Thousands of Amazon vendors were sent into panic mode on Monday, March 5th, 2019 as they logged into their Vendor Central accounts to find that there were no PO’s to fulfill and direct fulfillment Vendor’s found that their inventory was set to zero. If you fall into the following profile then you probably received this email:
- Businesses doing $10 million or less in sales volume on Amazon per year, and don’t have assigned vendor managers at Amazon
What is going on? That is a question I am sure thousands of brands were asking themselves as they scramble for answers and solutions. Let’s talk about why this is happening and what brands can do to navigate through this time of ambiguity.
What's the deal?
While Amazon has yet to formally come out and say why PO’s have halted or why inventory has been zeroed out, there are rumors that Vendor Central and Seller Central will soon be merged into one. This initiative is likely the reason why Vendor’s are experiencing these issues as Amazon narrows down their Vendors to basically an All Star Team. Vendor’s are reporting messages from Amazon stating that they will no longer issuing PO’s for products and recommending Vendor’s open up a Seller Central account. There seems to be a mix of Vendor’s who have received this messaging and because of that it seems as though Amazon is going to start to be a lot pickier on who they choose to be Vendors and only picking the top products in their respective categories along with other metrics such as sales volume and profitability.
Amazon told me switch to Seller Central.
If Amazon has directly reached out to you and told you that they were no longer issuing PO’s for your products and recommends you switch to Seller Central, then it’s time for you and your team to start to strategize how to move to Seller Central and learning how this transition changes your Amazon business. For brand’s who heavily depend on Amazon’s revenue, it is going to be very important to address these changes right away so that brand’s in very competitive spaces don't lose sales and ultimately their sales ranking do to out of stock status.
Important considerations before switching to Seller Central:
- Tax Remittance - With a Vendor account, Amazon is the seller on record for your products so they collect and remit tax in areas in which the product is sold. While most online business are familiar with taxes for ecommerce, brands need to consider Sales Tax Nexus and the effect this has selling in states where your product is warehoused.
- Retail Relationships - When you have a Vendor account, your products show up as “Shipped and Sold by Amazon” which can be good for conversions and also protects your retail relationships especially for B2B exclusive businesses. When creating a seller account, brands need to consider their retail relationships and if becoming a direct-to-consumer seller on Amazon will affect those relationships. One strategy around this is to create a Seller Name that is exclusive of your brand.
- Inventory - When a brand sells through Vendor Central, Amazon pays for the inventory being sent to their warehouses so there is less worry from smaller brands especially ones who have a tight cash flow. By switching to Seller Central, these brands will now have to send inventory to Amazon without being paid for it but will be compensated once the item sells.Learn about the differences between Seller Central & Vendor Central
- Better price control
- Listing Content Control - Titles/Images
- Typically better margins, but not always
- Front inventory at Amazon’s warehouse
- Tax Remittance - Seller Collects and Remits
- Purchase Orders
- Tax Remittance - Amazon Collects and Remits
- Customer Services
- No price control
- Listing Content Control- Titles/Images
Migrating from Vendor to Seller: The Solution and How We Can Help
Setting Up a Seller Central Account
DO can help Brand’s navigate through the Seller Central registration process. The registration process while not complex, requires very specific information and documentation. Any incorrect submissions could prolong your registration which is why DO can assist brand’s in gathering all the required information to help facilitate the process so you can begin selling sooner.
DO has created thousands of products on both Seller and Vendor central accounts so this is right up our wheelhouse. DO not only can migrate your products from Vendor Central to Seller Central, we can also audit these listings and optimize them to ensure your products are merchandised in a way that contain best in class strategies to not only increase conversions but impressions as well.
When migrating over from Vendor Central, brand’s will need to reapply for Brand Registry in order to create Enhanced Brand Content (A+ Content), and use marketing offerings such as Sponsored Brands and Brand Stores. We would be happy to assist you with the registration of Brand Registry to ensure your brand is correctly registered with Amazon.
When you have a Seller Central account, the process to send inventory is quite different from Vendor Central. The main difference being that with Seller Central you have to front the inventory sitting at Amazon’s warehouse and also create your shipments manually. When creating a shipment in Seller Central, the brand has complete control over how many units and how those units are shipped to Amazon. The shipping process in Seller Central is more manual and for sellers who have only been on Vendor Central, this transition can be complicated. DO has experience sending shipments both on Seller and Vendor Central and not only can assist brands in getting shipments setup but train essential personnel on how to create the inventory replenishment shipments. Per Amazon’s terms of service, they will charge extra fees to those who send product that is not correctly setup and requires Amazon to do more work to get your products processed. The right partner here can help your team get caught up with Seller Central processes and also help you avoid any extra fees when sending inventory.
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