Brand 

Our partner company in this case was a brand with a flagship product with a strong sales record on Amazon Europe.

Problem

Whilst this brand’s flagship product had sold very strongly in the past on Amazon Europe, this success had led to it being inundated with opportunistic resellers. These parasitic sellers started a price war on the Amazon listings, forcing the price well below the high street price. Fast forward 12-months and the brand’s high street distributors were demanding wholesale price drops in order to compete with Amazon. This is the Amazon equivalent of combining oxygen, fuel and heat - you get a fire that is tough to extinguish.

Impact

Amazon’s algorithms are designed to out-compete high street retailers and as soon as it detected the high street price drop it suppressed the Buy Box on Amazon, making customers work harder to purchase the product. This led to a sales slow down which caused resellers on Amazon to drop the price even lower. A vicious cycle had formed. The brand were stuck between a rock and a hard place. Cut into their margin to maintain sales velocity or hold their nerve and risk losing market share across all sales channels. They chose to cut their wholesale price to the point that they were struggling to maintain a profit. Sadly this did not help the situation and sales dried up on Amazon leading the opportunistic sellers to abandon the listing.

The product went out of stock, the sales ranking spiked and the listing disappeared from customer search results. Sales dropped to one unit per day.

Need

The brand needed us to turn things around, allowing them to increase their margin on their flagship product and drive sales growth back to where it had previously been.

What did Bodhi & Digby do to meet these needs?

We worked with the brand to map out and control their distribution channels to limit the availability of their products. Whilst it is illegal for a brand in the EU to enforce a sales price, it is perfectly acceptable for them to restrict which sales channels its resellers are allowed to offer their products on. The brand gave us exclusive rights to resell their products on Amazon Europe.

We initiated a 3-month programme to stabilise the situation on Amazon, fix and improve all the listings and drive brand value directly with customers.

Once the search rank started to recover, the product re-appeared in customer searches and sales volume increased. Over months we increased the price, carefully avoiding the bite of Amazon’s pricing control algorithm to maintain sales velocity which allowed us to absorb the brand’s wholesale price increases. After six months the product had recovered back to where it had been previously and continues to show strong growth in its niche.