Data has become the new currency of the economic world, and most often, the player with the best data, is the one that wins the game. This is even more true in the eCommerce environment where having access to the right data (and applying it to your decision-making) is the deciding factor between who wins and who doesn’t.

Many companies have turned to the Amazon marketplace for its ability to open up previously unreachable markets, and for many, the platform provides a welcomed addition to their traditional revenue streams. However, this revenue comes at a cost — data. For Amazon, data shifts the balance of power in their favor and gives them the higher ground when it comes to relationship agreements with the brands that make their products available on the platform.

In this article we will identify and discuss five major data points that are required to be successful on the platform but that Amazon doesn’t give you — plus what you can do about it.

Leakage: sales made by preferred partners on unapproved assortment

The first data point that is vital to brands and companies selling their products on Amazon is the ability to understand where leakage is taking place. Leakage can be defined, as the headline points out, as sales being made by preferred partners on unapproved assortment. Preferred partners in this sense, are either (i) Amazon 1P, when you as a brand have decided to develop an official relationship with Amazon as a vendor, or (ii) authorized 3rd-party seller(s) that you have approved to sell specific line items on Amazon. Unapproved assortment could mean products that you don’t want your preferred partners to sell on the Amazon marketplace, or it could refer to item pages (ASINs) that are not the correct pages for the items that you do want to sell on Amazon. These item pages may have been initially created by unauthorized 3P sellers and in most cases are not aligned with the digital content that you want to display for your brand. For instance they may not include the most recent digital images or video content that you have invested in.

The reason that leakage exists is because Amazon doesn’t disclose the required data needed to identify sales that are happening off the radar. The implication of this is that your business could be missing out on higher order conversion rates, greater profit margins, greater sellout rates and exposing customers to poor experiences. There is not much you can do about it if you rely solely on Amazon for your data.

Poachers: Sales made by other sellers on approved assortment

A second data point that is of vital importance to brands selling their products on Amazon, is the ability to identify poachers on the platform. Poachers, as the headline points out, are other sellers, not in your distribution or sales network, that are making sales of your approved assortment.

Approved assortment refers to the products and product lines you have decided is a right fit for sale on the Amazon platform, and have created a strategy and objectives for. Poachers are a major problem as Amazon, once again, doesn't give you the data around who is making sales on your approved products. In addition, poachers dilute the efficacy of your advertising spend, as the return (or sales) may be being diverted to these unapproved sellers. This leads to greater revenue losses, sellout losses, and increases the likelihood of customers being exposed to poor experiences, such as a sub-optimal delivery experience, that then become associated with your brand.

Additionally, these 3P sellers are frequently supplied by wholesalers from whom they have obtained their goods at comparatively low prices — as wholesalers have specific distribution costs to supply a network of offline points of sales. This then enables them to compete on Amazon with extremely low prices compared to your brand’s Retail Recommended Price (RRP).

The implications of this are two-fold: in the short-term, they erode gross profit margins, and in the long-term, they damage brand equity value as consumers get used to having access to the brand at heavily discounted retail prices.

Trespassers: Sales made by non-approved sellers on unapproved assortment

A third vital capability and data point refers to the ability of your company to identify trespassers. Trespassers, as the headline defines, are unapproved sellers making sales on your unapproved assortment on the platform.

There could be a number of reasons as to why you have not included certain products or product lines for sale on the Amazon marketplace. One reason may be preferring physical channels as specific products may require a certain level of knowledge or expertise. Another reason may be because of preferential seller agreements that you may have in place as a value added aspect to your reseller agreements.

Trespassers are a major problem for brands on the Amazon platform as they undermine your strategic objectives, dilute your brand experience, and jeopardize your distributor relationships and agreements. Like poachers, the presence of trespassers also erodes your gross profit margins and damages your brand equity value.

Healthy growth areas

A fourth valuable data point for sellers on Amazon is the ability to identify and leverage healthy growth areas for the business. Healthy growth areas are directly related to the three phenomena identified above. It is estimated (based on data collected by Ayolab across a number of clients, timeframes and Amazon locales) that leakage, poachers and trespassers are siphoning off between 40% to 60% of your sellout potential. If these anomalies can be identified and addressed, they can be turned into profitable avenues for revenue growth.

The process for turning these losses into revenue should be defined on a case-by-case basis. But no matter which situation your brand is in, your solution and progress will depend upon which data set you have access to. This is not an easy process as Amazon does not give you the data transparency required to do it. By partnering with Ayolab, you get full marketplace transparency needed to convert poachers, leakage and trespassers into healthy growth.

Root cause analysis on the buy-box

The final ability and data point that we are going to discuss, could arguably be the most important, as it relates to the Amazon Buy Box. The Amazon Buy Box is where the war for sales is raging. It’s where sales are won and lost, and it’s where the unethical practices of trespassers and poachers most clearly manifests — as the seller that wins the Buy-Box is more often than not, the seller that wins the sale. Additionally, the reasons for losing the Buy-Box are not transparently communicated by Amazon. From their perspective, the loss of the Buy-Box is a powerful tool that they leverage to try to drive down your price to them even further.

The reality, oftentimes, is however different from what is communicated by Amazon. There can be any number of reasons for losing the Buy Box, in addition to the selling price. These can include fulfillment problems on Amazon’s side, such as not having the stock on hand to supply the order. In some cases, Amazon, even though it has aligned its price with a competing 3P seller, may decide to allocate the Buy Box to this seller, especially if it is an FBA seller, in order to maximize its marketplace fees, and the overall profitability for Amazon as a company, as opposed to its interests as a retailer. In such a case detecting the FBA sellers that do secure a big chunk of the Buy Box allocations is a tremendous tool to start mitigating their negative effect on your relationship with Amazon.

In a nutshell, having a detailed root-cause analysis on the Buy Box can be a powerful negotiating tool when it comes to dealing with Amazon, as well as strategizing the best route forward for your company and brand.

To conclude

It’s easy to see why data can make all the difference to the success and efficacy of selling products on Amazon. However, Amazon doesn’t currently make the data you really need available on their platform. It’s not all doom and gloom though, as there is a secret weapon on the market that makes all the data discussed in this article available to you — and in a way that adds true value to your business and enables an effective decision making process.

The secret weapon… Ayolab.

Over the past 5 years, Ayolab has analyzed millions of data points across thousands of sellers and items. What we learned and what our clients continue to see is that roughly 40%-60% of marketplace sell-outs take place outside the purview of brands. In fact, third-party sellers (authorized or not) make up the lion's share of these unseen sell-outs.

Ayolab is the world's premier Amazon Analytics platform that brings complete clarity, transparency and efficacy to your Amazon sales activities. In just 20 minutes you can find out how you can gain 20%+ in top line revenue on Amazon marketplace.

Click here to book a 20 min call with Ayolab to discuss your Amazon challenges.