e [Music]. [Music]. Hi, and welcome to Marketplace Masters, sponsored by Merchant Spring, your go-to for Marketplace analytics and agency client reporting. I'm your host, Paul Selt, and today we're diving into Channel distribution strategies on Amazon. Joining me today are experts from Valon, Freda, and Florian Schneider. Let me briefly introduce my distinguished guests for today. Freda, with his extensive background in digital sales, e-commerce, and strategy, has held key roles at Puma Group, including General Manager for Switzerland and Austria and the Global Director of Business Unit Management. He also brings experience from the Boston Consulting Group, where he worked on high-impact projects. Florian is an Amazon Seller since 2019 and leads Valon's distribution business unit. He has collaborated with startups and companies across various industries like fitness equipment, supplements, and FMCG. Since 2022, he has spearheaded Valon's internal distribution business, partnering with brands to sell their products exclusively on Valon's account.

together Freda and Florian will share their valuable expertise and perspectives on optimizing your Amazon distribution strategy, building successful brands, and navigating the complexities of e-commerce. Well, thank you so much for being on today's episode, Freda and Florian. Pleasure. Thanks for having us. Hello, Paul. I need to sit a little bit lower. I noticed that I'm sitting probably on a very high chair. I'm trying to get my head aligned with yours. There we go. Um, or we tried to move up a bit. Yeah, that's uh, perfectly aligned now. Excellent. Okay. Well, look, let's um, let's start off maybe with uh, with with you, Freda. Um, just, you know, I've spoken to a lot of agencies on these podcasts, and you know, I work with hundreds of agencies on a daily basis. I mean, not me personally, obviously, but you guys are a little bit different and unique, and I'd love to just, uh, just set the scene. Give us a quick intro about Valon and and how you guys started out. Yeah, actually, the story of Valu

on starts even a few years before uh valon because um together with Hano D my co-founder, we founded a company in the Sleep business third of life. And we um yeah, we grew on Amazon and uh from our former Network. You just mentioned a few of my uh former jobs. Um, people approached us and and said hey uh can't you help us on become successful on Amazon, how do you do it. And that's when we founded valon. So we are entrepreneurs, we are um sell. We um we live it still every day um and we of course also uh uh the same time, we also get live the same pain as all our clients. And that's when we founded Valu on uh six years ago. Um, we are Munich-based, we are a agency, we are consulting company, but we are also a distributor. Um, where we act as a distributor or broker for our clients. And that will be one of the topics today. Um, that's it. Um, mainly uh how valon has been created. It's driven by entrepreneurs, also our um um client.

managers. And um, that's also our approach for our clients. Yeah, fantastic. Thank you for giving that introduction and setting the scene there. Um, so let's try and unpack our topic. And today, I want to start quite high level. Um, you know, what are your, you know, you bring the sort of, uh, perspective, particularly from Germany here. You're obviously an agency, but do consultancy as well. You know, how do you see the current Amazon ecosystem and and what does it take to succeed in 2024, particularly from a distribution, uh, angle? Yeah. I mean, that there's a lot to say, of course, but when we just look at one country like Germany now, um, where more than 50% of the e-commerce, um, is covered by by Amazon and it's still growing. We see a massive, um, um, change and collapse in the supply chain. That's one of the things, um, to give an introduction, um, the supply chain, um, when it comes from manufacturer to consumer, uh, manufacturers are coming in heavily on the other side, um, um, also the system, the established system between

the Brands and suppliers and manufacturers, but also they are Retail Partners online and offline with all the buybox topics. We see massive problems which we have to solve, and mostly the brands can solve on their own. So, that is one of the topics why we think the sales channel of marketplace, and especially Amazon, has to be managed in a professional way. It has to be managed very specifically how to deal with it as a vendor, as a seller, or even using a distributor broker model. And that is the our journey into offering this full service. The next thing is especially how to play on Amazon. Most of the brands try to cover or try to sell all of their product portfolio on Amazon, which is fine, but usually it's a I call it the Highlander game, it's a bestseller game. So, you try to establish and build bestsellers to make it very briefly and the.

other thing what is very special about Amazon is um the Performance Marketing site which we also cover of course but the Performance Marketing site which is the sales department um next to the content which is very important. The two main um the two main pillars never the lesson that's the my last point on that one um there is a there is some other very important tasks which we have to cover this is the right having the right product so we also um develop the right product with our clients. We do this database we do it kind of Target re-engineered product development together with the clients. We need a very data driven business management um so we not only want to cover content and Performance Marketing thank you for that uh big picture uh perspective there that's that's very useful um. I want to zoom in a little bit more on um some of these strategic approaches right particularly around distribution because you know even before we started this podcast we were talking about you know probably 10 years ago was or even five years ago you know

you're you have to choose you're either a vendor or a seller right uh, and then we evolve from hey let's move from vendor to becoming a seller, and then two years ago, we started talking about hey how do you do the hybrid approach, uh, this mon this this model continues to evolve constantly, um, you know what are the Strategic approaches that you see today in terms of you know how do you maximize your sales and grow your business across the Amazon platform, yeah, we see it exactly the same way, and we saw it in our development on our own company but also with the clients, to be honest, we also did not have the same approach three or five years ago, um, I want to start maybe one level more up, you either don't sell on Amazon, which well there are might be some companies who still consider that, um, um, then you sell to Amazon as a vendor being in the vendor program, you can be a seller or um yes you can also have this um um selling being done by a third party, it can be one of your retail.

clients, but can also be this broker-distributor model. Um, nevertheless, most of these, whatever, uh, um, um, um, model you chose, we see a development for certain reason, and that will be the main part of the podcast, in our opinion, to show what are the cases, what cases appeared for our clients, when did it make sense to add another sales, another model, like not only being a vendor, but also being a seller, and especially as we call it this not only hybrid to, um, using two models, but also now using three models, the broker and distributor. We call it dry hybrid, uh, model, and it's again not always choosing now one of the three, it's really like seamlessly orchestrating between the three, uh, channels, and that makes it so interesting because for different cases and use cases, we are using all of the three. Of course, there is an emphasis, mostly a focus on one of the three, no question, but this will be the most important and interesting part, in my opinion, to go through a few, uh, um, examples, when to use number two or

number three. And then it's exactly as you said. Then it's just a question of orchestrating and not of selection. So really, I just want to sort of paraphrase before we sort of dive into the detail here. Really, what we're talking about now is really the next evolution of around, you know, being a as a brand, actually having multiple distribution avenues towards Amazon Seller vendor. And then you mentioned mention sort of the broker model, you know, and using a combination of those, all those three. Now, before we go into specific case studies and examples, um, can you just explain particularly for those, you know, maybe sellers that are not used to the terminology, how would you explain, how would you put the broker model in layman's terms, in terms of mechanically how that works. And I'm sure we'll go into a lot more detail in a sec, just conceptually be great. Yeah, I just want to add one more point to what Freder just said is, and nowadays, especially in 2024, the approach that we have is you

know it's more about diversifying your business as well, right? So you either, as he said, you used to be either a seller or a vendor. You choose your approach, then you moved into maybe considering being a hybrid, but now it's so Amazon is so multi-dimensional and it's so complex throughout the years that it is really about diversifying your business. So what exactly is a broker or a distributor? Well, I usually frame it that way. You could look at it as a, let's say, as a strategic distribution Channel partner for your Amazon business. So what that means is if you work with a broker that combines the convenience of a vendor approach with the expertise and scale potential of the seller. So you sell your products in that particular case to a broker, broker, um, and then the broker does all the heavy lifting. He sells your product in whatever distribution, whatever Market Amazon Marketplace that you decide on. So there's obviously different types of Brokers, but a real good broker is someone that covers the entire value chain, meaning they do the SEO for you.

they do the keyword research. They build the listing. They build out the content in a very strategic way. They handle all the PPC campaign management. They do price promotions on Amazon. Customer service, so everything from A to Z, you don't have to do. You don't have to worry about anything. It's basically just like a turnkey solution. And the good thing about that is you have basically 0% of the risk, but you get 100% of the upside. So that's how I usually summarize what a broker model is. Yeah, I find that very interesting because that certainly refreshes the definition of maybe the one that's floating around in my head based on past experiences because the way you're describing it, really you're talking about full-service offer that the broker does, actively managing your Amazon account and on top of that, you know, purchasing the stock. Whereas traditionally, certainly here in Australia, brokers have a bit of a bad reputation for just selling stock but not actually doing all the hard work. But really what you're

saying is actually this. This model there is different to that. Uh, it's like the full service agency with, you know, the whole, you know, purchasing of stock associated with that. And usually just to add one quick point, usually what most companies claim is that, you know, we do everything for you. You don't have to worry about anything. But really the good brokers are, you could see them as a partner, right? It's not someone that you hire, and it's not a service that they provide. It's more like a partnership, right? The better the job I do as a broker, the better I sell your product. And the better I sell your product, the more money I can make. And the more money I can make, the more I can reorder. So it's a cycle, right? It all comes back to it. And I would love to, I would love for people to look at this as a partnership rather than a service or an agency service. Yeah, absolutely. I can underline that because

coming a retail world, we have had in the former companies like Puma, we have had dist uh uh for countries uh um where Puma did not start their operations on their own, and that's exactly what it is. It's a partnership, it's a real sales channel partnership. And why do we see it like this? Because we want to, or we are addressing companies that don't have the capabilities, the resources at all to be B2C. So, uh um, a B2B company, which we have as a client for example, they said, We don't even want to build up B2C uh capabilities, resources or anything. It can be a manufacturer, which is even less B2B, sorry to say sometimes, than than Brands, and it can be also D2C companies, which are specialized in social or other Google or shopping uh topics, and they say, Guys, I mean maybe it's better you take care of it. Can also be for a certain time, and that's when we also will come to dimensions. It's about

countries. It's about can be product topics. It can be period of time topics when this model can jump in, and that's exactly where we are heading to, to the examples now a bit. Yeah, yeah, I was going to say I would love to, uh, I think that's kind of the theory, right? Um, I would love to hear some examples, or even just maybe within your own client portfolio, um, you know, how did they get to a conclusion of using multiple channels? Why? Why did it make sense for that client, you know, what does it look like? Um, if you can share, uh, some of examples with us, that would be very interesting, of course, yeah, sure. So what we've seen throughout the years, obviously as an agency working with hundreds of clients, um, we've always seen the same issues and challenges arise, right? So I'll give you a quick example of let's say you're a vendor and you sell on Amazon, and all of a sudden your products get crapped, right? Um, and Amazon do decides to not reorder the product or leaves the buy box and

the product has been doing well over the years and gathered some good reviews. It's been doing well, and now all of a sudden, Amazon decides to leave. What happens with the listing? If you have a backup option, you could still sell that listing. You could sell the product rather than Amazon. You sell it to a broker, and then the broker continues to sell the product. So that's one example. If you're a vendor, it's just like a backup option so that whatever you build throughout the years doesn't get lost, and you continue your success with that product. I think this buy box topic is one of the things like being out of stock because the buyer doesn't order anymore. They do external price crawling and find somewhere on the internet a lower price, and either they reduce the price as well or as a seller, they take away the buy box. It's always about alternatives to be still active if you have the pressure from annual.

negotiations. Um, um, you at least have an alternative. Um, of course, you can also do it as a seller, and that's what I said. It's not always then the broker or distributor model is the solution, but it can be one of the very fast and and good ones. And one of the examples I like also very much is one of our, uh, clients. Um, um, he, he, he, he's just preparing for a certain emergency in case his account is maybe blocked or or anything else, and he said, I want to be able to sell my products the next day still. I don't want to, uh, lose sales of one week, one month, or whatever. It's too important. So we set up a certain emergency system for them to be able to sell his products right the next day. Um, things like that, like account suspensions, um, and and or or or the same thing, removal of selling authorizations, um, so that's, that's these topics of jumping in, for example, one of the big, big use cases. Yeah, absolutely. And then is there

I mean the theme I'm hearing here is there's a big use case around building in redundancy in the system, so that you can maintain operations, keep selling, particularly if your vendor account is temporarily disrupted or permanently disrupted. And my follow-up question there then would be, you know, how do you think about because at that point, having another seller account versus a distributor account could also be an option, but for which type of clients and customers and what type of scenarios actually does this broker model provide a better fit than, hey, I've got a seller account and I'm running that because, you know, why go for the broker model and in what situations? Yeah, I'll take that as well. So, I mean, regardless of your sales strategy, of your approach, we just touched on an example of a vendor. If your vendor frer just mentioned a few points and I did as well, so it's more like a backup option in case something happens to your account or Amazon decides to not reorder products, but then also from a growth

perspective from a strategic growth perspective, it could also make sense, right? So, I'll give you another example. Let's assume you are a seller, and you sell in Australia, and you're very successful, and you've maximized your potential in Australia, and now you decide you want to take your brand abroad to Europe, right? It's very complex to set up the infrastructure in Europe. It's, uh, it's very fragmented. So, there's a lot of marketplaces in Europe. You have countries like the UK, like Germany, Spain, France, and each country has their own specific regulations, um, not just that, but they also have different tax implications. So, for you now, in order to test Europe and to see if Europe works for you, you would have to go and set up all the infrastructure. You would have to register taxes in all these countries. You would have to make sure that your products are compliant. And if your product is compliant in France, it might not be compliant in Spain, for example, right? So, and it's very cost, uh, it's very cost

um very costly and takes a lot of time, and very resource-intensive. So if you now have a partner, someone that already has set up the entire infrastructure for that continent and is registered in all the countries and knows exactly how the product should look like and uh what are the rules in the UK and knows all that and now takes your product and launches it in all these European marketplaces. First of all, it's a lot quicker. You feedback right away. You get feedback instantly, basically as soon as the product launches, and it takes the guesswork right before you actually do the heavy investment. So either you're fine with having the broker selling your products now in Europe, or at some point you decide that you want to take that in-house as well and you want to take that on board yourself, and after some time, you then set up the infrastructure and you register for taxes because you've seen it work. Um, but then that's sort of a Bridge Approach. You start with the broker. It's going very well, and then you

take it back and you sell yourself, or you continue to work with the broker, because it's easier. You need less resources, you need less people managing the marketplaces. Just two examples there. So yeah, if I may add one point just um, so it's really this Regional Dimension either from Germany to Europe in one in one day kind of, if you don't want to do that pan-European uh uh step with taxes and all the other uh um um um uh challenges from the US or Australia to Europe, or of course also for European uh companies to go to the US, which is also possible relatively fast. Very uh cost-efficient exactly as Floren has um explained it. Yeah, no I think that definitely resonates with us because many years ago when we were running an agency here in Australia, we did bring some clients from Australia to the US and um regulatory issues aside and set up that that itself is a big burden but also of course you start with you know a seller account that has you know no history uh and no is I said and then you

have products that have no reviews and everything right now of course on the product side you may not be able to do something about that. You have to build that up, but at least you have a selling account that has a reputation, a history, is an asset, and you know you can sort of get going a lot quicker, absolutely exactly. And that's also one of these new cases. And by the way, of course, we also have clients who go to the US and we support them with their own seller account or vendor approach. No question we're coming back to the very beginning, it's about orchestrating, but if they go into a country where they don't want to make a bigger investment or anything, or they want to try some single products like product launches, new product, whatever development, then it's a very easy way to do it. We even do it in Germany right now for one of the partners who don't have any connection to B2C right now rather B2.

B2B-driven. And they say, Let's just try it. Let's just sell a few products and see if it works because for less money we cannot try try it out. And that's exactly this topics. Yeah, no, that makes absolute sense. So I'd love to go a little bit deeper on that into that specific broker model. Um, let's, for argument's sake, I am, you know, I have a successful Amazon business here in Australia, and I do want to expand into Europe. Um, and the broker model sounds like a really good, uh, short to medium-term option for me. Take me through it, you know, how does it actually work? Um, you know, how would, how would I work with someone like yourself? Uh, you know, what do I, what, what do I need to do and think about versus, uh, you know, what will you do for me? And I, you know, Florian already described some of this, but you know, practically speaking, what does it look like? Yeah, sure. So first of all, the, the great advantage to that approach to that model to

Amazon vendor is it's very flexible. You could speak to a broker, you could negotiate things. You could, it's very, it's a very flexible approach. It's not a set-in-stone approach that Amazon often has, um, in terms of payment, in terms of, you know, payment terms as well, and, uh, and their contracts. So, so that's certainly a big advantage, um, so it's a very individual approach. So let's say you, you decide you want to expand and you go, you want to go to Europe. So the first thing that, of course, is to define the strategy with your partner, right? You want to be able to align with them in order to really understand where, where you can take this. And then the responsibility is mainly on the broker side, right? So what you have to make sure, obviously, is that there's always, there's always enough stock, uh, available, right? That's on you, that's, that's your responsibility as the brand, um, and you might want to provide more insights into the product in terms of also digital assets if you

have any videos if you've done any photography in the past that's something that you want to share so that's also on you but not necessarily. Good broker is also someone that um has in-house teams uh graphic designers and is able to portrait your product in the most efficient way. Of course, always coordinate that with you. And then another responsibility that's on your side is the logistics so you have to make sure that the products are being shipped to your partner. And apart from that, then it's really up to your strategic partner to make sure that the products are optimized, that the products are listed, that everything runs smooth, that the account is being monitored, that products are live, and nothing gets flagged, and that the campaigns, the performance marketing campaigns, are efficiently running and uh then you have regular performance reviews with your partner with your broker where you know align on the strategy and see where things are going and uh that's that's pretty much it it's a very straightforward very easy approach um great can I ask a few

follow-up questions. There are a few things I just want to go one level deeper, right? Um, let me just outline a couple of questions. Um, and then you can sort of tackle them. We'll do them in rapid fire. Um, the first question I have around, um, does the broker buy the stock off me or is it on consignment? Um, and my probably my second question is, um, what is the ex, you know, and and how do you actually, I've got two multiple questions. Stock, do you buy the stock? Is it on consignment? Second thing is, how do we agree on a marketing budget? Uh, because that, that's probably a tricky pit bit. And then, um, thirdly, you know, how do we, does, you know, how do you deal with things like damages and returns that happen on the Amazon side of the fence, right? So, um, you know, particularly on on the vendor side, they can be very but even on the seller side, you know, it could be actually product issues, you know, how do you, how do you carry that risk between the broker and the

actual brand. Sorry, so there's three questions to unpack there. So a lot there, whatever you want answer. Let's start with the first one. Maybe Freder can take the second or third. Yeah, so in terms of the model, this is, this is as I said, it's very flexible, right? So I give you, obviously, I give you a few details here, but there's, there's certainly more to it. So let's say you, I mean, the broker could buy your product. That's one opportunity, that's one possibility, right? So the broker buys your product at a wholesale price, right, that you both agree on, where you make your margin. Then the broker buys it and then it's his responsibility to sell the product. That could be one approach. Also could be another approach where you guys are splitting the profit, right? So you basically provide the product at production price, there's no margin on your side, but then the broker does all the heavy lifting and make sure the product is optimized and sells on Amazon, and then you split whatever is left over.

you split the contribution margin that could also be an approach so it's not there's not a set-in-stone way to do this. It's more like depending on your goals, depending on your situation, uh you can speak about it. It's a very flexible approach, that's a great thing about it. May let me add one part, it's we when we talk of our approach, we buy the product. So we definitely buy the product because that's what we experience from our clients. Um, that this is their favor. So we have set up the whole organization like this. We buy the product and pay the invoice. So we are like a key account partner to them. Um, very easy one. And then of course there are different ways how to contribute. Um, as Florian has correctly mentioned right now, the marketing site is always in an exchange, of course. But at the end, we are also responsible for the marketing topics because usually our clients do not really know how it works. Of course we explain them. We take them in as a

partner, but like a key account seller in the offline world, they try to explain to the brand what they are doing. And of course, we are very transparent, by the way. So, we are very data-driven. We have a BI tool that is top-notch, in my opinion. So, we even share these KPIs with them. We try to explain what we are doing, how we are doing it. But of course, it has limits. And it's good it has limits because they should not, if they understood the entire Amazon world and business, they would do it on their own. That's exactly what they don't want to do. So, it's very split in. We do everything. They only have to do the product development, the brand management, provide the product, ship them to Amazon, and we take over with the content. And that's also how we set up then the margin and the remuneration model, I would say. That's what for the marketing. We try to explain in that there is no real

marketing budget absolute marketing budget what a lot of big companies are thinking about. Okay, what's the absolute marketing budget for this month for the for the year. We try to tell them, Hey, if it's a percentage, so the moment it's running and we are growing, there is no absolute limit or something we should just move on. But they usually fastly um um understand that. And um maybe we can also, well, I I don't, did we answer the first two questions already correctly because the damages is I think a totally different top. Yeah, look, I, you know, obviously there's a lot of detail. The real, I guess what I'm, you know, my broader question here and maybe it's way too much detail for today, but I'm interested. I'm going to ask anyway, is um, there are some things as a broker you can't really control, uh, or you know you could, but you'll be carrying like a a disproportionate part of the risk. Um, so I'm I'm just trying to understand that balance between, Hey, I'm just buying you.

a cost price for your product that as soon as it's in everything is our responsibility um including marketing including you know if there's a faulty product and the product has to come back and there's a lot of damages and and you obviously that's going to cost you quite dearly um I just wanted to sort of get a sense and I'm sure it's different for every category product and agreement but philosophically like how you how you view that tension right between kind of risk versus kind of partnership see I I think it always comes always comes back to of of course we do our homework first we're not or not I'm saying we but in general a broker they would obviously validate the product first right so it has to obviously make sense to sell a product it has to be has the margin has to be right there has to be potential on Amazon to actually uh to to be the for the risk to be worthwhile right but then at the end of day there's still risk

involved, of course, right? So there's always this, um, yeah, the risk is always there. So it's, um, but then we try to do as much homework as we can and validate the product as good as we can and then decide and also communicate with the partner. It's a little bit like in the offline world still. I mean, you are a partner, you try to cover a, by a contract and buy certain arrangements, of course, and there are other things where you just then have to talk and exchange, um, but that's also a development, a learning, step by step, which we also did in the past two years. We learned from what happened and it's a trial and error, as always in the marketplace world. And of course, you here and there, you pay on top a little bit. You didn't cover a certain risk, but, um, as I said, we always see it as a partnership and they also, they're very, um, happy. They are very, um, um, appreciating our services. So they also

want to continue usually and then you try to find a solution for it, but of course, yeah, there's always a certain risk. Of course, yeah, there's no business without risk. Of course, I would say fantastic. Unfortunately, we're out of time, so we're going to have to wrap up here. Um, but before, uh, we say our goodbyes, um, I just wanted to ask for anyone that's tuning in live today or, uh, watching this on demand and just looking at this going, actually, this broker model or this, this try hybrid model that we're talking about actually really appeals to me, uh, appeals to my particular use case. Um, what's the best way to continue the conversation with, uh, with the both of you? Well, would be great to, to get in contact with us directly. I think you will have our contact. Um, there is, um, two things. We are already working with other agencies and Consulting companies, also the big strategy Consulting companies, to be honest. So we are also always open for an exchange with other agencies.

Consulting companies in the US and Australia, we are not in a light Tower or completely closed or something. We do that already with strategic Partners, so we are also open to have that conversation. We are very much in discussions for this last case of distributor when companies want to exit Amazon completely, which obviously then they could still cover it by distributor, but also when entering, and we had that case already. So, in my opinion, just contact us through you and through our on LinkedIn, and we are open to discuss all the approaches. Perfect. Well, on that note, Florian and Fred, thank you so much for appearing on our episode today and really bringing to our audience a new and different way to think about Amazon distribution. I really enjoyed, as you probably would have picked up, I really enjoyed quizzing you about this particular topic, and I loved hearing those particular use cases, particularly around how do you build

your backup options or how do you use this model to quickly uh or more rapidly enter and test New Market before fully investing uh yourself so thank you so much for being on the show much appreciated thank you very much. All right, everyone, that is it for today's episode uh thank you so much for uh tuning in uh in this live discussion on optimizing your Amazon Channel distribution. For more insights, visit our video on demand library at Merchant spring.io. Now if you do want to streamline your analytics reach out to me uh DM me on LinkedIn to learn how Merchant spring can help. Last but not least, I'd love to hear your topic suggestions for future episodes. Let me know and I'll do my best to find the right expert to address them. Thank you so much for listening and watching until next time take care. [Music] [Music]

Advanced Strategies for Optimizing Amazon Channel Distribution

Advanced Strategies for Optimizing Amazon Channel Distribution