Marketing channels & marketplaces
Many brands operating under Amazon US’ Vendor Central accounts have been excluded from the program and redirected to Amazon Seller Central. So, what is this change all about and why has Amazon made this decision? What does this mean for Vendor Central sellers? Here’s a summary of the new measures being taken by the American giant.
Brands selling on Amazon had the option to choose between the Vendor Central and Seller Central services, or even opt for hybrid sales. But it seems this is no longer the case.
On March 4, tens of thousands of vendors were excluded from the Vendor Central program in the United States. Varying messages received from Amazon, notifying the vendors that all orders had stopped, or that their stock was zeroed, or the platform detected technical issues with the ordering system. While for some this message was temporary, for others the decision was final: “the featured offer will be disabled when the product is out of stock”. Brands affected by this change were subsequently invited to register on Amazon’s Seller Central.
The affected brands are ones with Amazon sales equal to or less than $10 million per year, who don’t have a dedicated Amazon Vendor Manager. Vendors who sell bulky, heavy, or wholesale goods with particularly high shipping costs were also targeted.
While Amazon is excluding smaller brands by asking them to redirect to Seller Central, conversely, some of Vendor Central’s larger brands (generating sales of more than $10 million per year) are being asked to stop their business on Seller Central.
Following the announcement, which has caused a huge stir in the global e-commerce ecosystem, Amazon partially reversed its decision to terminate the majority of orders. The American giant said that orders would resume after a “temporary break” under certain conditions. The marketplace has invited merchants to enrol in the Amazon Brand Registry, a program allowing owners and licensees of a trademark to submit proof that they’re authorised to sell the products of that trademark. Sellers have 60 days to sign up to this register to gain access to the automatic execution of their order form again. As for the merchants who don’t own a brand, they’ll be automatically sent back to Seller Central.
According to Amazon, the objective behind these changes is to improve and standardise the customer experience, and “to provide customers with improved selection, value and convenience”. In addition, the American giant is seeking better control of the brands sold on its platform, with a particular focus to combat counterfeiting. The invitation for sellers to enrol on the Brand Registry is therefore not insignificant. Amazon wants to eliminate merchants who sell poor quality, counterfeits or branded products without authorisation.
“Amazon is weeding out the vendors that are tainting the purchase experience for customers, compromising brand positioning and costing the company valuable resources to maintain, at lower profitability than if they were third-party sellers,” according to Juozas Kaziukenas, CEO of Marketplace Pulse.
Seller Central and Vendor Central in most respects mirror each other, in terms of advertising, marketing and ranking algorithm. It’s only in their pricing, business model and execution where there are differences. Hence the rumours of a potential merger of the two distinct Amazon platforms first mentioned in the Recode report published at the end of 2018.
Although it has been denied by a spokesperson for the American giant, it has been reported that Amazon is about to launch a system: Amazon “One Vendor”. This new, unified platform would bring together Vendor Central and Seller Central in one system, standardising the tools and services that the marketplace offers to all its sellers. Some customers have already received a message from Amazon telling them that one of their two accounts would be closed within 30 days of reception of the email.
It looks like the days when brands had the choice are over: online retailers will no longer have the freedom to choose between Vendor Central or Seller Central.
Amazon will now be responsible for redirecting sellers based on their product catalogue, revenue, sales and profitability, etc. In this regard, Teikametrics founder Alasdair McLean-Foreman says, “The merger of Vendor Central and Seller Central optimizes Amazon’s own profitability while providing lower prices and massive selection to consumers.”
Amazon could, therefore, benefit from this merger in many ways, such as:
The brands affected by this exclusion that have been invited to use the Seller Central service will, therefore, have to reconsider their medium and long-term strategy. If historically they opted for full Amazon support with Vendor Central (the only model available at the time), they will now have to manage their business alone via Seller Central: stock and returns management, subscription to the “Fufilment by Amazon” service, customer support, VAT, etc. To learn more, we suggest you rediscover our comparative guide to Vendor Central and Seller Central.
However, moving from Vendor Central to Seller Central is not necessarily a bad thing. In addition to being able to set their own sales and promotion prices, vendors will have a better overview of their sales and customers, as well as greater decision-making power over their inventory. According to Bloomberg, more than half of the products sold on Amazon in 2018 came from Seller Central service vendors.
NB: According to CNN, Amazon will no longer prohibit its third-party vendors from selling their products on other sites for less than on its platform. But according to Digiday, Amazon has begun to set a maximum retail price for every product.
So why not use this news to diversify your business, and spread your risks more evenly?
While this announcement only concerns Amazon US for the time being, European sellers should now consider the marketplace model, whether on Amazon or other marketplaces. Our team is at your disposal to help you take your first steps on Seller Central via our platform. With Lengow, you’ll be able to centralise your orders using one of our plugins or our API, and manage several shipping services through marketplaces (including Fulfillment by Amazon).
If you have any questions or need help finding the right markets, contact our team who will show you all the great opportunities available on marketplaces:
Sources : Digiday, Forbes, Bloomberg, CNN.
Picture : Digiday
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