Ever since Amazon’s temporary suspension of POs via Vendor Central in March, followed by cryptic emails, and backpedaling, many have wondered about Amazon’s plans. Is Amazon moving to a “one vendor” system? What do these actions and developments mean for vendors, sellers, and for the future?
To provide insight on these issues, we’ve asked a variety of industry experts their opinions on some relevant questions. At eCommerce Nurse, we always hope to provide our clients, readers, and visitors with a better picture of the rapidly evolving issues surrounding Amazon. The opinions represented here are those of the following contributors, and not the companies and services they represent.
Meet the contributors:
Dani Thompson: Dani is a senior client manager at eCommerce Nurse. Having worked in marketing since graduating from university, she spent 3 years at Amazon in site merchandising on the Home and Garden retail team. During her time at Amazon, she established vendor conferences, worked closely with PR and liaised with vendors to effectively build and manage promotions and marketing activities.
Jérôme de Guigné: Jérôme and his team help brands grow quicker on Amazon globally. They offer coaching services, account management (for vendors and sellers) and online training/webinars. Jérôme comes with 20 years of sales, eCommerce, and international distribution experience in Europe, Asia, and North America. He focuses on real-world proven solutions, with results as great as 5x sales growth within 2 years
Travis Rudolph: Travis Rudolph is the founder of Trek Strategy. He has a passion for brands, retail, and an unparalleled expertise of how Amazon works and what makes them tick. Travis started this business because he knows how to help companies, big or small, navigate the maze of Amazon and be successful. Previously, Travis was the Vice President for Amazon Sales and Marketing at Netgear.
Becky Trowbridge: Becky Trowbridge is the Content Editor at eComEngine, a software company that helps Amazon sellers accelerate their growth, through tools such as FeedbackFive, RestockPro, MarketScout, and SmartPrice. She enjoys traveling and is attempting to teach herself to crochet this year.
Mark Pettit: Mark is the founder of Skye High Media, an Amazon-focused agency, helping brands of all sizes achieve optimum results on the world’s leading eCommerce platform. Mark is an ex-Amazonian and worked within Amazon's Advertising division for 3 years, helping vendors and sellers manage their ad-based goals. He has also been a member of the eCommerce Nurse team for 2 years, taking on an ad manager role and managing the sponsored ads side of the business for eCommerce Nurse clients.
Pat Petriello: Pat is a former professional seller on Amazon.com, Amazon.co.uk, eBay, Buy.com and former member of the Amazon Seller Service Team. As a Head of Marketplace Strategy for CPC Strategy (now Tinuiti), he’s responsible for keeping his team on the cutting edge of Amazon trends and insights. Pat is a thought leader in the industry, speaking at a variety of events and often quoted in the industry press. He’s passionate about understanding Amazon as a channel and helping brands utilize its full potential.
Mark Reich: Mark is the VP of Vendor Solutions, responsible for Sellics Vendor & Agency business, which currently manages >250 clients globally. Previously, Mark has worked in various sales and leadership roles in SaaS startups (e.g. Dropbox). Mark started his career as an entrepreneur and co-founder to the current Sellics founding team on a different project.
What do you think about persistent rumours of Amazon moving to a “one vendor” system?
Dani Thompson: It makes sense for Amazon to move to one system. At the moment, there is such a big divide on the features available to vendors and sellers. Amazon is very much about efficiency and customer experience, so moving to one system looks like an obvious move, but one that will have to be carefully considered to keep all parties happy. If the rumours are true, I can’t wait for this mother of a vendor system. Imagine what Amazon can achieve if they throw all their resources into just one system! Maybe we’d even get an improved way of loading new products and a help-desk that had the autonomy to actually take action rather than farm the questions out to “the relevant team.”
Jérôme de Guigné: Amazon is a very secretive company, they don't announce much. They are very much into the doing, less into the saying. Therefore, I am always very cautious with rumors. It probably started from someone who has a contact within Amazon. But first, the people inside Amazon know very little what is going on elsewhere inside Amazon; and second, those who really do know say nothing.
So here's for the rumor. What we can say is that lately — and more so in the US, i) both vendor and seller systems are becoming more and more similar (offering very similar features, whereas 2 to 3 years ago the differences were much greater), ii) that it becomes increasingly difficult to become a vendor (clearly in the US, less so in Europe), iii) that Brand Registry is making sellers that own brands very similar to vendors. Finally, iv) the number of vendor managers have decreased — numerous brands we work with are now in full automated service now, with no one responsible for the account. So we can see — for a fact — that amazon is on-boarding fewer vendors, and making the seller system more attractive. To say they will merge both systems, I wouldn't venture too much into this, and wait and see. (All of this is less true in Europe.)
Travis Rudolph: When Jeff Wilke (CEO of worldwide consumer) appointed Doug Herrington SVP for North America Retail and gave him both the vendor and seller platforms to manage, I knew that changes were afoot. Previously, they had been managed by two separate heads which created a type of firewall in terms of the operating style and how the systems were managed. Combining the two platforms makes sense when you view the merger in terms of data. Integrating all that data (pricing, items, sales, sellers, vendors, traffic) into one system should allow easier access and management, and I believe this is important for multiple reasons. For example, for years it has been known that the seller platform had more robust capabilities, which makes sense when you consider that sellers adopted self-managed tools years ago because they had to (sellers have always been on their own in terms of managing their business). Whereas on the vendor side, the tools for self-management didn’t exist and have only recently been introduced as Amazon works to downsize the retail overhead costs. Also, driving the integrated data lower into the management hierarchy will give actionable information to more levels of leadership both in the world of vendors and sellers, but also, I believe, the advertising group. Amazon’s advertising arm thrives on data, so the more access they have, the more compelling their offerings will be.
Becky Trowbridge: I would not be surprised to see Amazon move to a one vendor system, but depending on how it is implemented I think there could be major concerns for both vendors and 3P sellers. There are significant differences between Vendor Central and Seller Central, but I can definitely see where maintaining one platform and having the same rules for everyone would be more manageable for Amazon.
Mark Pettit: I don't see Amazon moving to a one vendor system. Rumours have it that a brand will be reviewed on a per ASIN basis, meaning that it will either be allowed to sell on marketplace or through Amazon directly (wholesale). The ramifications of such a set up could encourage brands to limit the number of items they list on Amazon, which goes against one of Amazon's main goals: Selection.
Pat Petriello: It does seem likely that Amazon would endeavor to reduce internal system redundancies and costs by moving all brands to a unified platform. What that platform may look like is still up for debate, but Amazon ultimately wants to dictate how brands interact with the marketplace (seller, vendor, hybrid) as opposed to the brands making that decision and trying to navigate the gray areas of what is or is not permitted at any given moment.
Mark Reich: There have been a number of statements by Amazon indicating that they are actively working on reducing the level of differentiation between the seller and the vendor platform. From our perspective, the move to unite both organizations under the same leadership hints to such a development. However, Amazon has also never publicly confirmed the existence of a program called "one vendor" and from our interaction with Amazon, there seems to be no indication that such a broad project actually exists.
From our perspective, it is likely that true to its core DNA, Amazon is testing a variety of initiatives to achieve a certain set of objectives rather than pushing one centralized program aligning all internal resources. These objectives may include increasing the profitability and scalability of their relationship with brands as well as making successful selling tools tested on one platform available to both sides (example: Brand Registry, advertising options, A+/Enhanced Brand Content).
Another limitation to introducing a new platform in one go, is that larger brands typically active on the vendor platform are hesitant to adapt, as evidenced by the intense reaction to the sudden purchase order draught in March of this year. This indicates that if Amazon were to actually implement a new, unified system on the backend, they would have to inform their suppliers well in advance to avoid major fallout. These direct consequences could include blows to the cherished customer experience (just imagine your favorite LEGO Star Wars set suddenly going out of stock and not coming back until the retailer has successfully migrated to a new platform).
This is not to say that the system will never change or be unified. It just means that it is likely that there will be incremental steps or a long (and not so secret) rollout phase should any major changes be the order of the day.
"Amazon has also never publicly confirmed the existence of a program called one vendor and from our interaction with Amazon, there seems to be no indication that such a broad project actually exists." Mark Reich, Sellics
Do you believe Amazon will continue to work with vendors or move to a seller-only platform?
Dani Thompson: I think Amazon will look at the 80/20 rule and continue to work directly with the vendors who bring in the majority of revenue. A lot of eCommerce Nurse clients we work with have used both Vendor Central and Seller Central, but they actually prefer having control over their account/brand/pricing on the Seller Central platform.
Brands are often daunted by the amount of work which Seller Central can require, but that’s where working with an agency like eCommerce Nurse (who knows the systems inside out) can work to your advantage. I would advise any brand thinking of listing on Amazon to take time and seek advice on which system may work best. If you list on Vendor Central first and then move to Seller Central, it can have huge implications on content ownership — even changing a product title can take weeks.
Jérôme de Guigné: Amazon wishes to have the best offer and the best prices worldwide. To do so, I very much doubt they would remove this option to source themselves. On critical branded products, they will still want to keep the potential of a direct source. I also doubt they will stop their own private labels, which go through the vendor system.
Travis Rudolph: I believe that Amazon will continue to engage with the upper crust of manufacturers for two primary reasons. Pricing and availability are two of Amazon’s most sacred pillars for customer experience. If you take away the vendor platform, then under the current rules of engagement, Amazon would lose control over pricing and inventory levels because those decisions would be in the hands of sellers. Just imagine if Samsung priced their most popular TVs 10% higher on Amazon during Black Friday, or decided to stock out Amazon altogether. You could still likely purchase those TVs from a marketplace seller at a lower price, but the trust factor for third-party sellers is still not nearly as high as if you buy that same product as “ships from and sold by Amazon”. Amazon would begin to lose the trust of their shoppers to always have competitive prices and be in stock. I do believe that you’ll see Amazon forcefully begin to shift smaller brands to seller-only status in the near future. They already started doing this with non-brand owning distributors a few months back.
Becky Trowbridge: I think Amazon may ask that vendors move to a seller-only platform in order to continue to sell on the Amazon marketplace. If that’s the case, I’m wondering if programs like Amazon Vine will be extended to all sellers or phased out entirely.
Mark Pettit: I'm of the opinion that Amazon will always have a Vendor system in place, however only for the top 5% most profitable companies on their platform. Amazon is under pressure to make it's bottom line more profitable, hence why it's pulling resources out of vendor services. That being said, brands that are growing substantially on the platform are within Amazon's interest to continue supporting.
Pat Petriello: I 100% believe Amazon will continue to work with key brands and their vendor relationships are not completely going away.
Mark Reich: The vendor program still retains two key advantages that are relevant to Amazon's flywheel: Control of selection and control of price. To us, it seems unlikely Amazon will want to fully give up these powers, particularly for products and brands that are highly attractive to consumers and account for significant search traffic and purchase volumes.
While being more efficient and scalable, a seller-only marketplace may make the selection less attractive over time as bigger brands, unwilling or unable to run a seller model, pull their official portfolio from the platform. Taking this risk would not be in line with Amazon's core flywheel objectives, so unless they can convince a significant share of major brands to run on a seller model, we don't believe that they will abandon the vendor relationship entirely.
Is it likely Amazon will stop brands from having both seller and vendor accounts?
Dani Thompson: This is an interesting question, but one I think (with the current Amazon format) would be hard for them to enforce. Maybe this is why Amazon is going down the route of BrandHQ and the Brand Registry. If this was the case, Amazon still has a few tweaks to iron out when it comes to having continuous stock coverage and a key account manager for important brands.
Jérôme de Guigné: They have stopped some brands doing so in the States, but far from all of them. I would be also very careful not to draw quick conclusions here. It could be that for some categories or price-sensitive products it makes sense, but I doubt it does for all products. Amazon is very pragmatic. What is best for end customers? If hybrid means better availability and stable service, they won't stop it. My guess is that a few category managers got angry of certain brands playing the hybrid strategy and competing on the same product — which is a bad way of doing it.
Travis Rudolph: Despite some very passionate opinions that exist within Amazon on this topic, I just don’t see how Amazon could enforce this. When Amazon began automating many of the processes that affected vendors (ordering, pricing, advertising) retail vendors lost control of many of the levers that could restrict a brand into one platform or another. For example, vendor systems began making decisions based on profitability almost two years ago. If a product had terrible PPM (pure product margin), the automated ordering systems simply would not order the product. The in-stock manager began to lose control to override the system. So, the only way for a brand to have that product in-stock would be through the seller platform. And if a brand wants to launch a search campaign (PPC) on an unprofitable product, they can’t on the vendor side.
Becky Trowbridge: Based on what I’ve been seeing in seller forums and industry communications, I think it’s possible. Due to the differences between the accounts, it seems likely that Amazon would want to streamline all sellers and vendors into one system.
Mark Pettit: It's always possible and will only be determined once we know the type of strategy Amazon is looking to go with. Amazon is known for changing its mind, so it's hard to gauge which direction it will actually go in. I think Amazon will definitely want brands of a certain revenue cap to be moved in or out of Vendor programs based on total turnover. If Amazon is looking to automate more areas of its business and focus resources elsewhere, in a relatively slow-growing platform (retail), then I can see them revoking access for many vendors and telling them they can only access seller accounts.
Pat Petriello: It's likely that one of the primary goals of Amazon's rumored unified platform is to do away with the Seller Central vs Vendor Central dynamic which exists today.
Mark Reich: This is a topic where conflicting reports of customers in different marketplaces have left a question mark for us. Considering the likely objective of reducing the differences between the platforms and the long-term goal of making the relationship with brands more profitable and scalable, there should be a real interest on behalf of Amazon to acclimate brands with the seller model.
However, there are regular reports of hybrid accounts being shut down. We are also working with brands which Amazon is actively supporting in moving to a hybrid model, even lending support to run both platforms. From our point of view, this is a direct consequence of Amazon's decentralized approach. There seems to be no globally effective policy spanning all markets and categories. Rather, we have seen Amazon become more flexible and supportive with accounts that are active in categories or markets where Amazon has a vested interest in fast expansion.
Therefore, it is very hard to give a general direction here. However, we do suggest that vendors take a closer look at what running a seller account would mean for their business in the long run, even if there is no direct incentive or even approval from Amazon to start such an account in the short term.
Do you think Amazon will merge the seller and vendor platform into one in the future, and how soon?
Dani Thompson: I would love to see this happen. Seller Central has so much to offer and is — with every update released — becoming more slick and user-friendly, although product uploading is the one area which hasn’t changed much at all since I worked at Amazon. Whereas it’s pot luck to which country you’re working in as to the features you’ll get on Vendor Central, countries like Canada are still very much behind for the vendor platform. It would be awesome to level the playing field and for everyone to have access to a knock-it-out-of-the-park system!
Even EBC (enhanced brand content) and A+ modules are different on the two systems. Both having pros and cons but at the moment working on EBC (Seller Central) offers brands a lot more content opportunities. So, for a company that is all about efficiency, it makes sense to have one platform. As to how soon? Who knows, but the sooner the better in my opinion but ’something’ is certainly on the way.
Jérôme de Guigné: Here again we hear a lot of rumors of merge of systems. My experience is that as vendor or seller platforms do not impact end users really, they are very low on the priority list of Amazon. Once they do it, it often doesn't work well. One example: The pan-EU vendor central. It was meant to work perfectly. They stopped it six months after launch, because not working. Another thing: Amazon is presented as a worldwide company, but in many aspects, it is not. They are very localized, and many databases are made locally, and therefore very difficult to merge. In a word, if a "one vendor" system comes up, I'd wait at least six months to see if it really works, because if it doesn't, Amazon will have no shame to discard it and move onto something else.
Becky Trowbridge: It’s tough to say. I think the email communication that many vendors received earlier this year is a good indication that it could happen sooner rather than later. In the meantime, if vendors are going to make the move to Seller Central, it’s important that they understand the differences between Seller Central and Vendor Central. For example, on Seller Central Amazon seller feedback is a key metric that is important for everything from remaining competitive to ensuring that your account is in good standing, but this is not a metric that is in place for Vendor Central.
Mark Pettit: It's obvious both systems are very separate. Seller Central has clearly had more love and care put into it over the years. It could be the case that both systems merge into one, however, based on whether your ASIN qualifies for wholesale or marketplace, would determine the level of data a brand gets back. This approach would be rather messy. Does that mean that I can see more data for one ASIN and not the other?
Pat Petriello: It's difficult to predict timing on what, if anything, will happen on this front, and Amazon is historically tight-lipped about these type of releases.
Mark Reich: We believe that it is more likely that the platforms will gradually merge with more and more functionalities being aligned across both platforms, rather than an entirely new system being introduced in the near future. Such an alignment — allowing for a central login across seller and vendor accounts, or developing joint user interfaces for individual selling features (e.g. in advertising) could gradually appear over time without much advance notice.
Driven by teams, particularly in the areas of advertising and stores, Amazon has increased its pace of innovation concerning the development of selling features for both sellers and vendors. We would expect for them to be able to introduce such changes soon — they may even get going on this in less than a year.
What do you think Amazon will look like in 3 years’ time?
Dani Thompson: This is an interesting question, if you’re talking about Amazon retail, then I don’t think it will just be website based. I don’t imagine we’ll be at the point in three years of being able to think of something and have it appear. But I do believe that the Alexa and Echo will play a much bigger part in the buying process. I’d like to see more Amazon on the High Street, too, and bringing jobs to local communities, be that in retail or partnered other resources a community needs. I imagine that delivery times will become even shorter and that they’ll be evolution in the delivery process; more drones, eco-delivery options, green warehouses, maybe we’ll be sending our mail with Amazon, too.
I’d love to see Amazon becoming greener, cutting out plastic packaging on all products including the materials the suppliers use to wrap their products for display. And while Jeff Bezos aims for the moon with his rocket, that he’s not forgetting the impact his company is having on planet earth.
Jérôme de Guigné: I believe they will go on disrupting other markets: Cars, travel, boats, services ... they have the best performing sales platform in the world, and the largest audience, they can try whatever they want. A very big opportunity they are pursuing is B2B. If they achieve having B2B and industrial companies purchase from them, that will be a very big milestone, and could lead them into buying raw material (steel?), which is an enormous business.
Travis Rudolph: Amazon loves to create and foster internal competition as they believe that it creates better “products.” I think that retail (vendors) will still exist, but all the daily controls will be automated and self-managed and the job of the vendor managers will be simply program (funding) and availability of selection (assortment). The seller side of the platform will dwarf the vendor side by then because they are more profitable, nimble, and easier to work with. I think you will see mega-sellers that will become so large, that they are the size of most top manufacturers on the platform (this is already happening).
More broadly speaking, Amazon’s commitment to media, food, and healthcare is obvious. I think Amazon will own and operate one of the largest grocery store chains in the US first. Amazon covets Walmart’s ability to bring a customer into their stores once per week because they “need” groceries. I also believe that Amazon will find a way to lower healthcare costs and offer that to their members (Prime Health, anyone?). And I can also see Amazon being one of the largest media publishers in the world (music, gaming, film). And they will combine all of these experiences seamlessly into a customer’s daily life because of all the little gadgets they are putting in your home that are controlled by Alexa (Echo, Fire TV, eero WiFi, Blink Cameras, door locks) and are constantly feeding information back to Amazon to understand what makes your life easier and better. That either makes you very excited or very terrified (for the tin-foil hat crowd).
"The seller side of the platform will dwarf the vendor side by then because they are more profitable, nimble, and easier to work with." Travis Rudolph, Trek Strategy
Becky Trowbridge: More automated, with smarter product recommendations. Advertising will continue to grow and will eventually be incorporated into Amazon Alexa-enabled devices. Faster delivery will be available, and hopefully packaging will be more sustainable. Amazon’s connections with Whole Foods and Kohl’s will continue to grow. Being brand registered will be more important than ever, and Enhanced Brand Content will be even more essential to optimizing product listings.
Mark Pettit: I don’t see the landscape changing too much. There will be more focus in getting non-profitable vendors into the seller program, and also focusing on the top earners within the vendor side of the business. As always with Amazon, changes happen without people really expecting them, and I think that will continue to be the theme of the world’s most dominate e-Commerce retailer.
Mark Reich: This question is very difficult to answer as there are so many developments at play that could change the entire trajectory of e-commerce.
For the purpose of this article which focuses on the interplay between Amazon's retail and marketplace business, we can propose three predictions:
1) The very big brands will grow their Amazon presence and the shopping experience on Amazon will reflect this.
Amazon has identified a huge growth opportunity in its advertising business and has realized that in order to reach scale quickly and with limited investment of resources, it needs the presence of big advertisers on the platform. As is often the case, there may not be a broader, top-down initiative to drive big brand success. But the advertising business is already heavily catering to top-spending consumer brands and developing more and more features to win advertising dollars from competitors, notably Google. This will lead to a trend where more sophisticated advertising strategies (like retargeting) or formats (like video) are becoming available that heavily favor advertisers with relevant know-how and resources. Therefore, a shopper looking for products in top categories three years from now might see significantly more large brands appearing in their search.
2) Everybody aside from the big brands will be fully automated, and the tools and platform will evolve accordingly. However, selection will be affected by this as mid-market brands are crowded out by fast-scaling, pure-play Amazon brands.
This is not news to anyone. Amazon's retail business has been busy streamlining itself in recent years. One market segment that is strongly affected by this is the large number of mid-market brands acting through Vendor Central. A recent survey conducted among Sellics customers showed that while no company generating more than $10M in annual revenue on Amazon was affected by the halting of purchase orders, 2/3 of the companies generating less than $2.5M were affected. It seems that after years of trying to push promising smaller brands into Vendor Central, Amazon now goes the other way after its marketplace team has shown that it can outcompete any retail initiative in terms of efficiency and margins. In order to effectively cater not only to resellers or pure-play FBA brands, Seller Central will evolve and offer brands of all sizes a multitude of options & features to allow them to enter the B2C world.
However, many older multi-channel brands will not adapt quickly enough to this change and as they lose the remaining advantages of the vendor program, may disappear from the platform as savvier pure-play sellers reach scale and outdo them using Amazon's newest features.
3) Amazon's foray into omni-channel commerce will be supported by the forced alignment between retail sales and advertising teams of its suppliers.
Amazon has already launched numerous plays with external parties to grow its brick-and- mortar presence, from the acquisition of Whole Foods to the more recent partnership with Kohl's to allow for in-store returns. As competition from the likes of Walmart increases, and top-line e-commerce growth slows in a more saturated market, Amazon will look to omni-channel to provide further growth potential.
At the same time, the emergence of Amazon Advertising has forced many brands to more closely align their sales and advertising teams in order to compete successfully on the platform. To facilitate this alignment, more and more brands are making Amazon a strategic priority and more senior marketing and sales executives are actively discussing their future relationship with the e-commerce behemoth. As it gains access to the executive-level, Amazon will be able to agree to more "Kohl's-style" omni-channel partnerships, bringing its capabilities to third-party physical stores and other brand POS.
This will make for interesting new shopping experiences for consumers, both on and offline, and ensure further growth for Amazon while allowing brands to push their digitization initiatives.
The future of vendors and sellers
In conclusion, there are still lots of rumors and many unknowns when it comes to Amazon. From the input of our experts and industry leaders, it’s clear that thoughts are varied on what the future holds for vendors and sellers everywhere. We hope this round-up has given you some insight into the many directions and paths Amazon could take. Thank you to all our contributors for taking the time to provide such valuable opinions.
