Archive for March, 2020

Transitioning from Vendor Central (1P) to Seller Central (3P)

Transitioning from Vendor Central (1P) to Seller Central (3P)

As a direct result of the COVID-19 virus and the increase in orders for products such as household staples and medical supplies, as well as other high-demand products, Amazon announced on March 16, 2020, that they will be temporarily prioritizing products coming into their fulfillment centers through April 5, 2020, to more quickly receive, restock, and ship these products to customers.

For all non-essential brands, Amazon has temporarily disabled shipment creation. With all the rapid changes this is the ideal time for these brands to reposition on the platform and consider making a transition from Vendor Central (1P) to Seller Central (3P). Amazon has stopped or will be stopping PO’s for all non-essential products possibly until the middle of April.

In simple terms, Amazon has stopped non-essential item replenishment (ingestion) into their FBA centers, as well as prioritized only essential items shipping out to the customer (fulfillment) for the next several weeks if not longer. Transitioning will enable a Fulfillment by Merchant (FBM) strategy.

This will allow non-essential businesses to still be operational on Amazon during a time when Amazon has deprioritized your products and on top of that, be able to hit the ground running and be fully optimized once the economy has stabilized and customer habits have returned to normal. During peak seasons, this will be helpful. It is important to keep in mind that it could take up to two months for Amazon to start shipping non-essential products. As a brand it is crucial to utilize this time to reposition on Amazon and take back control of fulfillment as well as retail margins.

Over the years the number of 3rd party sellers on Amazon has increased significantly. Brand control is one of the main reasons why companies are choosing to transition from 1P to 3P. In the long run, the benefits of switching to 3P are increased profit margins, pricing control and brings a higher probability of opportunities.

Amazon 1st Party (1P)

In this model, you choose to sell your assortment to Amazon at wholesale pricing and allow them to be your retailer. This follows a traditional 2 tier distribution model where you negotiate pricing and terms with your Amazon buyer, sign a Vendor Agreement and ship your product to Amazon when sent weekly replenishment PO’s. This business is run either through the Vendor Central portal.

Amazon 3rd Party (3P)

In this model, you set up your own Amazon storefront and choose to sell your assortment direct to consumers becoming the Retailer. This business is managed through the Seller Central portal. Sellers on Amazon have full brand authority which gives them the freedom to control their products while 1P vendors give Amazon the authority to sell and manage their products. For more information click here.

Conclusion

These are certainly some challenging times and it is very easy to get fixated on the ominous short term circumstances presented by the coronavirus but, there is light at the end of the tunnel and non-essential brands can still make the most out of an unfortunate situation by focusing on long term opportunities in the present.

If you need a winning Amazon strategy or have any additional questions, please don’t hesitate to contact one of our Channel Key Amazon consultants. As a Full-Service Amazon Agency, we are dedicated to helping you increase your sales. Talk to our Channel Key team.

We hope that this post was insightful. If you have any additional questions leave a comment below, we’ll be there, we’ll respond, and we will help you through the process. If you found this post to be helpful, please like, share, comment, and tell other people about it. Thank you for reading.

Selling on Amazon: Are You Cannibalizing Your Own eCommerce Business?

Selling on Amazon: Are You Cannibalizing Your Own eCommerce Business?

Selling on Amazon may seem like a no brainer to most but, there are those brands out there that are hesitant to join the wave. One question that our Channel Key team is hearing surface from brands and manufacturers is, will selling on Amazon cannibalize my eCommerce business? Brands worry that if they start selling directly on Amazon, how much business done on the platform will take away from other channels. For example, if a brand that has no products on Amazon sets up a storefront, how much business if any would be taken away from their direct website sales, social sales, etc.

With Amazon’s vast understanding of consumer behavior and loyal support base, for most eCommerce businesses selling on Amazon, it is an absolute win and a necessity. If you aren’t doing it, you are putting yourself at a disadvantage. Amazon can be the advantage that your business needs to succeed in a competitive industry.

However, Amazon is a complicated marketplace because there are multiple ways for brands to source and sell on the platform. If not done correctly brands face the possibility of losing out on higher margins through direct-to-consumer sales and potentially the long-term growth of your brand. For eCommerce sellers, today’s digital landscape offers an array of opportunities.

Amazon has built up an incredible amount of consumer trust and adoption into its Prime program with over 100M members creating a shopping experience that is preferred by the consumer and often consumers will not buy if the product is not on Amazon. With Amazon being a product discovery platform for customers over 55% of all product searches start on the platform. As a brand or manufacturer, it becomes clear that this can be an expensive proposition to miss out on. 

There are situations where those that are searching for your brand directly on Amazon are buying a competitive product. In this case that is considered a lost sale versus someone that goes and searches your brand’s products, cannot find them and is then forced to go to your brand’s website and purchase the product direct. There are multiple paths to purchase and the question here is, what is the cannibalism rate and if someone searches your brand on Amazon and they find your product, are they just going to buy it on Amazon or are they still going to go to your brand’s website to purchase there?

Amazon Seller Pros

Your product can gain major exposure on Amazon with millions of active customers. As a third-party seller, your products will be listed and recommended for relevant search inquiries, thus resulting in higher sales.

  • Amazon is a brand discovery platform
  • 900M+ views a month
  • 55% of all product searches start on Amazon
  • 100+ million Prime members in the US alone loyal to Amazon

Image source: statista.com

Image source: statista.com

Amazon Studies Consumer Behavior

Amazon fully understands the motives behind the online buyer community at a fundamental level. As a seller, you have access to the benefits of the extensive marketing research Amazon has already generated and endless marketing opportunities. 

Other Things to Consider:

For Amazon, third party sales can be very profitable. Depending on the category Amazon takes a certain percentage of profit, before fulfillment fees, fulfillment center costs, and shipping costs. As the seller, you must determine if margins are high enough to invest.

Long-Term Brand Growth

Selling on the Amazon platform may cannibalize your eCommerce business in the sense that consumers shopping for your products aren’t necessarily loyal to your business but to Amazon itself adding to their massive customer base. This can result in your business becoming heavily dependent on Amazon for sales.

How Can Channel Key help your Amazon business? 

As a full-service Amazon channel management agency Channel Key works with brands and manufacturers to develop the best strategy when launching or transitioning on the platform. There are many ways to reduce the impact of your success on Amazon to your website sales:

Price Control:

Controlling the price on Amazon to your own eCommerce site keeping loyal existing customers and price-sensitive buyers shopping directly from you. One of the simplest things to do is price slightly below Amazon to keep your loyal customers onsite and still capture new customers on the Amazon platform. You must make sure if you use this strategy you make sure the price of your items on Amazon stays at or above MAP (minimum advertised price) and website prices.

You will also need to decide which selling platform strategy will be best for your business in terms of making products available and selling on Amazon:

  • Vendor Central (1P): Selling directly to Amazon. In this scenario, Amazon gets to set pricing and dictates how much inventory is at Amazon.
  • Seller Central (3P): Selling on Amazon. This is where the brand sets the price and decides how much inventory is at Amazon.

Distribution Control:

Controlling your distribution is the most effective way to protect your products on Amazon. For most brands, this means monitoring resellers and keeping clean distribution channels by implementing strong internet reseller agreements. To be successful you must limit the number of resellers offering your product on Amazon.

Conclusion

Amazon’s vast understanding of consumer behavior and loyal support base provides brands and manufacturers with the opportunity to access their database and be competitive in the industry. Discover your online brand success with a welcoming platform that is continuously growing.

If you need a winning Amazon strategy or have any additional questions, please don’t hesitate to contact one of our Channel Key Amazon consultants. As a Full-Service Amazon Agency, we are dedicated to helping you increase your sales. Talk to our Channel Key team.

We hope that this post was insightful. If you have any additional questions leave a comment below, we’ll be there, we’ll respond, and we will help you through the process. If you found this post to be helpful, please like, share, comment, and tell other people about it. Thank you for reading.

Amazon Shipping Impact Temporarily Prioritizing Products Coming Into FBA

Amazon Shipping Impact Temporarily Prioritizing Products Coming Into FBA

Recently Amazon announced that they will be temporarily prioritizing products coming into their fulfillment centers. The eCommerce giant said that they will be closely monitoring the developments of COVID-19 and its impact on their customers, selling, partners, and employees. 

As a result, to an increase in online shopping some products such as household staples and medical supplies are out of stock. Keeping this in mind, Amazon says that the company will temporarily be prioritizing household staples, medical supplies, and other high-demand products coming into their fulfillment centers so that they can more quickly receive, restock, and ship these products to customers. 

For products other than these, Amazon has temporarily disabled shipment creation and they are taking a similar approach with retail vendors. This will be in effect through April 5, 2020, and Amazon will let you know once they resume regular operations. 

Products being accepted to ship to FBA 

  • Baby Products 
  • Health & Household 
  • Beauty & Personal Care (including personal care appliances) 
  • Grocery 
  • Industrial & Scientific 
  • Pet Supplies 

In order to prioritize, listing products in an inaccurate category is a violation of Amazons listing policies and may result in account suspension. This is currently being applied to the US and EU marketplaces. 

  • At Channel Key, we are your Amazon experts. Our primary solution: Setting up fulfillment by merchant (FBM) (3P) strategy allowing you to ship directly to your consumers.  
    • Brand Control 
    • Stabilize Pricing 
    • Increase Profitability 
    • Control Channel Conflict  

What this means for Vendors/Sellers  

  1. Amazon is still Receiving and shipping “grandfathered-in” inventory as planned 
    • Replenishment orders created before March 17, Amazon will still receive it. Essential items will be given priority and Amazon will still pick, pack, and ship non-essentials. Non-essential orders will have a slower shipping time. 
  2. Amazon FBA sellers can use other methods of fulfillment 
    • Amazon recommends sellers who typically sell FBA to use their own resources and carriers for shipping products and to sell Fulfilled by Merchant (FBM). 
  3. How will this affect Fulfillment by Merchant (FBM) sales and sellers? 
    • Currently, there is no change. Amazon sellers are still able to create and list products.
  4. Can sellers still sell non-essential products? 
    •  both FBA and FBM sellers can still sell products that are non-essential. 
  5. Can Sellers sell essential products? 
    • Essential products can still be sold by sellers if they are able to create listings for them. Sellers listing products in any of the essential categories will need approval from Amazon as some of the categories have been “gated”. 

For additional information click here 

Conclusion  

Amazon is making these temporary adjustments in order to prioritize household staples, medical supplies, and other high-demand products coming into their fulfillment centers so that they can more quickly receive, restock, and ship these products to customers. Sellers may continue to sell products already in fulfillment centers. This is now in effect starting on March 17, 2020, through April 5, 2020, and Amazon says that they will let sellers know once they resume regular operations. 

If you have any additional questions, please don’t hesitate to contact one of our Channel Key Amazon consultants.  As a Full-Service Amazon Agency, we are dedicated to helping youTalk to our Channel Key team. We will continue to keep you updated. 

Amazon 1P to 3P Transition

Defining Your Amazon Strategy – 1P to 3P Transition

Your supply method selection is a very important part of the foundation of your Amazon business. Although Vendor Central (1P) and Seller Central (3P) provide similar marketing capabilities there are still many factors to acknowledge with your supply distribution relationship.

Companies operating as first-party vendors sell their products to Amazon, and Amazon then sells these products to consumers. Many companies begin their Amazon journey as Vendors however, as a seller you do business directly through the Amazon marketplace.

For brands and manufacturers who are new to the Amazon marketplace, navigating the platform at times can be overly perplexing. There is no way to know for sure what will be the right move for your business. Both 1P and 3P have advantages and disadvantages. Depending on your goals, your choice should reflect your resources and proficiency.

Factors to Consider

  • Supply Chain & Logistics
  • Funding
  • Inventory
  • Pricing Strategy
  • Distribution
  • Assortment
  • Goals & Success Metrics

Amazon is a platform that is forever changing. At one point in time, 1P may have been effective for your business however, that does not mean that 3P may be the right transition for your business today.

Amazon 1st Party (1P)

In this model, you choose to sell your assortment to Amazon at wholesale pricing and allow them to be your retailer.  This follows a traditional 2 tier distribution model where you negotiate pricing and terms with your Amazon buyer, sign a Vendor Agreement and ship your product to Amazon when sent weekly replenishment POs. This business is run either through the Vendor Central portal.

Amazon 3rd Party (3P)

In this model, you set up your own Amazon storefront and choose to sell your assortment direct to consumers becoming the Retailer. This business is managed through the Seller Central portal. Sellers on Amazon have full brand authority which gives them the freedom to control their own products while 1P vendors give Amazon the authority to sell and manage their products.

Over the years the number of 3rd party sellers on Amazon has increased significantly. Brand control is one of the main reasons why companies are choosing to transition from 1P to 3P.

In the long run, the benefits of switching to 3P are increased profit margins, pricing control and more. Seller Central requires more demanding work on the part of the seller however, it also brings a higher probability of opportunities.

Conclusion

In conclusion, the best Amazon brand strategy for your company ultimately depends on how you want your products to be displayed and what level of control you seek.  If you care more about driving top-line sales and less about your retail price points, maybe the 1P model is right for you.  If you have a large assortment and want to better control your retail price points than maybe the 3P model is right.

If you need a winning Amazon strategy or have any additional questions, please don’t hesitate to contact one of our Channel Key Amazon consultants.  As a Full-Service Amazon Agency, we are dedicated to helping you increase your sales. Talk to our Channel Key team.

We hope that this post was insightful. If you have any additional questions leave a comment below, we’ll be there, we’ll respond, and we will help you through the process. If you found this post to be helpful, please like, share, comment, and tell other people about it. Thank you for reading.

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