Today Amazon announced that they are discontinuing their Vendor Express program (references: 1, 2). This means companies who have been selling on Amazon through the Vendor Express program must now figure out another way to sell on Amazon, or forfeit their Amazon sales.
In terms of transition time, there isn’t much notice. Amazon says they will stop issuing purchase orders (PO’s) on May 21, 2018. They will then presumably continue to sell whatever stock they have, but if you are reading this on March 13th then you have somewhere in the range of 60 to 90 days, perhaps 120 days where your products will still be selling on Amazon and then that channel will dry up… unless you do something about it.
There are basically 3 alternatives to consider, for brands who are currently selling on Vendor Express and don’t want to just give up Amazon as a sales channel:
Moving from Vendor Express to Vendor Central is a great option, but unfortunately the vast majority of business on Vendor Express won’t have this option. The Vendor Central program is more robust, with more ad options, access to real people as buyers (not just a computer algorithm), etc. Its all together just plain better than Vendor Express, but its only available to very large brands with household name recognition. If you work for Coca-Cola or HP, great. Otherwise, its not an option for you. And its invite only.
This is an option for literally every brand who is currently on Vendor Express. They can move to Seller Central and become sellers. There are many pros to this in that you have better control of retail pricing, (some) access to customers, better advertising options and the ability to enroll in brand registry. However, its A LOT MORE COMPLICATED as through Seller Central you are the seller, not Amazon. Even if you do Fulfillment by Amazon (FBA) which takes care of storing inventory and shipping orders, you still have lots of things to worry about:
Sales Tax – if you are selling through Seller Central with FBA, you have sales tax liability in 25 or so states. So you need to sign up for sales tax licenses and then begin collecting and filing monthly/quarterly in all of those states.
Inventory Caps – new Seller Central accounts typically have an inventory cap of 5,000 units. It can be increased based on performance over time, but if you are selling more than say 2,000 units a month through Vendor Express you’ll likely have issues keeping product in stock due to this cap.
Customer Service – anyone selling via Seller Central has to meet Amazon’s performance requirements, which means responding to all customer inquiries within 24 hours. Even on weekends.
Inventory Projections – on Seller Central, the onus is on you to analyze sales, predict quantities and initiate inventory shipments.
Category Ungating – sellers cannot sell in every category by default. For many categories you must apply and be granted permission. For some, you are able to sell right away.
Profit Margins – on Seller Central you have to manage the profitability of your products and brand much more closely. You sell the product for the full selling price, but then you have many different fees that you don’t have on Vendor Express, where you sell at a wholesale price. Fees include:
Amazon’s Commission (generally 15%)
Fulfillment Fees (FBA only)
Sales Tax Collection Fee
FBA Storage (monthly)
FBA Storage (long-term)
Professional Seller Account Fee
Sell to an Amazon-Focused Distributor
We believe this option makes the most sense for most companies who are looking for an alternative to Vendor Express. If you find a company that is already an established seller on Amazon, they will have systems and processes in place to handle things like inventory management, customer service, managing profitability, etc. You can then just sell to them at a wholesale price just like you do to Amazon. So for a company that was formerly on the Vendor Express platform, this option most closely resembles what they have been doing. Simply receive a PO from the distributor and then ship them the product, and they’ll make sure it sells on Amazon. Some distributors will even help ensure your brand meets your standards, honor MAP pricing and offer other value-adds as well that Vendor Express doesn’t.
For the past several years, Net Focus Media has helped companies who wanted to sell through Seller Central (option 2) as well as those who wanted to sell to a Distributor (option 3). But more recently we’ve focused exclusively on functioning as a Distributor for companies who want to sell on Amazon without the difficulty, learning curve and time investment involved when setting up a Seller Central account. We’ve simply found this to be a better model than consulting and advising companies to do it on their own, as we’ve already built the skills, systems and processes to be efficient. Simply adding a few more products to our catalog is relatively simple, and the products end up selling better than if the company sells on their own, since our account is established and a top-performer.
Sell to Us Wholesale… We’ll Sell on Amazon For You
If you are currently in the Vendor Express program and need a hands-off way to continue to sell on Amazon, and in fact grow your Amazon business then please contact us today. Net Focus Media is looking to add new brands to our catalog and if you contact us quickly, we can even ensure there is zero downtime for your Amazon channel. Contact us today to discuss an Amazon sales channel partnership.