Amazon actively encourages third party sellers to use the site as a platform. This is partly because they earn money from fees and partly so they can incorporate any potential competition into their structure. Here is a guide to the 5 kinds of sellers on Amazon.
Standing for Direct To Consumer, the term DTC is often interchanged with ‘manufacturer’. This should give you some hint as to the nature of these sellers’ business model. Direct To Consumer sellers are the producers of the products they sell. By cutting out a commercial partner and selling the products themselves they minimize overheads and maximize the amount of money they can make from each product. Manufacturers are also able to give good customer service due to their expertise surrounding the products they sell. One issue some customers have with DTC sellers is the language gap. Manufacturers come from all around the world and will not necessarily have a representative on hand that can speak the language of the customer that is buying their products.
Private label products are created by one company with the explicit purpose of being sold under the brand name of another. If, for instance, a company makes beer under a brand name but contracts the brewing out to a more experienced brewery this is a private label product. Many sellers offer products on Amazon under their own brand name despite it being produced by another company. Brand names are important in ecommerce and can help boost sales. Companies like Nuanced Media help Amazon sellers negotiate the branding and marketing elements of the job.
Much like Direct To Consumer sellers, factory branding is all about cutting out the middlemen. Factories, often based oversees, will list their products under their own brand names in order to allow for cheaper prices and larger profits. There has recently been a huge explosion in the number of factory sellers operating out of Shenzen, People’s Republic of China. These factory sellers often trademark seemingly meaningless names in order to give off the impression of being brand affiliated. Search for any generic product on Amazon and you are likely to find hundreds of products sold in this way
Resellers purchase items in bulk from manufacturers. They then sell individual units to consumers for a slightly higher price – finding their profits in the margin between purchase and sale price. Resellers will be familiar to pretty much any retailer. It is the traditional shop-based method of making a profit and has carried over relatively commonly into the online world. Resellers often focus on the sale of brand name goods.
Aggregators are the empire builders operating within the mega empire of Amazon. They purchase manufacturers, resellers and private label brands in order to grow, connect and consolidate them into a network. Some of the top third-party sellers on the website have become extremely wealthy using this method. Aggregation is not a cheap way of building an empire: significant funds must be available for the purchase of pre-existing businesses.