationships help smooth the process of getting started on Amazon, but we often are introduced to emerging Amazon programs that are not publicly announced and only available to well-managed Amazon selling programs. For example, new B2B managed spend and bulk buy programs that are emerging at Amazon Business, with a goal of capturing the planned portion of B2B buying, is a new frontier that agencies like ours are tapped to test. Taking advantage of programs like these requires personal relationships at Amazon Business itself. 

Ultimately, working with an Amazon consultant is faster, easier, more profitable, and lower risk for manufacturers, especially for firms that are new to the platform. In some cases, we’ve seen companies that work with our firm build internal capabilities over time and move programs in house. We call this “graduating” and we celebrate when this happens. Other clients have stayed with us for many years.  

The point is that Amazon is complex and constantly changing, and maintaining an agency relationship is the lowest risk approach to grow and stay on top of this channel, particularly at the early stages of launching a selling program. 

No matter which approach fits your business, navigating Amazon requires a solid strategy. Even if you’re just putting your toe in the water, it can help to have an expert by your side. If you’re looking for some ideas, direction, or want something more hands-on, we’re happy to help. Schedule a call with us to discuss your business and how to maximize your Amazon opportunity. 

16 views0 comments


bottom of page