In potentially one of the biggest strategic shifts in its 20-year history, Amazon looks poised to cut ties with a large number of its smaller suppliers or vendors. That means many brands may be kicked off Amazon 1P—and you might be one of them.
If you’re reading this article, you may very well be frantically trying to identify the “what next” for your brand, now that Amazon’s Vendor Management team has notified you that it will no longer be buying your brand’s products through Vendor Central. Plenty of traditional B2B manufacturer brands will find themselves in a similar situation, all wondering how Amazon’s third-party (3P) seller platform works, and scratching their heads at how B2B brands are supposed to evolve quickly enough to succeed as B2C operators on the Amazon channel.
Thankfully, you’re not on your own. Here are five immediate steps to take to protect your business if your brand is pushed out of Amazon’s Vendor Central—and start charting a new strategy to succeed on Amazon.
But First… Kicked Off Amazon 1P? Here’s Why Just Becoming a 3P Seller Is Not Enough
In the wake of this news, you might be thinking, “We’ll just become a third-party (3P) seller!” But I’ll be perfectly clear: if you think simply opening a third-party seller account will capture back the revenue that had been coming from your Vendor Central sales, this action alone is not going to work.
If your brand is pushed out of Amazon’s 1P, there are five critical and immediate steps you need to take to protect your current Amazon business:
- Preserve your branding content
- Determine the right distribution model
- Preserve your retail pricing levels
- Preserve your advertising efforts
- Start collecting and using Amazon’s customer data effectively
If you take action in each of these areas, only then will you be in a position to protect the sales revenue you’ve enjoyed to date on Amazon, while ensuring that you have the right people or partners in place to protect your brand equity on Amazon, as well as off Amazon. Let’s look at each of these areas in more detail.
Action Item #1: Preserve Your Branded Content with Brand Registry
As a brand selling through Vendor Central, the product listing content you submit into the Amazon catalog is normally protected so other sellers can’t overwrite it with their own content. However, when you are no longer loading content through Vendor Central, you aren’t as likely to have “content authority” over your content – meaning some random third-party seller’s content might be what gets displayed to Amazon customers.
What does this mean for you now? It means it’s time for you as the brand to be getting into Amazon’s Brand Registry program (brandregistry.amazon.com). This free program gives brands with registered trademarks the ability to lock down content on their product listings in the Amazon catalog.
Brand Registry Lets You Control All of Your Branded Content
Furthermore, while you may have gotten used to submitting content for products you were wholesaling to Amazon, the Brand Registry program enables you to take control of content on other listings for your brands’ products (including retailer-created bundles, listings with incorrect UPCs, duplicate listings, etc.). By taking control of the branding of all of your brand’s listings (those you have been directly selling plus additional listings created by third-party sellers), you can ensure that your branding on Amazon is factually complete, correct, and consistent with branding in other channels where your brand is sold.
Securing Brand Registry is also critical if you’ve been using A+ detail pages or brand stores as part of your catalog efforts on Amazon. Once your brand is moved out of Vendor Central, Amazon may also close your Vendor Central account, making it impossible for you to change the content you loaded in there previously. Should Amazon choose to maintain the “retail contributions” of catalog content you submitted in Vendor Central, that content could continue to live on in the Amazon catalog, but you no longer have a platform for accessing and changing that content.
Use a 3P Account to Manage Your Branded Content
That’s why we recommend an approach where brands secure Brand Registry, then open up a third-party seller account—this lets them lock down and control content without asking Amazon’s permission to update content through Vendor Central. This account doesn’t need to be used for selling purposes, but instead is used to load content on all of your branded listings in the Amazon catalog. As a Brand Registry owner, you can load Enhanced Brand Content (EBC), the third-party version of A+ detail page content that you may have loaded in Vendor Central.
Likewise, you can create and load a brand store through your third-party seller account, replacing the existing brand store that you may have loaded through Vendor Central. You’ll likely have to file a ticket in Seller Support (the third-party seller account support system), asking to have the “Retail Contribution” removed from your listings and brand store, so you can replace it with third-party seller content that you can now easily manage and change without first getting permission from Amazon.
All Brands Should be Using Brand Registry—1P or Not
One final point on Brand Registry: you should be securing Brand Registry rights anyway, even if your brand remains in Vendor Central; this tool gives you the ability to clean up listings of your brand that you didn’t create in Vendor Central—so that all of your product listing content can meet the desired standards for your brand.
If controlling your branding is important to you, the bothersome task of maintaining a clean catalog will fall on you. This involves compiling all of the listings for your brand in the Amazon catalog, and filing the necessary Seller Support tickets to get inappropriate or inadequate content changed or removed. As mentioned earlier, duplicate listings, listings with incorrect UPCs, or reseller-created bundles may exist in the Amazon catalog. With Brand Registry, you have the ability to change content on such listings, but you will also need to consider having these listings merged onto correct listings whose content you do control.
Ultimately, a clean catalog with accurate branding information and no confusing duplicate listings will create a smoother experience for potential customers.
Action Item #2: Determine the Right Distribution Model
Now that you’ve been kicked out of Vendor Central, you’re going to need to identify a new distribution model for your products. Thankfully, you still have several options at your disposal.
The Absence of Amazon in the Buy Box Creates a Vacuum for 3P Sellers
Let’s start with the sellers that are already on your Amazon product listings today. If there are a bunch of third-party sellers offering your products today while Amazon is also selling your products, in most cases it’s Amazon that wins the sale over all other sellers (because of its willingness to cut price just to be the “buy box winning” seller on your listings). But when Amazon stops selling your products after it’s kicked you out of Vendor Central, who’s left to sell your products?
Well, all of those third-party sellers will start to see their sales increase, now that Amazon is no longer competing for the sale. Typically, most brands are surprised to see just how many unauthorized or unknown sellers (often with diverted product inventory) there are on Amazon. Unless your brand has extraordinary control of wholesale distribution, you will likely find new unauthorized or unknown sellers gaining sales share quickly. If your brand is popular among Amazon customers, the disappearance of Amazon as a seller will likely drive a mad rush by product diverters to gain share on your brand listings.
Will a MAP or MSRP Policy Really Help You Control Distribution? Probably Not.
If you’ve been operating under the assumption that a minimum advertising price (MAP) policy or manufacturer suggested retail price (MSRP) policy will protect you on Amazon, you’ll be disappointed to learn that such policies are of little use on Amazon channel, for two main reasons.
First, Amazon will not help you manage your distribution agreements or remove unauthorized sellers. Second, many of these unauthorized sellers are well versed in their legal rights. They know that they can often hide beyond the “first sale doctrine” case law that allows most anyone to resell products they’ve sourced, even if the brand doesn’t want them doing so on Amazon.
A Stronger Tool: An Online Reseller Policy
So, what should you do? The brand team needs to invest in implementing a proper online reseller policy, which can provide the brand with enough additional legal power to protect their trademarks in ways that ultimately allow them to remove unauthorized resellers from online channels. This policy needs to be developed by attorneys skilled in online channel law. The policy should be used as an ongoing enforcement tool with existing authorized distributors and resellers, and a tool for legal removal of sellers not abiding by the terms of the policy (which will most likely include any unauthorized resellers).
While legal tools can help reduce unauthorized seller activity, every brand team also has to review the controls it already has in place to prevent inventory from ending up in the hands of product diverters. Is the sales team keeping an eye on who’s submitting purchase orders—or are they incentivized to sell as much product as possible to anyone and everyone? Are there screening processes for prospective sellers to ensure product is sold in appropriate channels? By addressing these questions, the brand team can usually identify ways in which the company is inadvertently creating easy access for divertible inventory that often ends up on Amazon.
Four Distribution Strategies for Brands Kicked out of Amazon 1P
Finally, we can’t discuss distribution on Amazon without explaining alternative distribution options available for brands that no longer are able to wholesale products as first-party suppliers to Amazon. There are four approaches a brand can use when they move away from the 1P/Vendor Central options.
Alternative Distribution Option 1: The brand encourages its existing brick and mortar retailers to sell products as third-party sellers on Amazon.
This approach can work a) if the brand carefully picks the right brick and mortar retailers that have advanced Amazon channel skills to represent the brand, and b) if the brand keeps the number of retailers very small—otherwise there will inevitably be unwanted price competition/erosion as resellers compete for sales.
Alternative Distribution Option 2: The brand selects one third-party seller to be its exclusive reseller on Amazon.
If this reseller is particularly skilled at representing brands on Amazon, this model can work well, and enable the brand to remain a B2B brand.
Alternative Distribution Option 3: The brand enters the Amazon channel as the third-party seller of its own products.
This shift to a B2C model will require the brand to bring Amazon skills in-house, typically in the areas of catalog/listing optimization, inventory management/forecasting, Amazon advertising campaign management, and Seller Support (the ticketing process through which third-party sellers make all of their requests of Amazon). If suitable and affordable talent is available and the brand has proper distribution control to avoid sharing sales with unauthorized sellers, this model can work well and allow the brand to generate higher retail margins, instead of lower wholesale margins.
Alternative Distribution Option 4: The brand becomes a third-party seller, but outsources the running of the account to an agency that specializes in managing the day-to-day responsibilities mentioned in Option 3.
If the agency has extensive Amazon channel experience and expertise, this model allows a brand to maintain Amazon channel sales revenue while protecting its branding, pricing, and distribution. Because of its work with multiple brand clients, the agency should be much better positioned to stay on top of changing Amazon policies than the brand’s own employees in Option 3 would be able to do. The net margins earned by the brand in Option 4 should also be superior to the other 3 options.
Action Item #3: Preserve Your Retail Pricing Levels
Now that Amazon won’t be the predominant seller of your products, it’s critical to get to know the existing third-party sellers on your Amazon product listings.
When Amazon was the Buy Box winner on your product listings, it usually would lower its prices to match prices offered by third-party sellers (thereby helping to ensure that Amazon continued to be the third-party seller). But once Amazon is done selling, those third-party sellers’ pricing actions will become more obvious because the third-party sellers have much more opportunity to win share. Individual third-party sellers will thus be more likely to pay attention to small pricing changes made by other competing third-party sellers.
It’s also worth noting that as sales revenue shifts to third-party sellers, it will become harder for you to understand directly how much of your brand’s product is being sold on Amazon, now that the sales are being shared across the collection of third-party sellers offering these products.
If you’ve previously had to tell authorized distributors and retailers that you can’t easily control Amazon’s pricing decisions on your products, things just got harder for you, as you will likely face multiple price changes made by third-party sellers you may not even recognize or know how to contact to discuss their pricing decisions. Creating stable prices on Amazon now means establishing effective control of the distribution of your products, and hence some sort of online reseller policy to enable you to minimize the impact of unauthorized sellers’ ability to create price erosion.
Action Item #4: Preserve Your Advertising Efforts
When Amazon kicks a brand out of Vendor Central, it’s not clear whether the brand gets to keep its Amazon Marketing Services (AMS) account that it uses to manage advertising efforts on Amazon. If this portal is removed from your brand, you’ll need to quickly get up to speed on advertising options available through the third-party Seller Central interface.
The ability to advertise on Amazon is available through your own third-party seller account, or the third-party seller account of any of the third-party sellers offering your product. However, the specific forms of advertising are not the same: if a third-party seller account is not connected to the Brand Registry of a particular brand, that third-party seller account can’t set up Sponsored Brand ads that help create awareness of your brand.
While the Sponsored Products advertising option is available through the third-party seller advertising platform, those ads will only show up when that particular seller is winning the Buy Box—which means active selling by unauthorized or unknown sellers can hamper your ability to maintain your brand’s share of traffic paid for by advertising.
Action Item #5: Start Using Amazon’s Customer Data Effectively
For brands wholesaling to Amazon, it’s easy to fall into the trap of focusing on the size of overall purchase orders, rather than also considering changes in consumer preferences and sentiment that will ultimately impact the size of those purchase orders. Yet, while Amazon may not share all of the data you’d like to see on your business and category on the site, there are all sorts of data publicly available that can help your brand improve its business on Amazon.
Finding and putting this data to good use is even more crucial now that you’re no longer a 1P vendor. But you have to know where to find the data, and how to collect and use it effectively.
If you your brand has been kicked off Amazon 1P, it’s a perfect time to designate someone in your firm to be responsible for data collection and analysis. This means looking at product reviews of your brand as well as your competitor brands, to understand the good, the bad, and the ugly about these brands.
You can also invest in inexpensive subscriptions to external software tools like Jungle Scout (to help you size sales opportunities) and Reviewbox (to track changes in prices, product reviews, content, etc.). Most importantly, you need to have a person whose responsibilities include collecting and synthesizing these data into insights that can be shared with appropriate stakeholders in the company.
All Is Not Lost if You’ve Been Removed from 1P—But You Must Act Now
In summary, if you find your brand has been moved out of Vendor Central, focus immediately on:
- Registering your brand with Brand Registry (which you should be doing already).
- Cleaning up your distribution on Amazon (and consequently, any variance on the retail prices of your products).
- Identifying how to go to market through Amazon’s third-party seller (3P) platform, whether through an account you own, or a new partner that can help ensure your products are available for sale.
- Assigning someone on your team the explicit responsibility of managing your advertising activities on the Amazon channel. It is not likely that an existing sales person is the right fit to handle advertising, catalog, and channel control issues.
- In the same vein, assigning someone to be responsible for collecting and putting Amazon’s customer data to good use.
If you take these immediate steps, you will be better positioned to stabilize your sales revenues, and maintain traffic and visibility of your products on the Amazon channel.
Note: An earlier version of this article stated that Amazon had “announced” the removal of a large number of 1P vendors, but the company didn’t make any such formal announcement. The title and first paragraph of the article have been edited to reflect this.
Need More Guidance for Your Post-1P Transition? We’re Here
If you still need support with the huge transition your brand is now facing, get in touch with us.
As an advisory services and marketing firm, we support brands with their go-to-market efforts on the Amazon channel. We specialize in first-party, third-party, and hybrid distribution models, offering day-to-day account management, advertising campaign management, listing creation and optimization, and senior executive advisory services.
Our leadership team includes the former head of Amazon Services, a veteran manufacturer representative, and a serial entrepreneur who has built and sold multiple brand companies that leveraged the Amazon channel.
Click here to contact us if you need support identifying and rolling out the right Amazon channel strategy for your brand, or call us at 801-900-4723.