I still don’t know 100% if it was a good idea or not. We have had sales and in the end they have been higher than expected. I will summarize the idea, the results and the learning.
Sharing the risk
Launching a Europe-wide business on Amazon from scratch has a real cost. Setting up the structure not only logistically but also fiscally to be able to act with Pan-Eu and have the products in all Amazon’s European warehouses is a relevant risk if you do not yet have sales data for your products.
So the proposal to one of our customers was this. We sell your products through our accounts. You can make use of our infrastructure. We charge you agency services for it.
In return we buy your product from you even with a profit margin for you. It was not too complicated to convince. We are a partner in this case who, looking back, takes on almost more risk than the customer.
Learning realized
This exchange of service and product is not turning out quite as we had imagined. Yes, sales are coming in, but they are coming at a price.
- We have invested in new packaging on our own because the old one was poor.
- Vine reviews on average have revealed some more product shortcomings that we hadn’t paid attention to.
- It is difficult to have a good margin given that we bought the product from too expensive.
In summary: We did not invest enough time to build the collaboration base well. We should have been more demanding at the product level. However, I believe that this model with this customer may have a future. It will depend on the upcoming negotiations for the second batch of products.
