How a CPG brand found a 35% margin improvement and a 130% growth opportunity in taking Amazon back from its distributor
A consumer packaged goods brand had handed its Amazon business to a distributor and could not see inside it. Looking Glass Group assessed the channel and delivered a strategy to take it back, with a 35% margin improvement and a 130% growth opportunity over three years identified and an organization structure to run it.
The situation
A distributor arrangement is easy to live with and hard to see inside. The brand got a purchase order and a cheque. It did not get the retail price, the advertising data, the search rank, the review flow or the margin between the two. The question for leadership was what the channel was worth if the brand ran it itself, and what it would take to do that well.
This is one of the most common positions a CPG brand finds itself in on Amazon, and the answer is arithmetic, not opinion.
What we did
Assessed the channel from the outside in
We assessed financial performance, the competitive set, the portfolio and the advertising, and reviewed the partners already in place. Where the distributor held the data, we built the picture from the category data and from the brand’s own economics.
Built the net-sale model for going direct
For the brand’s products we modelled what the channel would net if the brand sold direct: retail price less Amazon’s fees, advertising, fulfillment and logistics, set against what the distributor arrangement was returning. The difference is the margin finding.
Wrote the strategy and the organization to run it
The output was a strategy to take the channel back, the net-sale model behind it and a recommended organization structure, because a channel the brand owns needs someone in the building who owns it.
The result
A 35% margin improvement and a 130% growth opportunity over three years identified in taking the channel back, with a plan the leadership team could act on. These are assessment findings, the size of the prize on the brand’s own numbers, and the plan set out what had to be true to realize them.
Why it worked
The brand got the arithmetic it had never been shown. A distributor relationship hides the gross-to-net, and once the net-sale model put the direct route and the distributor route side by side, the decision made itself. The organization recommendation mattered as much as the number, because the most common reason a brand hands Amazon to a distributor in the first place is that nobody inside owns it.
This is the assessment described on our Marketplace Assessment page. If a distributor or an agency runs your Amazon business and you cannot see what it is worth, that is the question the assessment answers.
Key facts
- Client: a consumer packaged goods brand (anonymous)
- Category: CPG
- Platform: Amazon
- Service: Amazon assessment and channel strategy
- Finding: a 35% margin improvement identified in taking the channel back
- Finding: a 130% growth opportunity over three years identified
- Deliverables: financial, competitive, portfolio and advertising assessment, partner review, channel strategy, recommended organization structure