You may have seen articles over the past couple of days like the one on Bloomberg titled "Amazon Is Poised to Unleash a Long-Feared Purge of Small Suppliers" (link). We've received many questions about this and wanted to provide some perspective about what this all means.
In summary, this and other related articles discuss the ongoing moves Amazon has been making to move "smaller" (in this case defined as <$10MM / year) Vendors to Seller Central. The article supposes that Amazon no longer wants a wholesale relationship with these companies but instead wants them to sell via Amazon's Marketplace, which now represents the bulk of Amazon sales.
Amazon's pullback from smaller Vendor relationships is a fact and a trend, but this is not news. This is more of a "migration" than a sudden "purge." Amazon has in fact been discontinuing some Vendor relationships, including with some of our clients, but targeted companies are free to continue selling through Amazon's marketplace or through their distributors and agents. As quoted in the article, Amazon's representatives said the following: "any speculation of a large scale reduction of vendors is incorrect."
SMBs who now rely on Amazon Vendor Central for most or all of their business need to quickly build back up plans that will allow them to transition their items into the marketplace selling model. If possible, they should implement a "hybrid" 1P/3P selling model as soon as is practical. This move could impact portfolio strategy, logistics, marketing, measurement, and more. If you do not have the expertise or systems in house to build this plan or to manage a marketplace business, we can help you.
As you consider the way forward, you may find some of our previous articles of interest:
- A Second Look at Third Party Selling
- How Smaller Brands are Winning at Amazon
- How to Optimize Your eCommerce Portfolio
We are happy to discuss any of this further with you, including implications for your brand. Please feel free to schedule time with us below.