Problem

Can controlling resellers help grow a brand’s total sales on Amazon?

NuNaturals is a consumer-packaged-goods company based in Eugene, Oregon that has been providing sugar-free products to customers all across the country for nearly 30 years. Founded by Warren Sablosky in 1989, NuNaturals has been an innovator in its product category and has continued to promote sustainable and healthy lifestyles for its customers. As innovators with their products, they are also forward-thinkers with their processes and systems. When Run AMZ approached the NuNaturals Team with a plan to grow their total sales and profitability on Amazon, NuNaturals jumped at the opportunity.

The strategy Run AMZ prepared for NuNaturals prioritized the control of resellers on Amazon in order to achieve a near 100% of the Buy Box for all the products they sell on Amazon. The Buy Box is a metric that represents the share of total unit sales on Amazon and is a critical component of successful Amazon businesses. By focusing on complete control of the sales occurring on Amazon, Run AMZ would aim to both increase NuNaturals’ margin on each unit sold, and increase the total number of units sold. To accomplish the latter goal, Run AMZ would work to build and manage more effective advertising on Amazon for NuNaturals.

Approach

1. Shut off the supply to resellers and Vendor Central

When Run AMZ first approached NuNaturals they were in the midst of several long-standing relationships with established eCommerce and Amazon marketplace resellers. NuNaturals also had a direct relationship with Amazon through Vendor Central. While Vendor Central carried only a few of their products, the vast majority of NuNaturals’ products were offered by the established resellers. These resellers were, and still, are some of the largest and most successful sellers on Amazon’s marketplace, including one reseller that is consistently ranked in the top 5 largest resellers on Amazon.

This meant that in order to make the transition to adopting Run AMZ’s recommended strategy, NuNaturals had to have the confidence that Run AMZ was capable of handling every element of the transition from resellers to NuNaturals becoming their own primary seller on Amazon. Everything from inventory management and forecasting, to content development and implementation, had to be executed flawlessly to prevent the loss of sales on Amazon.

2. Work with Distribution Partners to prevent the sale of NuNaturals’ products to unauthorized resellers

While preparing NuNaturals’ team for the transition to becoming the lead seller on Amazon for their products, it was very important to develop a strategy for managing the distributors that help sell their product to retailers all across the country. Something that makes growing a mature CPG company on Amazon difficult, especially in the grocery segment, is that distributors still play a vital role in providing products to customers at individual retailers. This second source of supply of a brand’s products, like NuNaturals, can make authorized reseller enforcement 10-times harder or nearly impossible to manage. If the relationship between the brand and the distributors is not strong enough that the distributor will implement the brand’s required authorized reseller program, it’s an uphill battle from the start. Fortunately, in this case, NuNaturals had the full commitment throughout their organization to make the hard decision on limiting resellers by enforcing their authorized reseller program for both retailers and distributors. The importance of a brand’s commitment to controlling who has access to sell their products cannot be understated and is one of the fundamental requirements to take full advantage of Amazon.

3. Increase shipments to Amazon through Seller Central to maintain appropriate stock

As NuNaturals began reducing or eliminating supply for resellers, Run AMZ had to provide advanced forecasting and larger shipments of inventory into the Amazon Fulfilment Centers to account for the growing percentage of the Buy-Box NuNaturals had on Amazon. By working closely with NuNaturals’ Supply Chain, Inventory Management, and Forecasting Teams, Run AMZ was able to transition NuNaturals’ full catalog of products over to their Amazon Seller Central account.

4. Increase Sponsored Products and Sponsored Brand Advertising Campaigns

With the constant attention being paid to inventory levels, the Run AMZ Team also needed to focus on the development and expansion of the paid advertising campaigns that were being used to drive sales of NuNaturals’ products on Amazon. These ads would play a critical role in growing NuNaturals’ total business on Amazon. One of the subtle, but critical, nuances of Amazon’s paid advertising platform, is that the most effective type of advertising, Sponsored Products, is only utilized if the seller running the advertising campaign has the Buy Box. A seller pays for themselves, and not other sellers.

As a way to see the impact of the increase in Buy Box percentage on advertising performance for NuNaturals, consider a hypothetical example:

  • Imagine that NuNaturals had a perfect advertising campaign for every product they sell, but they only had 50% of the Buy Box for their catalog. All of their ads combined deliver one million total impressions per month. There is a 5% click-through rate on their impressions, resulting in 50,000 page views. Of the 50,000 page views, there is a 10% conversion rate with the average sale price of $15.00. That means the 50,000 page views, with the 5,000 conversions, generates $75,000 in monthly sales. The problem in this example arises from the missing 50% of the Buy Box. Unless the other reseller(s) who have the remaining 50% of the Buy Box elect to also run advertising campaigns, 50% of the time, NuNaturals’ products aren’t being advertised.
  • Now imagine the same scenario as above, but with 100% Buy Box percentage with the exact same hypothetical advertising campaigns. Now, instead of only one million impressions, NuNaturals successfully gathers two million impressions across their products using advertising. The same 5% click-through rate on those impressions results in 100,000 page views. The same 10% conversion rate and $15.00 average item price then yields $150,000 in monthly sales. By doubling the Buy Box percentage, the advertising can produce double the sales.
  • The increase in Buy Box percentage becomes especially powerful when considering the impact it can have on organic search results. Not only is there a direct increase in sales by having advertising present 100% of the time, but the organic search results ranking can improve from the additional sales. Amazon’s A9 search results algorithm rewards sales and transactions. Amazon at its core wants sales and will reward products that perform well from a search-to-click-to-conversion customer journey for a given search term. So, in the case of NuNaturals, if they are only participating in advertising 50% of the time due to a 50% Buy Box percentage, their competitors, who may have 100% of their own product’s Buy Box are able to outperform NuNaturals during the times that NuNaturals doesn’t have the Buy Box.
  • NuNaturals loses by not participating.
  • Alternatively, if NuNaturals is always participating, they are winning, or at least equal relative to their competitors, at every search, click, and conversion. So when a brand like NuNaturals can overcome their lack of control of the Buy Box and replace it with near total control, they immediately grow their advertising capabilities and begin a long process of increasing their non-paid organic ranking for all their products in each of their categories relative to their competitors. It’s also worth noting that every sale NuNaturals has directly on Amazon is at a higher margin than they receive when a reseller buys product at a discount and resells it on Amazon.
  • The result of this process is more total unit sales, each at higher margins than before, all working together for better organic search results leaving NuNaturals with the opportunity to grow their business on Amazon dramatically.

Results

Sales grew by over 500% 

October 2017 – Run AMZ and NuNaturals agree to work together

  • Total Monthly Sales by NuNaturals on Amazon: $178,682.24
  • Total Monthly Units Sold by NuNaturals on Amazon: 9,141
  • Weighted Average Buy Box percentage: 20.5%
  • Total Monthly Sales on Amazon if 100% of the Buy Box was achieved: $464,815.29
  • Total Units Sold on Amazon if 100% of the Buy Box was achieved: 23,779

March 2018 – Peak Season for NuNaturals’ products, 6-months into the process with Run AMZ

  • Total Monthly Sales by NuNaturals on Amazon: $367,309.31
  • Total Monthly Units Sold by NuNaturals on Amazon: 15,757
  • Weighted Average Buy Box percentage: 76.6%
  • Total Monthly Sales on Amazon if 100% of the Buy Box was achieved: $479,516.07
  • Total Units Sold on Amazon if 100% of the Buy Box was achieved: 20,570
  • Average margin increase per unit sold directly instead of through resellers: 20%
  • Percent growth in initial 6-months Run AMZ was working with NuNaturals in total sales revenue: 106%
  • Percent growth in initial 6-months Run AMZ was working with NuNaturals in units sold: 72%

March 2019 – Peak Season for NuNaturals’ products, 18-months into the process with Run AMZ

  • Total Monthly Sales by NuNaturals on Amazon: $1,157,470.60
  • Total Monthly Units Sold by NuNaturals on Amazon: 58,306
  • Weighted Average Buy Box percentage: 89%
  • Total Monthly Sales on Amazon if 100% of the Buy Box was achieved: $1,300,528.76
  • Total Units Sold on Amazon if 100% of the Buy Box was achieved: 65,512
  • Average margin increase per unit sold directly instead of through resellers: 20%
  • Percent growth year-over-year in total sales revenue: 215% increase
  • Percent growth year-over-year in units sold: 270% increase
  • Percent growth in the 18-months since Run AMZ started working with NuNaturals in total sales revenue on Amazon: 548%
  • Percent growth in the 18-months since Run AMZ started working with NuNaturals in units sold on Amazon: 537%

*Note, for client confidentiality, the financial figures above have been anonymized using a consistent scale-factor for proportionality but are not exact financial figures. The percent increase in sales and margin as well as the percent growth figures are exact and can be used to represent the impact of the work Run AMZ did while working with NuNaturals.

 

Impact

When looking at the hyper growth that NuNaturals and Run AMZ achieved, it is easy to miss the importance of the compounding effect that a higher Buy Box percentage has. Because NuNaturals is now able to capture significantly more sales, at higher margins, they are creating a flywheel effect that reinforces the strength and performance of their products on Amazon relative to their own historical performance and that of their competitors.