In today’s episode, I talk about the challenge faced by retailers — from fledgling startups to large Consumer Packaged Goods brands — trying to sell through Amazon when Amazon simultaneously wants to match the lowest price available through brick and mortar retailers and also receive a low enough wholesale price to compensate them for their shipping costs to consumers.
The issue that that the consumer actually does some very valuable work in picking up the shelf from the store shelf and driving it home. You can see this if you look at the cost of having a gig economy driver go pick up that product at the store for you and drive it to your porch.
Amazon is trying to recoup the cost of taking your product off the warehouse shelf, putting it in a box, and sending it out with a delivery drive to be dropped at your door. For a consumer packaged goods type item, that can easily cost 30% to 40% of the retail price of the item. And yet, the customary prices in retail stores are not designed to cover such heavy delivery costs.
The solution is to differentiate the product you sell on Amazon from the one you sell to retailers, such as having a larger multi-pack size you sell on Amazon.
Tune in to hear all about it.
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