If you're surprised that Amazon is severing ties with smaller vendors in November then you just haven't been paying attention.
Amazon has made their mark on society by operating under a few main principles: scale, frugality, customer service, and did I mention scale?
Smaller vendors are difficult to scale, and they take up valuable resources from the Retail team which could be spent on larger vendors which Amazon is either already profitable on or drive significant volume.
They also many times are difficult to make money on, they cannot afford to advertise much if at all and rarely participate in promotions (Amazon has actually put that out of reach for certain vendors as of late, but that's nother story).
3P is a pure profit center for Amazon, they offload every single cost to the Selling Partner and then pad the referral fee to ensure they come out ahead on each transaction. If the Seller advertises that is a nice bonus.
I don't think small vendors are the end of it, I feel that next are vendors which refuse to partake in advertising, spend much on promotions, and/or Amazon loses money on.
Amazon will keep around the P&Gs, the Unilevers, Under Armours, etc. because they are basket-builders and easier to scale. But if you're not a household brand and your Vendor Manager has been pressuring you on Net PPM could you be next to be cut?
The most helpful advice I can give to Vendors about to be cut is simple - do not do it alone. There is an entire industry built on sales consulting for Amazon and for good reason!
Go search LinkedIn, Google, UpWork, etc. there is no shortage of information and Amazon experts. If you want a little headstart on where to look and who to start your conversations with leave a comment or send a note!
Amazon has made their mark on society by operating under a few main principles: scale, frugality, customer service, and did I mention scale?
Smaller vendors are difficult to scale, and they take up valuable resources from the Retail team which could be spent on larger vendors which Amazon is either already profitable on or drive significant volume.
They also many times are difficult to make money on, they cannot afford to advertise much if at all and rarely participate in promotions (Amazon has actually put that out of reach for certain vendors as of late, but that's nother story).
3P is a pure profit center for Amazon, they offload every single cost to the Selling Partner and then pad the referral fee to ensure they come out ahead on each transaction. If the Seller advertises that is a nice bonus.
I don't think small vendors are the end of it, I feel that next are vendors which refuse to partake in advertising, spend much on promotions, and/or Amazon loses money on.
Amazon will keep around the P&Gs, the Unilevers, Under Armours, etc. because they are basket-builders and easier to scale. But if you're not a household brand and your Vendor Manager has been pressuring you on Net PPM could you be next to be cut?
The most helpful advice I can give to Vendors about to be cut is simple - do not do it alone. There is an entire industry built on sales consulting for Amazon and for good reason!
Go search LinkedIn, Google, UpWork, etc. there is no shortage of information and Amazon experts. If you want a little headstart on where to look and who to start your conversations with leave a comment or send a note!
