Daniel Sperling-Horowitz in 1P, Amazon One Vendor, 3P

Amazon One Vendor: What Is It and How Will It Affect Your Brand?

Amazon is the talk of the rumor mill as sellers wage their bets on whether One Vendor is real or not. Today, Amazon is split between Vendor Central and Amazon Seller Central on the backend. But One Vendor elects to consolidate the two, creating a single online store.

For some sellers, that’s less-than-ideal news. Here’s why.

How Do Sellers Benefit from Two Selling Channels Today?

I recently spoke with the ecommerce director of a portfolio of brands that reels in over $150 million in annual revenue on Amazon.com. The company sells first party (1P, wholesale) via Amazon Vendor Central and third party (3P, marketplace retail) via Amazon Seller Central.

This hybrid approach is useful for a few reasons:

  1. Certain product lines earn higher margins on the marketplace
  2. Certain brands and product lines are more premium, and the brand owner wants to control pricing and consumer perception
  3. Sometimes Amazon stocks out of inventory and the brand wants to continue selling direct to consumer from its marketplace account
Wholesale Marketplace
Portal Vendor Central Seller Central
Abbreviation 1P 3P
Retailer Amazon.com Marketplace Seller
Prime Eligibility Yes Yes, via Fulfillment By Amazon (FBA) or Seller Fulfilled Prime (SFP)
Payment Terms 2%30 Net 60 (Amazon has option to pay in 30 days for a 2% discount) 14 day disbursement cycle
Price Control No Yes
Inventory Control Limited Advanced
Analytics Amazon Retail Analytics (Basic, Free), Amazon Retail Analytics Premium (Advanced, ~$30,000/year) Seller Central (Advanced, Free)
Advertising Yes, Self-Serve Sponsored Ads and Co-Op Yes, Self Serve Sponsored Ads

There's flexibility in this dual-selling method. But brands may soon have to give up control over where and how their products are listed—to the hands of Amazon itself.

What Is Amazon One Vendor?

In order to better control the customer experience and dictate the most favorable economic relationship with brands, Amazon is rumored to be months away from launching a consolidated selling experience called One Vendor.

With One Vendor, brands won’t be able to separate their 1P and 3P selling activities; instead of Vendor Central and Seller Central portals, there will only be one portal as Amazon may soon determine whether a brand will be selling 1P or 3P on a per ASIN basis.

So, if your brand has been avoiding a 1P relationship with Amazon to retain more control over your listings, you may be forced 1P anyways for the ASINs that Amazon determines are advantageous for a wholesale relationship. If you try to sidestep this and authorize specific third-party marketplace sellers (resellers) to sell your wares instead, Amazon reserves the right to prevent your brand from being sold by marketplace sellers entirely.

How Are Sellers Reacting?

As tech website Recode points out, this policy isn’t brand new. Amazon has long said that brands selling to retailers outside of Amazon that also want to sell on their platform are expected “to give Amazon Retail the option to source those product at competitive terms for sale as Retail items only.”

Now, the policy may actually be enforced.

“I don’t think it’s a sustainable model,” PopSocket CEO David Burnett, who has felt burned by the company in the past, told Recode. “Maybe for controlling the small players whose business depends on Amazon. But to endure this kind of treatment? There’s a lot of great brands out there who can make that choice to leave [Amazon entirely].”

In an FBA subreddit, one user shares Burnett’s sentiment, saying, “It seems insane. There are tons of legit, non-[private label], actual brands which are direct-to-consumer and sell on Amazon. Surely they know a d2c business is in no way prepared for such a massive [pay cut]?”

“Is 3rd party selling over??” writes another user.

“Depends on how they define ‘independent sellers,’” a third user says, referring to the same Recode article stating how One Vendor seeks to funnel brands and independent sellers alike into the same platform. “Could mean that [third-party sellers] can also submit their stock... But it could still be heavily restricted... So who knows.”

How to Protect Yourself: Go Multichannel

While the status of One Vendor is TBD, the future health of your business doesn’t have to be.

We’ve often preached on sales channel diversification for this very reason: if Amazon (or any other channel) decides to pull the plug on your brand, or offer direct replacements of your top-selling products, you’re protected.

Diversification ensures that you’re not reliant on any one channel. You can also build up traffic to your own webstore, while leveraging marketplaces for product line experiments, volume discounts with your suppliers, and/or additional brand awareness.
  comparison of uni-channel versus multichannel approach  

So, even if One Vendor were to drop tomorrow, you won’t have to choose between selling wholesale to Amazon to stay afloat or shuttering your business altogether.

Summary

  • If you're a brand and you sell on the marketplace, you will no longer have control over which ASINs (if any) can be sold 3P.
  • If you're a 3P reseller, you may lose your ability to sell brands or specific ASINs that Amazon wants to sell 1P.
  • Amazon is systematically taking control from brands. This will likely result in reduced competition on ASINs, while dramatically increasing tension between the ecommerce giant and the brands and resellers that are growing more reliant on the channel.
  • A diversified sales mix is your best offense and defense to ever-changing policies and selling arenas.

Stay Tuned

There is no official launch date for One Vendor and Amazon is remaining tight-lipped, even denying that such a program exists. (Meanwhile, former Amazon employees warn that it’s coming.)

We’ll be keeping a close eye on this topic and reporting any updates. Got any tips? Tweet us @ZentailCommerce.

Related Reading

The Hybrid Approach To Amazon Selling: 1P vs 3P