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The Amazon Hybrid Selling Model: Take Back Control of Your Brand With Seller + Vendor Central

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Not enough control over your pricing, inventory & contract terms with Amazon?
​If you’re an Amazon Vendor looking to increase your sales & grow your business the safe and potentially more profitable way, you should consider the hybrid approach, where you sell products through both Vendor and Seller Central.
This approach allows for tighter control over inventory and product pricing, and most importantly, provides flexible options to manage & scale your business.

Published in: Retail
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The Amazon Hybrid Selling Model: Take Back Control of Your Brand With Seller + Vendor Central

  1. 1. The Amazon Hybrid Selling Model: Take Back Control of Your Brand With Seller + Vendor Central
  2. 2. Overview Founded in 2007 Google Premier Partner 400+ Active Retail Clients Top 50 Fastest Growing Company San Diego D E L I V E R I N G L A S T I N G R E S U L T S F O R O U R C L I E N T S Solutions Retail-focused PPC & Shopping Amazon Sales Acceleration Facebook Performance Marketing Creative Services About CPC Strategy
  3. 3. Today’s Logistics ● Session Recording & Slides Will Be Sent Out ● Submit Questions to Our Panelists ● Resources Available as Handouts ● Join in the Poll Question! Analicia Santaella Webinar Coordinator
  4. 4. Today’s Speakers Leo Carrillo Manager, Marketplace Channels Sarah Simensky Marketplace Channel Analyst
  5. 5. ● Vendor Central vs Seller Central Business Considerations ● Where Does Selling on Amazon Stand Today? ● 1P vs 3P Cost Structure ● Next Steps Today’s Agenda
  6. 6. Where Does Selling on Amazon Stand Today?
  7. 7. Today’s Amazon Selling Ecosystem Fulfillment By Merchant Direct Fulfillment Product Purchase Orders Direct Prime Fulfillment Fulfillment By Amazon Seller FulFilled Prime
  8. 8. Why Vendors Consider a Hybrid Selling Approach? ● Contract Terms, Cost Increases & Consistent Funding Requests ● Amazon Stating Your Products Are Unprofitable for Them ● Confusing Chargeback Costs Your CFO Doesn’t Like to See ● Product Pricing Control ● Inconsistent Purchase Orders ● New Product Launches ● Communication with Vendor Managers
  9. 9. Copyright 2017 - Q4 Amazon Virtual Summit Single Screenshot Template Bulleted Content Use this slide for bulleted topics ● In odio dolor proin montes ad ac. Parturient nisl sit purus egestas ● ut condimentum ut voluptate sodales. Est erat et amet nec purus ● Sodales magna amet orci posuere, lectus id, fermentum sed bibendum vitae est tristique odio, erat aptent justo. Top Challenges to Consider as 1P or 3P
  10. 10. Vendors Face Inconsistent POs for Specific ASINs ● Issues: Inconsistent POs ○ Product stockouts ○ Product order lag ○ Amazon not ordering enough stock ● Solution: Migrating a product to seller central ○ Rather than depending on Amazon POs ○ Take hold of their own inventory management ○ Especially during launches or holidays
  11. 11. Demand Forecasting Not Driven at Seller-Level ● Classic Scenario: Amazon’s demand forecast says they need 1000 units for the next four weeks — yet they write me a PO for 400 orders only ○ Why? The new demand forecast is driven at the detail page-level by impressions or views that go to the product page regardless of sellers or vendors ● Issue: Amazon does not sort whether demand for a product is for the sellers or vendors ● Solution: Consider Hybrid Demand Forecasting ○ A cleaner setup ○ Less than 30 offers against products ○ Get closer to true demand
  12. 12. Launching a New Product on Amazon Amazon doesn’t know the demand for a new product Vendor Central Seller Central Amazon’s Born to Run Program Inventory control Influence Vendor Demand Forecast Amazon’s Vine Program Promotional pricing & strategy
  13. 13. Pricing Control Issues No control / Constant re-pricing Vendor Central Seller Central Constant push by Amazon for lower COGS to enable lower selling prices Full control / Re-pricing controlled by Seller Comes with the responsibility to monitor & update prices as necessary
  14. 14. ASINs Continuously Running Out of Stock Vendor Central Seller Central Improve In-Stock Rate & Operational metrics outlined in Demand Forecast Algorithm Direct Fulfillment/Dropship program Inventory Backup through 3P Account (Hybrid Strategy) FBA or Seller Fulfilled Prime? Many ERPs integrate with Amazon Seller Central
  15. 15. Alternative Solution: Amazon Direct Fulfillment/Dropship 1. Vendor inventory acts as backup for when Amazon is out of stock 2. Ability to offer a vendor’s entire catalog to Amazon customers 3. Build demand for new products at a quicker pace – Historically Amazon will order minimal quantities of new items until demand dictates to order more 4. Protect Sales – By having direct fulfillment in place a vendor’s products will continue to be available for purchase if Amazon runs out of inventory
  16. 16. Copyright 2017 - Q4 Amazon Virtual Summit Single Screenshot Template Bulleted Content Use this slide for bulleted topics ● In odio dolor proin montes ad ac. Parturient nisl sit purus egestas ● ut condimentum ut voluptate sodales. Est erat et amet nec purus ● Sodales magna amet orci posuere, lectus id, fermentum sed bibendum vitae est tristique odio, erat aptent justo. Cost Structure & Profitability Analysis
  17. 17. 1P vs 3P Cost Structure On average runs between 25-35% depending on storage fees, cubic capacity and shipping costs Vendor Central Terms Damage/Returns 2% Freight 5% Co-op 12% Terms Discount 2% Chargebacks 1% Seller Central Fees- 3P Fulfillment Fees Variable Monthly Storage Variable Shipping to Amazon Variable Monthly SC Fee $40 Other Fees Variable Based on current average requests from Amazon
  18. 18. Pros + Cons: Amazon Hybrid Approach
  19. 19. Challenges with Amazon Hybrid Approach ● Two Separate Systems in Managing Amazon (Accounting + Warehouse) ● No PO Issued; Complete Responsibility for Inventory Availability ● Product Content Control - Maintain Listings in 1P Account ● Tax Ramifications Amazon 3rd Party Sellers are Responsible ● Different Marketing Capabilities on 3P Side
  20. 20. Pros to Selling as Both 3P + 1P ● Inventory coverage for vendor stockouts ● Selling your entire catalog, beyond what Amazon orders ● Flexibility and power to tap into pros of both 1P & 3P ○ Going 3P for product launches while maintaining stock control with 1P ○ If Amazon tries to lower wholesale price under 1P, you can choose to sell that product 1P ● Play both sides to see which is more profitable for your brand
  21. 21. So... what are the next steps?
  22. 22. ● Don’t ignore 1P operational issues - an effective Hybrid strategy involves operating efficiently on both sides ● Maintain 1P listings for catalog & content control, as well as access to Vendor-exclusive Betas (e.g. Amazon Attribution) ● Integrate your Inventory Management system (ERP) and Customer Service team with your Seller account to ensure smooth Seller Health from the start ● If using FBA, compare these 2 basic formulas to compare profitability between channels: ○ 3P: Retail Price - FBA Fees - Cost to ship to Amazon ○ 1P: Wholesale Price - Vendor Terms %s ○ Understand possible operational cost differences Key Takeaways
  23. 23. SMALL TEXT STACK TEXT ROW 1 STACK TEXT ROW 2 Schedule Your 1-1 Amazon Advertising Strategy Evaluation
  24. 24. Today’s Speakers Leo Carrillo Manager, Marketplace Channels Sarah Simensky Marketplace Channel Analyst

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