Amazon offloads vendors to Seller Central to boost profits
Beginning on March 4, 2019 several Amazon vendors did not receive purchase orders from the e-commerce retailer, according to a report by Digiday. That vendors received different explanations from the e-commerce giant coupled with rumors of the launch of the company’s new ‘One Vendor’ platform, stirred up panic among those that sell their products on Amazon. Most of these vendors sold products that were bulky to ship and did $10 million or less in annual sales.
Amazon’s ‘One Vendor’ is a unified supplier platform that streamlines the company’s Vendor Central platform, meant for first-party sellers, and Seller Central, which is meant for third party sellers. In November 2018 Recode reported that the move would give Amazon tighter control on where and how brands can sell their products.
An Amazon spokesperson responded to DigiDay in an email saying, “We regularly review our selling partner relationships and may make changes when we see an opportunity to provide customers with improved selection, value and convenience.” Amazon also rubbished rumors by saying there was no program that currently exists called ‘One Vendor’.
Digiday reported that several vendor-fulfilled accounts on Amazon were told they wouldn’t be part of the Vendor Central program any longer. They also reported that in February Amazon sent notice to vendors with annual sales volume on Amazon over $10 million a year — that any business they were doing simultaneously in the third-party marketplace would be removed.
Amazon will generate e-commerce revenue of $317 billion in 2019, representing 52.4 percent of all online sales in the US, according to EMarketer Inc. Kiri Masters who reports for Forbes reported that pushing vendors onto a centralized platform will help realize savings for Amazon. The Vendor Central platform demands more manpower and provides more services to shoppers. Seller Central vendors, on the other hand, have to manage their own customer support, inventory management and shipping, helping Amazon save on its warehouses, maintenance for one unified platform and product margins with vendors who are charged a 15 percent fee for referrals.