Amazon Case Study: Approach to Restricted Products and Exclusive Listings

The Challenge

A client came to us with two problems for the same product, a caffeine supplement featuring a proprietary blend of active ingredients.

For starters, after an initial listing, the product received a “notification of restricted products removal” warning from Amazon, and the product had been removed from Amazon’s catalog. In addition, the brand was facing steep competition from resellers, resulting in price compression and unpredictable inventory forecasting.

Product Incorrectly Disapproved

Amazon strictly regulates dietary supplements, and follows FDA guidelines. Our client’s product – a caffeine supplement – featured an ingredient, bitter orange extract, which is regulated by the FDA.

Amazon had identified the product as one potentially containing “bitter orange with synephrine at 30% or higher,” and when bitter orange contains synephrine at 30% or higher, it can’t be listed for sale on Amazon.com.

Unfortunately, laboratory tests for the product had confirmed this ingredient was within FDA guidelines; and therefore, Amazon had incorrectly disapproved the product.

Brand Competition from Resellers

A second, and unrelated challenge: The brand was facing stiff competition from resellers for its best-selling product, a 24-count bottle of the supplement.

The product had been widely distributed through traditional channels, and thereby, dozens of resellers were eligible to sell the product on Amazon. This extreme competition was causing three specific problems:

Price Compression – Competition between resellers to "win the Buy Box" often leads to lowering of prices for products. Repricing software is a common tool resellers use to compete for the Buy Box, which causes a perpetual lowering of retail prices, often $0.01 at a time. If the competition is fierce enough, resellers are forced to sell items at a loss as opposed to racking up storage fees at Amazon fulfillment centers.

Inability to Advertise When Not in the Buy-Box – Our client was only winning the Buy Box about 50% of the time, and because brands cannot advertise when they’re not Buy Box eligible, our client couldn’t scale ad campaigns. As a result, the client was competing with resellers on the same product page, instead of competing with other brands within their niche.

Unpredictable Sales Forecasting – The stiff Buy Box competition made it difficult for our client to accurately forecast sales. This was caused in part by price instability, as well as the client being pushed out of the Buy Box by competitors. There was also a large fluctuation in the number of resellers, making it difficult to measure competition and forecast sales.

Our Approach

Our first focus was getting the product reinstated, and once the product had been reinstated, we focused on out-competing resellers.

Reinstate Product

Amazon has a fairly straightforward process for product disputes; the difficulty, though, is initiating the process and getting an Amazon rep to review your dispute without replying with a canned "templated" response.

Before contacting Amazon, we recommend that you build your case. Collect any relevant testing, data or proof you have that your product is compliant with Amazon's rules and regulations. Our client’s product had been tested by an independent laboratory, and we submitted the results of these tests when seeking reinstatement. With persistence, we helped the client prove the "banned" ingredient fell within the permissible FDA and Amazon guidelines. The product was successfully reinstated.

Develop Amazon-Exclusive Product

Because the client’s best-selling product – a 24-count bottle of its best-selling supplement – had been widely distributed through traditional channels, dozens of resellers were eligible to sell it on Amazon. Our solution: Develop a product sold only on Amazon, with zero distribution outside of Amazon. This exclusive product helped the client:

Compete with other brands – With this product listing, the client won 100% of the Buy Box. The product wasn’t distributed through traditional channels, which stopped resellers from sourcing it. Advertising 100% of the time allowed our client to compete with other products instead of other sellers.

Out-Compete on Price – The exclusive product, a 100-count bottle of the best-selling supplement, enabled the client to beat competitors on price-per-unit. This drove sales and visibility while simultaneously creating a better deal for customers.

Results

Within months of taking over the account, our team helped the client achieve three goals:

1. Increased Sales – Because the client could win the Buy Box 100% of the time with the new product, revenue increased.

2. Improved Advertising ROI – The client was able to more quickly scale advertising campaigns and reach their target audiences. This also helped drive the increase in sales and profitability.

3. Stable Pricing – The exclusive product provided the client with much more control over pricing. This resulted in more accurate forecasting and increased bottom-line revenue.

Conclusion

For Sellers, Amazon can be a difficult marketplace to navigate. Small problems can quickly turn into expensive problems. Issues like a product getting disapproved or price compression due to reseller competition require swift action, otherwise you risk sales interruptions and/or losing control of your brand.

This case showcased the importance of two Amazon strategies:

One: If you’re struggling to get a product reinstated, work with an Amazon brand manager; particularly one who has worked in the dietary supplement category. Or if you plan to DIY, be persistent and build a strong case prior to submitting evidence.

Two: Have a plan for protecting your brand on Amazon. Losing control can happen quickly. Product exclusives are one potential solution; especially if the product is widely distributed and has dozens of potential resellers able to source it. Yet, there’s plenty of other strategies like Amazon Brand Registry to stop unauthorized resellers, or improving Seller metrics to win the Buy Box more frequently. Another strategy not utilized in this case is to have brand owners reach out to resellers and/or distributors directly and to send cease and desist letters.

Bottom line, selling on Amazon is complex and can take time to understand, especially for brands new to the platform. Hiring an Amazon brand manager can help new and established Amazon sellers avoid growing pains associated with selling on Amazon. Some instances, as in this case study, require an expert with persistence to overcome obstacles troubling a brand owner.

Mile High Online is a full-service Amazon brand management firm. Contact us for a wide range of Amazon Seller services, including product development, advertising strategy and more.