Amazon Has Dropped Thousands of 1P Vendors: Here's Why It Happened and What To Do About It
What Happened and Why:
Earlier last week, thousands of unmanaged 1P vendors (those without an assigned vendor manager from Amazon) were effectively dropped from Amazon’s Vendor Central. The move was without warning and affected brands across categories and regardless of performance metrics. First indications of the shutdown came when vendors who utilize Direct Fulfillment to ship to consumers received sudden notifications that they would stop receiving product orders to fulfill. Then, this Monday, the scope of the situation became clear as unmanaged vendors, more broadly, found that Amazon hadn’t placed their regular weekly purchase order. Vendors were told that they would be notified if purchasing resumed, but others have been directed to open Seller Central accounts, confirming our intuition that the departure is permanent.
While Amazon’s decision to cut off unmanaged vendors was abrupt and vague, it is just the latest in a series of ongoing measures related to the merging of Seller and Vender Central into a single entry some refer to as One Vendor. First reported on by Recode, the merge would give Amazon more control over how and where brands sell on their platform. The unified portal would also allow Amazon to do away with programs like Direct Fulfillment which would become redundant with 3P merchant fulfillment.
By migrating unmanaged 1P vendors into 3P sellers, Amazon is encouraging vendors to take a more active role in their business on Amazon, from inventory and fulfillment management to price-setting. The shutdown is likely to spread to remaining 1P vendors who do not have a vendor manager and/or do less than 10 million dollars on the platform yearly.
What Vendors Can Do Now:
Step one: don’t panic. While moving away from Vendor Central (albeit involuntarily) might be troublesome, it is not a valid reason to abandon the platform altogether. We have all seen the statistic: 50% of all product searches start on Amazon. While capturing these sales may become temporarily more difficult, the payoff for staying engaged in Amazon is enormous (especially with a plan in place). Change is to be expected from innovative companies like Amazon. Those who respond with flexibility will reap long-term benefits.
Step two: get help. If there were ever a right moment to call for reinforcements, it would be now. Every day that passes without Vendor Central functionality is a day of lost revenue. One way forward for many vendors is to transition to 3P selling, a complex endeavor that could take months to handle internally. Agency experts, on the other hand, can guide vendors through the muck and minimize the damage of downtime. After all, it’s the reason that we exist in the first place.
Though any agency is better than going at it alone, consider how your Amazon agency would help with a transition to 3P, specifically. For years, Orca Pacific has specialized in developing 3P strategies for 1P vendors, meaning that our experts are uniquely positioned to approach 3P selling through a 1P perspective. What’s the difference? For starters, we recognize the need for strategies that allow brands to maintain ownership over their products and content. We also utilize technology to encourage relevancy of products during downtime so transitioning vendors don’t miss a beat. Without consideration of these factors, the 1P to 3P transition can become unnecessarily costly and time-consuming only for vendors to end up like every other seller on the Amazon platform. Our proven process can turn what seems like an insurmountable challenge into an opportunity for new growth and success.
Are you interested in making a quick and effective transition from 1P vendor to 3P seller? Reach out to our team to learn more about how we can help.