Why Some Amazon Vendors are Moving to the Seller Side

I often talk about sellers moving over to the vendor side and adopting a hybrid approach. I now want to focus on the reverse, where more and more vendors are looking to open a seller account and either adopt a hybrid approach, or move away completely from having a vendor relationship with Amazon.com, Inc. ("Amazon").

Vendor to Seller?

The question is: if a manufacturer or brand owner has a vendor relationship, what is making them want to move away and jeopardize that? The truth is that these days some vendors are having a rough time on the Amazon marketplace. They are being squeezed dry with revised terms, such as Amazon requesting steep increases in allowances versus previous years, the forever growing chargebacks, deleting from their range ASINs that Amazon considers unprofitable and the inability to agree to MAP policies.

As a former Amazon Vendor Manager, I can see why Amazon is doing this. After all, they need to improve profit margins. It is not cheap to offer free shipping and Prime membership. They only want to sell lines that are profitable and ensure they remain competitive on all their product listings. The fulfillment centers are continuing to improve processes to increase efficiency and reduce lead time. Despite understanding why Amazon has so many demands, this does not make it any easier for vendors as they see life on the other side of the fence (with the seller side looking a lot prettier).

Benefits for Amazon Sellers

What makes the seller side look so good? Selling through a Seller Central account often means higher profit margins. Merchants can control their retail prices and listings, the shipping process is less stringent, and they can sell what they want and not worry about Amazon delisting the items (unless of course those products aren’t eligible for sale). Seller Central is really moving with the times and offers more tools to sellers to enhance the selling experience, improve search and conversion and ultimately increase sales. If there were a dance-off between Vendor Central and Seller Central, Seller Central would definitely be getting the crowd's support!

As attractive as the seller side might be to a vendor, the vendors are still nervous about making this step. They’ve heard rumors that Amazon will close their seller accounts or not let them do this in the first place. They are understandably scared as this has happened, typically with bigger brands. The vendors want to talk their issues through with the retail team before making this decision, but only the large accounts get a look over. The small vendors are left with restricted communication via Vendor Support. As a result, vendors end up creeping out the back door quietly hoping nobody will see.

Look Before You Leap

If a vendor is looking to move to the seller side, I always ensure expectations are set and they understand what this involves. The last thing you want to see is a vendor jeopardizing its relationship on the vendor side and then finding out the seller side was not what they expected. The seller side means selling direct to consumers via Seller Central. This means the business must have the correct infrastructure, time and resources to manage inventory, pricing, customer service and single orders, all of which are things that the retail team manage on behalf of a vendor. Yes, the FBA program can help reduce the time by shipping customer orders on a seller’s behalf and managing customer service, but the seller still needs to ensure there is the correct level of inventory for FBA and manage any general customer queries.

Also, if a vendor is looking to completely divorce itself from Vendor Central and not take the hybrid approach, they need to be aware of what they will be missing out on. The benefits they would no longer be able to enjoy involve bulk orders, access to Amazon Marketing Services (AMS) and the Vine program, video uploading, and greater promotional activity and visibility. Amazon also manages customer service, orders, pricing and inventory on behalf of vendors. Last year, I would have also mentioned A+ detail pages, but with Enhanced Brand Content now available on Seller Central, it’s a level playing field there.

What's Next?

So what is the future for vendors? Being a former Vendor Manager as well as part of the launch of Vendor Central into the UK, part of me hopes that the retail teams step it up and give greater incentives for vendors to want to stay vendors. Unfortunately, I don’t believe that the retail teams coming down heavy on vendors by closing seller accounts or not allowing them to open one is the answer. I would love to see Amazon enhance the vendor experience by finding innovative ways and incentives to keep vendors happy and motivated to remain on the vendor platform. As always, I am excited to see if the Amazon retail teams have anything up their sleeves.