As the number of vendors grow to accommodate Amazon’s goal of “Earth’s biggest selection,” the dynamics of vendor relations have changed and continue to evolve. Efficiency is the driving force now, and I am here to share the basics on how Vendor Central changed the direction of selling on Amazon.
As an ex Vendor Manager, I can remember working with vendors to strategize, help with product set-up from start to finish, create unique promotions, and manually change retail prices. Our vendors could sit back and watch sales grow. But given Amazon’s business growth and the rapidly increasing number of vendors, that strategy became antiquated and impossible for Amazon to maintain.
Vendor Central was born to create scalable automation of processes and programs for vendors on Amazon. The new way of doing business lets Vendor Managers focus on key accounts with the potential for long-term partnerships while developing and implementing strategies to achieve sales, profit, and selection targets for their categories.
Vendor Managers are not accessible to all vendors
The days of having a Vendor Manager to meet with or talk to in order to strategize and resolve issues is over. It may still exist for some of the larger brands, but if you are a small or medium-sized account, you may not have known Vendor Managers existed or ever spoken to one.
While there are still hands-on Vendor Managers, Amazon offers vendors a couple of different options to support their business depending on size. Strategic Vendor Services (SVS) is the option for large vendors driving a certain level of sales. The Vendor Success Program (VSP) is for the small- to medium-sized vendors.
For those using SVS, Amazon provides vendors with dedicated, account-specific support (at a cost) to help them with their business needs. VSP focuses on offering vendors scalable solutions. Vendors are given general support instead of an assigned Vendor Manager, and are supposed to rely on “Contact Us” when more help is needed.
Amazon operates on an 80/20 rule. They support and interact with the top 20% of vendors while the other 80%, or “tail end” vendors, are left to their own devices.
With this proportion in mind, it’s simple to see how Amazon is changing and evolving. Amazon is automating and consolidating their existing processes to put more responsibility on vendors. In today’s system, vendors are now tasked with becoming more self-sufficient and taking ownership of their own growth. This puts a burden on smaller vendors, but even the larger vendors who still receive dedicated support are expected to manage tools and systems, though they get a bit more help.
Vendors must take ownership of their accounts
Vendor Central changed the dynamics by putting ownership back on vendors. It gave them tools and processes to manage their own businesses, with less reliance on Amazon. Vendor Central has evolved and continues to become more self-service every day. Historically, Vendor Central started off as a system to receive purchase orders and send shipments. As the portal ramped up, it grew to accommodate product set-up, management of merchandising activities and even to pull sales reports. Amazon Marketing Services was also introduced to manage the advertising side of the business.
Now that vendors have all of these tools and resources available to manage their accounts, the biggest challenge is devising a strategy to succeed on Amazon without guidance from SVS specialists or Vendor Managers. Vendors who have a solid understanding of the ins and outs of Amazon can be astronomically more successful than those with limited awareness of Amazon’s inner workings.
One common mistake is vendors that attempt to mirror the same strategy they have always used–with brick and mortar stores, for example. When applying these same principals to e-retail on Amazon, it ultimately fails and vendors are unsure what went wrong. As most vendors know, Amazon has its own language, its own systems and a specific way of doing things.
Vendors must define an Amazon strategy
Ownership on Amazon is not just about accessing and using Vendor Central. I usually talk about success with three key ingredients: Strategy, execution and review.
- Vendors must define an Amazon specific strategy on how they plan to achieve their business goals and hit their targets. Within this strategy they should consider distribution strategy, pricing strategy, competition, marketing iniatives, product assortment, and customer engagement.
- Once vendors have defined their strategy, Vendor Central comes into play as far as executing it. Vendor Central allows vendors to freely manage and optimize their product assortment and specific marketing initiatives, including merchandising activities and advertising with Amazon Marketing Services (AMS). Other strategies might include execution of ideas outside of the Amazon platform.
- Once the Amazon strategy is executed, vendors need to regularly monitor and review their business to make sure they are hitting targets and goals. Identifying trends, areas of improvement and additional opportunities for growth are key to ensuring the strategy is working. Amazon allows vendors to track their performance through reports provided in Vendor Central. Vendors can access ARA Basic for data on sales and inventory and ARA Premium (ARAP) for additional data such as customer behaviour. Vendors running ads in AMS can also generate reports and obtain data from the portal.
Lastly, third-party tools like Vendor Society can give vendors a wider view of the business, with tips and ideas as well as how-tos and tutorials for everything from listing optimization and new product launches to negotiating terms and managing marketing initiatives to boost traffic and conversion. Sign up today if you need support and guidance on how to set up your vendor account for success.