Amazon Margins: The Hidden Cost of Losing Distribution Control

 When your Amazon margins are under pressure, the problem may not start on Amazon.

As products move across markets, distributors and marketplaces, brands can lose visibility over where their inventory goes, how it is priced and who ultimately sells it.

What happens when the biggest threat to your Amazon margins isn't Amazon, but your own distribution network?

To explore this challenge, we spoke with Martin Heubel, Director & Founder of Consulterce, a strategy consultant based in London and former Senior Manager at Amazon. During his five years at Amazon, Martin led several FMCG categories and helped companies including Nestlé, PepsiCo and Mars successfully sell online. Today, through Consulterce, he works with brands across Europe and North America to help improve their Amazon margins and reach sustainable profitability.

In this conversation, Martin shares his perspective on distribution control, parallel imports, Amazon's changing role in the distribution ecosystem, and why visibility may ultimately be more valuable than control.

Martin, from your experience working with global brands on Amazon, what is the biggest business risk when a brand loses control of where and how its products are sold?

The biggest risk is margin erosion without understanding where it comes from.

Once products move through uncontrolled distribution, they can reappear on Amazon at lower prices, trigger price matching and put pressure on the economics of the 1P relationship, during and outside annual vendor negotiations.

The problem is that the damage often shows up on Amazon, while the root cause sits somewhere else in the distribution network.

That is why visibility matters so much. If you don't understand where your inventory is going, you eventually lose control of both pricing and profitability.

“The damage often shows up on Amazon, while the root cause sits somewhere else in the distribution network.”

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Parallel imports involve genuine products and can be perfectly legal. From a commercial perspective, when do they become a real problem for a brand?

When the brand offers retailers significantly different incentive structures across markets.

This becomes especially evident when brands offer significant discounts to wholesalers or distributors in one market, only to see those same resellers compete for the consumer sale on marketplaces like Amazon.

This distorts brand equity and effectively leads distribution partners to compete with the brand.

How has the growth of marketplaces like Amazon changed the traditional relationship between brands, distributors and resellers?

Amazon has made distribution much more transparent and much harder for brands to manage.

Historically, brands could separate channels relatively well. You sold to distributors, retailers or wholesalers, and each operated within a reasonably defined commercial environment. You could run rotating price promotions and consumers would not have visibility about whether a price was competitive to other retailers in the market, unless they would actively compare different offers.

Amazon changed that.

A product sold to one distributor can appear on Amazon within days, often at a price the brand never intended. Amazon then sees that price, matches it, and expects its 1P business economics to still work.

That means a distribution decision made elsewhere in the organisation can quickly become an Amazon profitability problem.

The key shift is that brands can no longer think of Amazon, distributors and resellers as separate commercial channels. They are increasingly interconnected.

Price, availability and inventory move across them, whether the brand designed it that way or not.

Can a brand actually grow its Amazon business while losing control of its broader distribution? What trade-offs should commercial leaders be looking at?

Absolutely. And it happens more than one might think.

You can grow traffic, sales and market share on Amazon, but if your products are also becoming more widely available through distributors and resellers, that growth can come with declining ASPs, more price matching and increasing margin pressure from Amazon.

That is the paradox: your Amazon P&L can deteriorate while your Amazon revenue continues to grow.

Commercial leaders therefore need to look beyond topline sales.

They need to understand where inventory is going, who ultimately sells it, at what price, and what impact that has on the economics of their most important retail relationships.

It also means that brands have to innovate their approach to assortment and distribution strategies.

“Your Amazon P&L can deteriorate while your Amazon revenue continues to grow.”

With customers increasingly choosing where they buy, do you think brands should still aim to control their distribution, or should the goal be to gain visibility and influence across every channel where their products appear?

The goal should shift from trying to control every transaction to creating much better visibility and influence over the distribution ecosystem.

Brands need to know where their products are appearing, who is selling them, how inventory got there and what that means for pricing and channel economics.

And then they need to make conscious decisions about which partners they supply, which products they make available through which channels, and where they are willing to accept channel conflict.

MAP, unilateral pricing policies and selective distribution networks are tools brands will increasingly need to use to protect brand equity in the medium to long term. Those that won’t will pay the price and see their online margins further deteriorate.

Martin's perspective highlights an important shift for brands.

The challenge is no longer simply to identify where products are being sold. It is to understand how they got there, who is selling them, what price they are creating in the market, and what impact that has on the broader distribution ecosystem.

As marketplaces continue to connect distributors, retailers and consumers, a distribution decision made in one market can quickly become a pricing or profitability problem somewhere else.

That makes visibility a strategic capability, not just a monitoring exercise.

For commercial and Brand Protection teams, the question is therefore becoming less about:

“How do we control every transaction?”

And more about:

“Do we have enough visibility to understand what is happening across our distribution network, and enough influence to act before it impacts our margins and brand equity?”

The future of distribution control may not be about controlling every transaction.

It starts with knowing where your products are going, understanding why they are getting there, and having the intelligence to decide what happens next.

That is where distribution visibility becomes a strategic advantage.

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