Many merchants that have been operating under Vendor Central faced the harsh reality when Amazon halted their purchase orders without notice. Vendors who have been pushed out of the program in early March were now being redirected to Amazon Seller Central. This lead vendors searching for answers on why their business with Vendor Central changed without any warning.
The Difference between Vendor Central and Seller Central
Although Vendor Central (1P) is an invite program only, it’s been said the 1P model is less profitable for Amazon compared to Amazon Seller Central (3P) thus one of the reasons Amazon stopped sending PO’s to some 1P suppliers. The 3P platform requires less manpower and risk by Amazon for inventory, forecasting, listing set-up/management, and customer support. One of the most important differences for 1P suppliers is they sell their products to Amazon at a negotiated wholesale price, but Amazon controls the retail price to the customer. So, if your brand also sells into brick and mortar retail and you have a MAP Policy more than likely Amazon will offer your brand’s products at a lower price which will cause an issue in your other sales channels. In contrary, 3P merchants can control the retail price on Amazon which will keep all sales channels on a level playing field.
Amazon’s New Strategy
This strategy not only will be more profitable for Amazon but with 3P Sellers making up over half of Amazon’s revenue it was only logical for Amazon to go this route. With more 3P Sellers being added every day it also made sense from Amazon’s ad revenue which generated to $4.6B in 2018 and gaining ground on Google and Facebook. More shoppers are shifting towards searching for a product on Amazon compared to Google because variety, pricing, receiving their order in 2 days, and the ease of checking out.
How Positive Distribution LLC can help manage the Amazon chaos for you.
While this announcement only affects brands on the Amazon US marketplace, Positive Distribution LLC’s turnkey Amazon marketplace management solution allows brands to focus on their other sales channels and lets us navigate the “jungle” for you! With over 15 years of experience on the Amazon platform, our team stays on top of Amazon’s algorithm so that we maximize your presence to drive sales and profit.