6 Steps to Transition to Seller Central on Amazon (Without Losing Sales)
Information about setting up Seller Central accounts is everywhere. Yet there is a distinct difference between starting fresh as a 3P seller and transitioning a current 1P business (especially when your vendor sales make up a significant portion of your overall revenue).
Starting from scratch means missing out on a significant amount of sales during downtime, not to mention abandoning the effort you’ve already sank into your 1P approach. Transferring a business to 3P, on the other hand, means utilizing the assets and processes you already have in place to quickly build and implement a front-to-back strategy which will recapture your sales.
That’s why I’ve laid out some crucial considerations when transferring a successful 1P business to the 3P side of the Amazon platform. For unmanaged 1P vendors who are at risk of being funneled into Seller Central in the coming months, these steps should carry increased urgency.
Transitioning Without Losing Sales
The key to any successful transition is to keep the sales momentum going. Brands who let their sales dip for too long have a harder time building up their product relevance to the levels that they may have enjoyed as a 1P vendor. Sales history does not move from Vendor Central to Seller Central, so you will need to implement the following steps quickly to maintain your product relevance.
1. Choose a Method of Fulfilment (FBA, FBM, 3PL)
Since you will no longer be selling inventory wholesale to Amazon, you will need to decide how your new orders will be fulfilled. You should start with an analysis of your options, including any discounts or programs in which you are eligible to participate. Sellers should prioritize acquiring a Prime Badge, as customer conversion rate is drastically increased when products are listed under Prime.
One way to receive the all-important Prime Badge is to pursue FBA (Fulfilled by Amazon). This fulfillment method is a popular option which allows 3P sellers to fulfill their orders from Amazon warehouses while still maintaining ownership over the products. Products will receive the Prime Badge and customers will see the trusted “Fulfilled by Amazon” label during purchase.
Keep in mind that not every product or brand is eligible for FBA. Amazon has published their requirements and policies online for 3P sellers to review. Additionally, brands who pursue FBA have tax liability in those states which house their products and, therefore, need to factor in those costs when weighing FBA as a fulfillment option. Amazon has a handy FBA Calculator to help brands determine the relative costs of participating in the program along with a tool within Seller Central to estimate the tax cost.
A useful FAQ for 3P seller taxes on Amazon can be found here.
Though FBA isn’t the only way to receive a Prime Badge. Those who utilize the Fulfilled by Merchant (FBM) method to ship products directly to consumers can apply for Seller Fulfilled Prime if they can prove their ability to reliably and consistently meet Prime shipping standards. Seller Fulfilled Prime is currently not accepting new enrollment, but brands can still get on Amazon’s waitlist here.
A third fulfillment option for 3P sellers are 3PLs. These are independent businesses which provide warehousing and shipping services. While 3PLs can prove to be a reliable option for some brands, their services can be limited based on product size, type, or volume of sales.
2. Prepare for Operational Changes
There are a number of operational changes that you will need to adjust to if you are transferring your business to 3P selling. For instance, 3P sellers lose access to the automated EDI systems which work to ensure that product inventory never gets too low for 1P vendors. Without this system, manuel monitoring of inventory is necessary with FBA.
Although this presents another challenge, because sellers are also without access to the same highly-accurate forecasting tools which help vendors regulate their inventory. Instead sellers must implement a process to make educated inventory projections. By ensuring that this operational element is in place, 3P sellers can prevent out-of-stock occurrences which, if too frequent, can result in account suspension.
Yet another operational change to expect is with payment structure. Whereas 1P vendors receive payment (often for large orders) within 30 or 60 days of shipping a purchase order, 3P sellers are paid only when a product is shipped to the customer. That brings up a number of cash flow considerations for transitioning brands.
3. Setup a 3P Account
Perhaps the most basic step transitioning brands should take is setting up their 3P account. To do this, you will need contact, tax, and financial information. You will then need to complete Amazon’s Self-Service Registration and pay a professional account fee of $40/mo. You could set the account up as basic until you are ready to start using it to avoid fee prior to activity, though you should switch to the paid professional account once you are live.
4. Enroll in Brand Registry
The Brand Registry program gives sellers the tools to manage their brands on Amazon and report infringements more easily. Over 60,000 brands are already using Brand Registry and reporting 99% fewer infringements than before. This is important for sellers both for brand protection purposes and because it is a requirement for sellers to access features like Enhanced Brand Content, Brand Stores, and Early Reviewer Program.
Brands looking to sign up will first need to make sure that they are eligible by reviewing Amazon’s Brand Registry requirements. If eligible, sellers will need to provide digital assets for trademarks and USPTO trademark numbers as well as the filer’s contact information.
5. Ensure Pricing Control
One benefit of Seller Central is that brands have more control over their own pricing. However, Amazon has strict policies against price gouging, so brands should be careful not to increase their prices too rapidly else risk BuyBox or ASIN suppression. The best practice is to keep prices listed within a reasonable threshold of matching competitors of Amazon.
6. Expand Your Team
Let’s be real. The transition from Vendor Central to Seller Central entails more than just flipping a few switches. The above steps are necessary to ensure that you do not lose out on sales. They are not, however, sufficient to secure your future success on the Amazon platform. Whether handling fulfillment, inventory management, or any of the other considerations above, pulling the right levers and doing so without hesitation can be the difference between sticking the landing and falling down flat.
That all goes, however, without mentioning the ongoing and tireless effort of actually driving traffic and selling product through advertising campaigns and high-quality Amazon content. You need a team of experts, whether internal or external, who work full-time to maximize your potential on the platform. With a suite of new tools and opportunities for 3P sellers, it is up to transitioning vendors to dedicate the resources needed to turn what could be a turbulent time for their Amazon business into a chance to continue growing their e-commerce business.
Reach out to our team at Orca Pacific to discuss your future on Amazon.