Recently, a large number of first-party Amazon vendors didn’t receive purchase orders from the site, sparking debate about whether the move was a harbinger of changes to come. These Vendor Central sellers (also known as 1P sellers), who sell their inventory directly to Amazon to manage and then resell to consumers, were told that Amazon will no longer be sending them purchase orders for their products starting 3/3/2019.
Amazon is historically bad at sharing information and communicating with vendors, sellers, press, and analysts, and the boilerplate responses the company gave vendors did little to quell fears. According to Adweek, it appears now that the massive withholding of purchase orders may have been a back end tech issue, and many of these vendors are back to business as usual on Vendor Central. This was definitely the case for several content26 clients who initially were told they’d been booted out of Vendor Central only to be reinstated the following week.
But numerous industry insiders saw too many underlying coincidences in the snafu to believe that it wasn’t a precursor for Amazon streamlining their vendor and seller platforms.
To stoke the flames, other vendors have recently received similar messages: “I would like to inform you that our internal team has reviewed your business with Amazon and strongly believes that Amazon customers would be better served if your products were made available through Seller Central.”
According to our sources at Amazon, the process of transitioning first-party sellers (Vendor Central) to third-party sellers (Seller Central) has been in discussions at Amazon for over a year. Amazon claims that this housekeeping is simply to improve the customer experience, and that the site regularly reviews selling partner relationships and makes changes when they see an opportunity to provide a better customer experience.
Others see this move as a signifier of a larger impending change in the Amazon vendor landscape.
Amazon Moving Towards a “One Vendor” System?
Supposedly, in the near future Amazon is planning on combining both Vendor Central and Seller Central into one consolidated selling system, called One Vendor. But is this rumor fact or fiction?
Amazon claims that there is currently no program in place called One Vendor. Yet former Amazon employees who now work with agencies that assist brands selling on Amazon insist that it’s real, and that it’s coming.
Creating a consolidated marketplace would be more efficient for Amazon, as one marketplace is easier and cheaper to operate than two. And as an added bonus for them, it would also give Amazon complete control over which brands sell where–including dictating who must sell their inventory directly to Amazon and who are allowed to manage their own–eliminating any choice brands once had about how they want to sell their products on Amazon.
Regardless of whether One Vendor is coming or not, all brands need to begin preparing for changes to how they do business with Amazon.
Advice for Amazon Vendors that Have Already Received Notification
If your brand received notification that you will no longer receive purchase orders on Vendor Central, it’s urgent that you begin investigating Seller Central. Even if you were reinstated to Vendor Central, we believe there be a second wave of vendors that will be forced on to Seller Central later this year.
There are pros and cons to the Seller Central platform. Vendor Central is a more streamlined and simplified operation since Amazon handles shipping and inventory, but Seller Central gives brands greater control over pricing, with better insight into customer data and behavior for free. On the whole though, third-party sellers on Seller Central will likely have to carry more responsibilities to sustain business as they had known it on Vendor Central.
The consensus in the community is that these platform shifts are only being hoisted on brands that are not enterprise vendors generating large annual revenues on Amazon.
Advice for Amazon Vendors that Have Not Received Notification
Every brand on Vendor Central that is not a multi-million dollar revenue maker should be prepared to be moved to Seller Central at any point. For many of these brands, that means Amazon will sell through their existing inventory and will not be reordering.
These Amazon vendors should take the time now to ramp up their third-party Seller Central account. It’s also a good time to become more knowledgeable about the differences between the two platforms, including the change in fee breakdowns and the new daily operational oversight that is required for a direct-to-consumer model.
We’ve already begun talking to clients about how we can help with this transition. Reach out, and we can talk through the nuances that pertain to your brand and provide you with the best path to proceed.