Amazon restricts the vendor programme in 2024!
From November 2024, Amazon will remove certain suppliers from the vendor programme, especially those with annual sales of less than €2-5 million in the EU and $5-10 million in the US.
This particularly affects smaller brands that were reliant on the Vendor Central programme, where Amazon purchased their products directly. The affected retailers will be asked to switch to the Seller Central programme, where they can sell their products directly to customers via Amazon.
What is the vendor programme anyway?
The Amazon Vendor Programme is a model in which Amazon acts as a wholesaler and buys products directly from manufacturers or brands (the ‘vendors’) to then sell them on its own platform.
In contrast to the Seller Central programme, in which sellers offer their products independently on Amazon and set the price, Amazon acts as the buyer in the Vendor programme and decides on the price, storage and sale itself.
Here are the main features of the vendor programme:
- Direct sale to Amazon: The manufacturer sells its products in large quantities to Amazon. Amazon becomes the owner of the goods and assumes responsibility for the sale.
- Pricing by Amazon: Amazon determines sales prices based on internal factors such as market analyses and competition.
- Advertising and marketing: Vendors have access to advanced marketing tools and advertising options to promote their products on Amazon.
- Logistics: Amazon handles the entire fulfilment process, including storage, shipping and returns processing.
The programme is attractive for larger brands as Amazon takes care of sales and logistics. However, it can be challenging for smaller brands as they have less control over pricing and sales strategies.
What is the Seller Central programme?
Amazon’s Seller Central programme is a platform that enables retailers and brands to sell their products directly on the Amazon marketplace. Unlike the Vendor Programme, where Amazon acts as the buyer, sellers in the Seller Central Programme retain full control over the selling process. Here are the key features of the Seller Central programme:
1. Direct sales to customers: Sellers offer their products directly on Amazon and sales are made directly to end customers. They are therefore responsible for the sale themselves.
2. Pricing: Sellers have the freedom to set the prices of their products themselves and adapt them to the market.
3. Fulfillment by Amazon (FBA): Verkäufer können den Logistikservice von Amazon nutzen, um Lagerung, Versand und Kundenservice über Amazon abzuwickeln. Alternativ können sie den Versand selbst übernehmen (FBM – Fulfillment by Merchant).
4. Marketing and advertising: Sellers have access to various marketing and advertising options, such as sponsored products or brand advertising, to increase their visibility on the platform.
5. Reporting and analyses: Seller Central offers comprehensive tools for sales analysis and for monitoring stock levels, customer ratings and other important key figures.
The Seller Central programme offers sellers more control over their business activities, but also requires a higher degree of personal responsibility in areas such as logistics, customer service and marketing.
Why is Amazon reducing the vendor programme?
This decision to downsize vendors for the Vendor Programme is part of Amazon’s strategic restructuring aimed at using resources more efficiently and focusing on larger suppliers.
This poses a challenge for affected retailers, as they now have to manage their logistics, fulfilment, pricing and customer service independently.
