Is Amazon dictating a new policy and merging its platforms into a “One Vendor” system? It’s a big question this week, as Monday dawned with tens of thousands of vendors failing to receive their weekly replenishment purchase orders from Amazon. A flood of confusion and speculation has followed, as retailers attempt to align their business plans and strategy to Amazon’s less-than-transparent actions.
What is happening?
Some vendors received notifications of a system error within the ordering system, while other vendors were told to expect no future orders to be raised. Other Direct Fulfillment brands have found their inventory set at zero, with seemingly no opportunity to replenish. One Vendor Society member from Europe was told of “a mandate to restructure all distributors across Europe, so all smaller accounts will need to be moved out from Retail Business.” They were prompted to create an Amazon Marketplace (ie., seller) account. Many vendors who received notifications do smaller amounts in sales volume on Amazon, as well as vendors who do not have a specified vendor manager at Amazon. Some vendors who sell large or bulkier goods (which increase shipping costs) have also been notified of changes.
While it’s currently unclear if these changes are at a country or brand level, many believe these are stepping stones on the path toward the rumored merger of Seller Central and Vendor Central into a one portal. If Amazon partitions vendors and sellers into systematic groups now, it will obviously make the eventual switch to one system more seamless.
Why is Amazon possibly changing their ways?
It’s no secret that Amazon constantly pushes toward streamlining overheads and increasing their profitability. A single selling management portal with the same number of suppliers, yet with no duplicate system operations would obviously net more profit by saving Amazon resources and time.
For those paying attention, Amazon has made a series of recent changes that focus more on brands and less on distinguishing between sellers and vendors. Many vendors who used to have an assigned vendor manager have seen Amazon move away from this model, for example, to instead deal with a ticket-based resolution service. Amazon has required vendors to pay large amounts for the support of a physical (yet part-time) vendor manager. At the same time, Amazon has created more consistency in processes and tools available to both platforms, including Amazon Advertising, EBC, and Vine.
All of this has resulted in more pressure on vendors–both to deal with a competitive pricing strategy and new initiatives, and also to perform with less robust support. For many vendors, especially smaller ones with limited margin and budget, this is simply unrealistic.
Lastly, as Amazon puts customers first, they rely on large amounts of behavioral data and sales metrics to inform decisions. A “One Vendor” system would paint a much clearer picture of marketing decisions, order history, and the shopping habits of millions of customers. All of this information forges into Amazon’s advertising strategy, policy, and development.
What should we do?
It’s clear that Amazon is moving toward a more self-service operating model for vendors and sellers. Those that have already received notification from Amazon that is vague and unclear with no clear direction, be sure to push back and get some concrete answers. There is lots of speculation out there and it is important you get answers directly from Amazon specific to your business before reacting on assumptions. It is imperative brands prepare for changes and look at long-term plans for Amazon. While it’s unclear exactly what will happen–or when–the signs of a shake-up are clear. Vendor Society founder, Carina McLeod has some suggestions:
“I believe in the future, both vendors and sellers will remain (wholesale and direct to consumer), but under one platform. Amazon will dictate what the brand should be, and could even be both, if it makes sense for the customer experience. While this is speculation, vendors need to have a backup plan. Especially the smaller to medium sized vendors (the tail), and look into having a seller account ready, should Amazon pull the plug on their vendor business.”
Amazon has moved seller accounts to the vendor side when it’s made sense in the past (for specific or mutually beneficial programs, for instance). The notifications this week suggest it may now be time for certain vendors to begin creating seller accounts. Seller Central is certainly more self-service and hands-on than Vendor Central. Moving over now, with plenty of time before events such as Amazon Prime Day or the Q4 rush may be ideal.
With considerable changes potentially on the horizon, we understand brands who may have apprehension or confusion. We’re here to help. Whether you need help with launching a seller account, creating listings or are launching new products, need to get setup with the Brand Registry, or if you want to create an advertising, marketing or promotional strategy. Contact us for customized support.
**Update (March 11, 2019)**
Over the weekend, Amazon sent an email to vendors who are not currently part of the Brand Registry. The email alerted them that orders have resumed. Amazon apologized for any inconvenience and encouraged brand owners to register their brand. “We prefer to source products directly from brand owners, so enrollment in Brand Registry will be important for vendors going forward,” Amazon said. “If you are not a brand owner, we encourage you to consider selling your products directly to customers in our store via Seller Central. If you do not already have a Seller Central account, you can get started by registering here.”
Though orders have resumed for certain vendors, it is important to not act on assumptions and contact Amazon for concrete information regarding your specific accounts.