There have been rumors over the last few months that Vendor Central (the method used to sell to Amazon) was going through a major rehab and could even potentially be eliminated.
Last week many of our Vendor Central Accounts received an email saying that their direct fulfillment had been suspended. It seems that today, a large number of those clients stopped receiving new orders for their Vendor Central Accounts.
It looks as if Amazon is again reducing the total number of companies that it will offer access to selling directly to Amazon as opposed to selling on Amazon (via Seller Central).
The companies that we talked to all had products that had been selling well and at high volumes. So, it is unclear at this point what metrics Amazon is looking at to determine which accounts will be allowed to remain on its Vendor Central platform.
If your Vendor Central account was shut down what should you do next?
For many brands, the best option is to move to Seller Central to sell your products. Here are the first 3 things we recommend you do if you want to sell directly on Seller Central (we have alternate options if Seller Central isn’t a good fit for you near the end of the article):
1. Review The Seller Central Fee Structure
In our agency, we work with a lot of clients that have moved to Seller Central or have moved to a Hybrid model of selling (selling some SKU’s on Vendor Central and some SKUs on Seller Central).
As we transition these clients many of them to selling directly on Amazon, they are pleasantly surprised to find out that they will have higher margins compared to selling directly to Amazon.
You might have heard that Amazon takes 8-15% of the selling fees or that Amazon takes about 33% of the sale. Both are partially true- but don’t really tell the whole picture.
Amazon’s fee structure for Prime offers can be a bit complicated so we recommend that you use the FBA Revenue Calculator to determine what your fees for selling on Seller Central would be.
This calculator will show you your fees if you ship from your location (merchant fulfilled) or if you use FBA (Fulfillment By Amazon).
Other fees you need to be aware of is that you will be responsible for are your inbound shipping and storage fees.
When sending items into Amazon will get Amazon’s partnered shipping rates if you are using parcel carriers (like FedEx or UPS). You can also send your items via Freight. Inbound shipping costs can range from as little as pennies on the pound for freight and up to .85 cents a pound for smaller parcel shipments.
When you go to send you items into Amazon you will want to make sure you only send in 30-60 days’ worth of stock at a time. There is a very small monthly storage fee of 69 cents per cubic foot for standard items most of the year.
However, if items stay in Amazon’s warehouse for over a year the fees get very significant. So, managing your lead time is very important to keeping your costs down on Amazon.
2. Open Your Seller Central Account
If you already have a Seller Central account, you are going to be in a much better position as it will be easier to move your items over your sales velocity quickly. If you have not opened your Seller Central account, you will want to do that right away.
Amazon holds payment for a period of 30 or fewer days for new accounts to prevent fraud. So, you want to get the account open and your first sale as quickly as possible to “start the clock.”
Once your account is open, you may have to get “ungated” to sell your products or to sell in particular products. This generally requires providing safety documents and invoices.
Once you are approved, you will be able to list on the same product detail pages you sold on previously. Amazon has some tutorials to take you through the process or you can hire a firm (like ours) to handle the transition for you
A quick warning, on new Seller Central accounts that have steep increases in their sales, Amazon sometimes performs a velocity review. This review can take 7-30 days and could hold up your disbursement from Amazon.
3. Keep Your Items In Stock
In order to protect the long-term sales velocity and ranking on Amazon, it is very important that your items are not out of stock. This means that you might have to have a Merchant Fulfilled offer on your stock to while you wait for the items that you sent into FBA (Fulfillment By Amazon) to be checked in.
Use your sell-through data from Vendor Central to determine how much stock you should send into Seller Central. We recommend 30-60 days’ worth of stock with a minimum lead time of 14 days. Be prepared that Amazon may have you send your inventory to multiple warehouses.
Sending items in case packs can reduce the total number of warehouses you will be assigned. Before sending your items to Amazon Seller Central you want to make sure that you are complying with the prep requirements for the FBA warehouses.
What is selling on Seller Central isn’t an option?
For those that due to sales tax concerns, inventory, accounting, or other issues are not able to utilize FBA there are other options.
One of those options is to sell to highly skilled 3P sellers. Now, not all 3P sellers are created equally. We have worked with many companies to help them find quality 3Psellers that can handle all of the management of inventory, advertising, listing enhancements, etc. at the high velocities.
Not only do we sell items as a third party seller ourselves, but we also have a long list of sellers we have trained over the years that we use to match up with clients who are looking to make a quick move to 3P sellers.
You have to be very careful when you are working bringing on 3P sellers to make sure that you have the right reseller agreements in place and that you limit the number of resellers to ultimate protect your brand from price erosion that can be so rampant on Amazon.
We know that this can be a frustrating time for many brands on Amazon.
We have created a LinkedIn Group to discuss transition options as brands look to adjust their strategy with this drastic change in the Amazon landscape.