How Amazon Vendor Purges Will Affect Your Business & What To Do About It
If you sell products through Amazon, there are some big changes headed your way. You may have heard the reports by Bloomberg or the LA Times – or read some statements by Amazon justifying their recent actions. There’s a lot in the air for vendors when it comes to Amazon relations. So we’re going to break it down for you.
What Has Happened
Back in March 2019, Amazon dumped thousands of small vendors with little to no explanation. In other words, they failed to renegotiate contracts with vendors – something they’ve done every spring for as long as most vendors can remember. When June rolled around, Bloomberg put out a report outlining why these smaller vendor purges across the board is clearly Amazon’s next move. At this time, Amazon claims they review their “selling partner relationships on an individual basis as part of [their] normal course of business” but each day more and more vendors are losing footing.
What Will Happen & What It Means
Amazon will most likely no longer allow smaller vendors to sell in bulk directly to Amazon.
If you hold less than $10 million dollars in sales with Amazon, this will directly affect you.
There are two ways to sell product on Amazon:
Seller Central is used by brands and merchants to market and sell their products directly to Amazon’s customers. With this, they are a marketplace or a third-party seller.
Vendor Central- Manufacturers and distributors sell via Vendor Central and are first-party sellers. You’re acting as a supplier, selling in bulk to Amazon. Registration on Vendor Central is by invitation only.
Smaller vendors will be forced to move to the Seller Central Marketplace if the vendor purges move forward. So these vendors will sell directly to the consumer without Amazon’s vendor seal of approval.
– Smaller vendors will no longer be able to sell their products in bulk to Amazon for distribution.
– Amazon will also no longer offer fulfillment and shipping from their warehouses for those smaller vendors.
– Products that make the cut will still be underprioritized over Amazon brands or larger partners like Proctor & Gamble or Sony.
– In the big picture, big-name brands will likely commend Amazon’s effort to consolidate bulk purchases. However, smaller businesses will have until the end of the summer to get their operations in order or risk a disastrous holiday quarter.
How Will This Affect Me?
– You will need to make the switch from an Amazon wholesale supplier (Vendor Central) to an independent marketplace seller, (Seller Central) which can take up to 120 days. For some businesses, that’s the difference between success and failure.
– There are some benefits to the marketplace platform such as more control over pricing and access to more data, but it also requires a level of expertise that a lot of merchants don’t have.
– Sellers will need to answer all product-related questions from shoppers. However, you’ll have a more direct link to your consumers and audience. However, there is downside: increases in operational costs to keep your customer care adequate.
– You will be responsible for finding other solutions and getting your product to the consumer in an acceptable amount of time.
– If you are unable to compete with shipping rates and times of Amazon’s preferred partners, consumers will choose those products over yours.
What Can I Do About It?
– Prepare to make the switch or start selling through the Seller Central marketplace now.
– Start looking for fulfillment solutions and negotiate relationships that can help this operational restructure benefit you.
– Start thinking about how you will fulfill those orders and how to keep them organized.
– Offer shipping services that exceed expectations in customer care, personalization, and communication. So you don’t have to reinvent shipping, but you can compete with Amazon by using a service that exceeds expectations and provides satisfaction.
– One solution is ShipTime, a multi-carrier platform designed to cut costs and inefficiencies, organizing all shipments in one comprehensive portal. ShipTime provides automated communication on behalf of the carrier. They also designate a Heroic Support team to handle customer care between client and carrier on your behalf. Contact ShipTime here.