Marketplaces & Wholesale

The point is not to avoid these channels. The point is to use them deliberately, with a clear view of what they add and what they take away.

The Marketplace Decision Framework

Marketplaces serve two purposes: discovery (new customers find you through marketplace search - incremental revenue) and cannibalisation (existing customers buy on the marketplace instead of your site - margin compression). The tension is always reach vs margin vs brand control.

When to go on Amazon:

The Quad Lock approach: We went on Amazon relatively early because knockoffs were appearing and we were getting customer requests, particularly in the US. Better to control our brand presence and take the margin hit than let copycats define us. Defensive play first, revenue play second.

Amazon Strategy (Deep Dive)

If you've decided Amazon is the right move, here's how to do it properly. This covers the full stack: organic ranking, PPC, reviews, Brand Registry, fulfilment, and the real P&L impact.

Amazon 1P vs 3P: Which Account Type

Before you decide who ships the box (FBA vs FBM below), decide who you're actually selling to. There are two account models, and they're fundamentally different businesses.

1P (Vendor Central) means Amazon is your customer. You wholesale to them, they own the listing, they set the retail price, they own the inventory. You get the "Ships from and sold by Amazon" badge, which converts. But you've handed over price control, and their payment terms run 30-90 days.

3P (Seller Central) means the shopper is your customer. You own the listing, you set the price, you control inventory, and settlement lands roughly every 14 days. The trade is a weaker Buy Box position and you do more of the work yourself.

3P (Seller Central)

• You own the listing, price, and inventory
• Settlement ~14 days (cash-flow friendly)
• Full control of the brand presence
• More operational work on you
• Now the default for emerging brands

1P (Vendor Central)

• Amazon owns price, inventory, and the listing
• Payment terms 30-90 days (cash-flow drag)
• "Sold by Amazon" badge converts well
• You lose pricing control entirely
• Invite-only, and increasingly hard to keep

The practical reality in 2024-2026: Amazon has been offboarding smaller vendors, pushing brands doing under roughly $5-10M to Seller Central. So for most brands reading this, 3P isn't a preference, it's the only door open.

The rising play is hybrid: a handful of hero SKUs on 1P for the badge and the volume, the long tail on 3P where you keep control and margin. But hybrid is an optimisation for brands already at scale. Start 3P.

Organic Ranking

Amazon's search algorithm rewards relevance and conversion. Before spending on PPC, get listing fundamentals right:

Post-2025: Optimise for AEO, Not Just SEO

The keyword-stuffed title is dying. Shoppers increasingly arrive via AI assistants (Rufus on Amazon, plus ChatGPT and the rest) that read your listing the way a person would and answer a question: "which phone mount actually holds on rough trails?" If your listing is built for a 2018 keyword crawler, the assistant skips you. This is Answer Engine Optimisation - the same shift reshaping web search (Section 16: Other Marketing Channels covers the off-Amazon version) - now hitting the Amazon search box, and it's the biggest shift in Amazon discovery since sponsored placements took over the page.

The practical moves: write your title and bullets the way a customer phrases the problem out loud, not as a keyword shopping list. Frame the use cases explicitly ("for mountain biking, motorcycle commuting, and gym") so the assistant can match your product to a specific question. Fully populate the structured attributes (material, fit, compatibility) because that's the machine-readable data the AI leans on. And treat the Q&A section as a ranking surface, not an afterthought - it's where assistants pull the specifics that close a hesitant shopper.

Amazon PPC

Amazon PPC is almost a requirement these days. Organic results are dominated by sponsored placements, and new listings (especially from new brands) need PPC for sales velocity.

Sponsored Products

• Keyword-targeted product ads
• 70-80% of budget
• Best ROI for most brands

Sponsored Brands

• Banner ads with brand logo
• 10-15% of budget
• Brand awareness + consideration

Sponsored Display

• Retargeting + audience-based
• 10-15% of budget
• Competitor targeting

The PPC playbook: Launch auto campaigns to discover converting keywords (weeks 1-2). Harvest top performers into manual exact-match campaigns (weeks 3-4). Ongoing: negative match non-converters aggressively, bid on own brand terms, test competitor terms. Weekly: review search terms, kill anything with >20 clicks and zero conversions.

Reviews Strategy

A product with 50 reviews at 4.5 stars outsells a better product with 5 reviews at 5 stars.

• Amazon Vine: Enrol new products. Free units to trusted reviewers.
• Follow-up emails: Simple "we'd love your feedback." Don't incentivise.
• Insert cards: Within Terms of Service (TOS) if asking for a review (not a positive review). Smart way to drive warranty registration and capture emails.
• Don't: Offer discounts for reviews, use manipulation services. Penalties are devastating.

Brand Registry & Brand Analytics

Essential for serious Amazon presence. Requires registered trademark. Gives you: A+ Content, Brand Analytics (search term data, market basket analysis), counterfeiter reporting, Amazon Brand Store, Sponsored Brands eligibility. Project Zero / Transparency Program for counterfeit removal and item-level authentication.

FBA vs FBM (Fulfilled by Merchant)

FBA (Fulfilled by Amazon)

• Strong Buy Box advantage
• Prime-eligible (this matters more than price)
• Amazon handles returns and CS
• ~30-35% total fees (referral + fulfilment + storage + returns processing)
• Best for: high-velocity SKUs, standard sizes

FBM (Fulfilled by Merchant)

• Weaker Buy Box position
• Not Prime-eligible (unless Seller Fulfilled Prime)
• You control the customer experience
• ~15% referral only + your shipping costs
• Best for: large/heavy items, low-velocity, premium products

Amazon P&L Reality

Amazon ($100 product)

• Referral fee: ~$15 (15%)
• FBA fulfilment: ~$6-8
• Storage + inbound + other Amazon fees: ~$4-7
• Returns processing (blended): ~$3-5
• PPC (blended): ~$8-12
• COGS: ~$20-30
• Net margin: $23-44 (23-44%)

DTC ($100 product)

• Shopify/processing: ~$3-4
• Shipping: ~$6-10
• Paid acquisition: ~$15-22
• COGS: ~$20-30
• Net margin: $34-56 (34-56%)

Beyond Amazon: Other Marketplaces

Marketplace vs DTC Cannibalisation

Most brands see 15-30% cannibalisation when launching on Amazon, meaning 70-85% is truly incremental. The question isn't whether cannibalisation happens. It's whether the upside is worth it.

At Quad Lock, new products always launched on our own site first. We'd give our own DTC channels a couple of weeks exclusive window before listing on Amazon or making products fully available to retail partners. The launch period is when demand and margin are both highest. Capturing that on your own channel rewards your direct customers, drives traffic to your site when interest peaks, and reinforces the message that the best experience is always on your brand's .com.

Wholesale Strategy

The key test for any distribution deal: will this retailer or distributor actually grow your reach, or just divide existing sales across more sources?

Wholesale Pricing & Terms

These are directional benchmarks. Terms vary significantly by category, geography, retailer size, and your negotiating position. A brand with strong DTC traction and proven demand can negotiate very differently from one knocking on doors for the first time.

The Real Economics of Wholesale vs DTC

The headline maths says wholesale is your worst margin. You're selling at 50% of retail instead of keeping the full price. But that's a surface-level comparison that misses what the retailer absorbs on your behalf.

Cost	DTC (You Pay)	Wholesale (Retailer Pays)
Fulfilment (pick, pack, ship)
Customer acquisition		Partially absorbed
Customer service
Returns processing
Platform/tech fees
Packaging and unboxing

When you strip out all the costs your DTC channel carries, the per-unit margin gap between wholesale and DTC is smaller than the sticker price suggests. Some brands find the net margin difference is only 10-15 percentage points, not the 50% it appears at first glance.

Here's that maths on a $100 retail product (COGS $25, healthy wholesale economics per the 30% rule above):

A 50-point sticker gap shrinks to roughly 10 points of contribution once DTC carries its real costs. Wholesale still loses on margin, customer data, and LTV - but it wins on zero CAC, zero fulfilment complexity, and volume. That's the actual trade.

Retail Vendor Compliance and Deductions

Here's the part nobody warns you about. The wholesale margin you negotiated is not the margin you keep. Big retailers run on rigid vendor compliance rules, and every time you miss one, they deduct it straight off your invoice. Late delivery, wrong carton label, missing ASN, short ship - chargeback, chargeback, chargeback. Walk into a Walmart or Target account without being ready for this and the deductions can quietly eat your entire wholesale profit.

The backbone is EDI (Electronic Data Interchange), the standardised message flow between you and the retailer:

On top of EDI, expect tight specs and fees on everything physical: carton and pallet labelling (GS1/UCC-128), case-pack configurations, on-time-in-full (OTIF) delivery windows with penalties for missing them, slotting fees to get on shelf, markdown allowances, and returns terms. None of it is negotiable once you're in.

The Real Cost of Wholesale

So if the margin gap is manageable, what's the real cost?

The customer relationship.

This is why the strongest DTC brands treat wholesale as incremental reach, not core revenue. The wholesale customer who would never have found your .com is genuinely incremental. The DTC customer who buys from a retailer because it's more convenient is pure cannibalisation, not just of margin, but of lifetime value.

The maths changes entirely if wholesale customers are genuinely new to the brand and convert to direct customers over time.

Retail as a Marketing Channel

If post-purchase data confirms retail is acquiring new customers who convert to DTC (as it did for us), the next question is how to scale it deliberately.

Being in retail stores builds brand credibility that drives DTC sales. When someone sees your product in a respected retailer, it validates the brand. They might not buy in-store, but they'll search for you later and buy from your website.

When to start: DTC is profitable and growing, you have excess manufacturing capacity, brand recognition earns the meeting, and gross margins are 60%+ on DTC.

Pitching Retail Buyers

What buyers care about (in order): Sell-through rate (prove it with DTC traction and social proof), margin (standard keystone or better), brand story, and marketing support.

Pitch deck (under 15 pages): Brand/founder story, product range with heroes highlighted, pricing/MOQs/terms, marketing plan, current traction (revenue, growth, reviews, press, social), differentiation, and sell-through data from existing partners.

The Line Sheet and the Opening Order

The pitch deck gets you the meeting. The line sheet closes the order. A buyer can't write a PO off a brand story, they write it off a single document that tells them exactly what they're buying, for how much, and on what terms. If you don't have a clean line sheet, you look like you've never done this before.

Don't expect a national-chain first order. Opening orders are deliberately small so the buyer can test sell-through with minimal risk:

Trade Shows: Picking the Room and Measuring the Return

Once you've got sell-through proof, a trade show puts you in front of dozens of buyers in three days. But shows are expensive and easy to do badly, so be deliberate about which room you stand in. Pick the show where your category's buyers already walk, not the biggest show - a focused 200-buyer specialty show beats a sprawling one where nobody's looking for what you sell.

Go in clear-eyed on cost. A real all-in number (booth, build, freight, travel, staff, services) for even a modest 10x20 runs well into five figures, not a few thousand dollars. So you don't measure a show on the orders written at the booth. You measure it on revenue attributed over the following 6-12 months against the full all-in cost.

Managing Channel Conflict

Channel conflict is one of the most complex, ongoing challenges for any DTC brand that sells through multiple channels. This section covers the key levers. But be aware: this topic could fill a book on its own, and the legal landscape varies significantly by jurisdiction. What follows are the strategic principles. The legal execution requires professional advice specific to your markets.

The Five Levers

Brand Protection and Unauthorised Resellers

Once your product gains traction, unauthorised resellers and counterfeits will appear. This is not a question of if. The longer you wait to address it, the harder and more expensive it becomes.

What to do about it:

Section 23 Checklist