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Tag Archives: vendor central to seller central

Amazon

Moving vendor seller (1p) to seller central (3p)

Moving from the Vendor Central (1p) to Seller Central (3p) model with Amazon can be a game-changer for businesses facing complex vendor negotiations, lower product control, higher costs, and tight pricing algorithms. Many brands have started questioning the effectiveness of the 1P Vendor Model and considering the switch to Seller Central as a solution. 3P sellers on Amazon contribute to 56% of total Amazon sales, highlighting the potential benefits of transitioning to the 3P model.

The primary motivation behind this transition is the increasing costs associated with the 1P business model. However, there are additional factors to consider as well. If the 1P model has impacted your business, making it difficult to operate profitably, then moving to Seller Central could be right for you.

This blog post will explore why you should consider switching to Seller Central and when it is the right time to transition. Let’s dive in!

Why Should Vendor Central Move to the seller central model? 

There are three significant reasons why you should consider moving from the 1P to the 3P model on Amazon:

  1. Increase Margins: The 1P Vendor model has complex cost calculations like vendor agreements. Lately, there has been a lot of pressure put on Vendors with increased costs of selling on Amazon. At the same time, 3P has straightforward cost calculations, which helps to see the profitable prices.
  2. Change Product Prices: The 1P model may need to give you more control over pricing, leading to frustration and eroding profits. Moving to the 3P model allows you to take control of your prices and ensure a sustainable pricing strategy for your products.
  3. Control and Manage Inventory Yourself: In the 1P model, you use Amazon to generate purchase orders. By switching to Seller Central, you can have a more hands-on approach to managing your inventory. 

When Should You Move from Vendor Central (1P) to Seller Central (3P)?

Here are some scenarios that indicate it might be the right time to move from Vendor Central to Seller Central:

  1. Unsustainable Cost to Serve Amazon: The 1P model requires significant investment, but the returns may only sometimes justify the costs. Negotiating with vendors and managing chargebacks can become a burden. Moving to the 3P model can alleviate these challenges and provide greater control over your costs.
  2. Amazon Erodes Your Prices: If you notice that Amazon’s pricing structure is eroding your profits, it might be time to take control of your prices. Switching to the 3P model allows you to set prices and ensure a sustainable pricing strategy.
  3. Multiple Options to Sell Your Products: With increasing competition, many brands choose to have both a Vendor Central and Seller Central account. This approach allows them to explore different markets and provides flexibility in case of any fees or margin pressure changes from Amazon.

How to Switch from Vendor Central to Seller Central

When transitioning from Vendor Central to Seller Central, it’s crucial to follow the guidelines and terms set by Amazon to avoid any legal issues. 

Here are the steps to make a successful transition:

  1. Open a Seller Central account: Create a new Seller Central account if you don’t already have one.
  2. Register with Brand Registry: Ensure that your brand is registered with Amazon’s Brand Registry to protect your intellectual property and gain access to additional features.
  3. Choose a fulfilment option: Decide whether you want to use Fulfillment by Amazon (FBA) or handle fulfilment yourself (Fulfillment by Merchant – FBM).
  4. List your products: Add your products to your Seller Central account using file upload. 
  5. Set your product pricing: Determine the pricing strategy for your products on Seller Central to meet your business goals.
  6. Manage your inventory: Take control of your inventory management by tracking stock levels and replenishing as needed.
  7. Manage product content: Optimise your content, including titles, descriptions, images, and keywords, to improve visibility and conversion rates.

There are two options to consider when becoming a 3P seller: the hybrid approach and the hard switch.

  1. Hybrid Approach: Many brands choose a hybrid approach, using the 1P and 3P models simultaneously. This allows them to leverage the benefits of both models and maximise their potential on Amazon.
  2. Hard Switch: Some brands completely transition from the 1P to the 3P model. This option suits brands with few purchase order volumes or favourable trade terms with vendors. It provides greater control over supplier partnerships and allows for a more independent business model.

Challenges of Switching from 1P to 3P

While moving to Seller Central offers numerous benefits, there are also challenges. Here are some common hurdles that brands may face when switching from the 1P to the 3P model:

  1. Distribution Strategy Alignment: Switching to Seller Central can impact your distribution strategy, mainly if you compete with your distribution partners on Amazon’s website. Balancing the distribution channels and maintaining strategic partnerships becomes crucial in this scenario.
  2. Amazon’s Tough Requirements: Amazon has strict requirements for third-party sellers to ensure a positive customer experience. Failure to meet these requirements can result in account deactivation and the loss of revenue streams. Understanding and adhering to Amazon’s policies is essential to maintain a successful 3P business.

Increase Brand Awareness with Amazon Advertising

To increase brand awareness and stand out among competitors on Amazon, consider leveraging Amazon Advertising. With expanded advertising services, you can now advertise on and off Amazon’s website. This allows you to reach a wider audience and drive more traffic to your products. Partnering with Amazon Advertising Agency like ours can help optimise your sponsored ads on Amazon and maximise your brand’s potential.

Moving from the 1P (Vendor Seller) to the 3P (Seller Central) model with Amazon offers significant advantages, including increased control over inventory and sales channels. By carefully evaluating your business needs and considering the challenges and benefits of the 3P model, you can make an informed decision about transitioning to Seller Central. Remember, Seller Central requires different skills and knowledge, so be prepared to adapt and manage your business effectively in this new environment. We can always chat if you are considering moving from 1P to 3P. Book a call today.

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