Amazon offers two sales options: Vendor and seller. The main difference between these two models is who is selling the products. With Vendor, Amazon’s retail team buys and resells their products to their customers, and you can only become a Vendor with a prior invitation from Amazon. While with Seller you can sell directly to Amazon customers. Now, in addition, more and more providers opt for the Hybrid model in which sellers sell their products to Amazon and assume the role of supplier and Amazon owns the products and handles logistics, distribution and shipping. But what is changing and how to deal with it?
In a round table that took place in the E-SHOW held this Tuesday and Wednesday in Barcelona, Eric Vela, Amazon Specialist Consultant; Hugo Valera Artigas, president of Enbotella; and Lucia Lázaro, E-Commerce Manager at OMG Transactexplained the differences between these models. “If you’re going to start a project at Seller, one of the main things to consider is logistics. Be clear about which channels you are going to use, if you are going to use Amazon logistics or your own, that is the main thing “began by explaining Candlewhile pointing out that in the case of having expansion plans, “Taxation is also very important”.
For Lazarus, “The model to choose changes a lot depending on the scenario and the maturity of the brands”. In parallel, the president of bottle pointed out that “In both channels there are tools that Amazon provides you to protect your own brand… It is now more a matter of what customer profile you are addressing, if it is a more urgent customer then I would recommend Vendor or if it is a more subscription customer profile I would opt for Seller”.
Asked about the Vendor and Seller compatibility and what would be the advantages that a hybrid model could have, in the opinion of the Amazon specialist consultant “More than compatible with, today it is practically essential”. “Those of us who are dedicated to working with clients, see that more and more are going from one model to another. The one who is in Seller also wants to have a Vendor account and the one who is in Vendor wants to have a Seller account”he added, insisting that “It is very important to be able to have that balance between the product we have on one side and the other and have a well-differentiated strategy for the health of your channel”.
By your side, Lazarus He was of the opinion that all brands are going to seek profitability: “The fact that the potential of the brands is with a hybrid, is not always given. We have had brands that, being a Vendor, have refused to be a Seller in any of their product lines because they did not enter into a direct conflict with Amazon; and on the other hand, others being a Seller have refused to be a Vendor because they lost control of the brand”. Subsequently, in the opinion of Valera, “The more channels you have, the more ROI you can choose because they have different returns, each channel has different returns. Since it depends on so many factors, it is good to have a presence in absolutely everything and have the ROI of each channel calculated and decide where it is best to invest in order to sell more”.
How to deal with logistics depending on the model
Regarding how sellers should deal with logistics shipments to Amazon depending on the model and at peaks of high demand such as Black Friday, the amazon consultant indicated that “With Vendor, the only way to anticipate demand peaks would be to accept the large volume orders that are arriving and try to negotiate the price and plan production. With Seller, we do have the tool to be able to anticipate demand peaks and send more stock to the warehouses”. Lazarus advocated having a preparation of the stocks and a direct communication with Amazon: “Each one has to find its value, according to the product and according to the strong point of each of the brands, and of course, it is a priority to always negotiate with Amazon”. Likewise, the president of Enbotella said that planning is important on these dates of high demand: “You have to be prepared and understand very well what your calendar is, also diversify with transport and above all anticipate”.
Towards a hybrid model
In the Seller model, it is necessary to have a good status of the account, since the weight of the management falls on the seller of the brand, but lately, we see that more and more vendors are moving towards a hybrid model. “Vendor is getting tougher with negotiations and managing the catalog from the Vendor platform is very complicated. Many times we request changes and they ignore us and we are seeing that having a hybrid model to rely on and being able to manage the catalog from Sellers and then sell in Vendor is a very powerful combination”he pointed Candle.
For the OMG Transact E-Commerce Manager, “brands try to diversify and look for the opportunity of each of the models”. “You have to analyze how we buy these products on Amazon and what solution this brand is giving, so I think that you have to adapt the two points: the profitability of the brand and what is expected when you come to Amazon and look for this type of product that sells the brandhe pointed.
Along the same lines, the president of Enbotella reiterated that if due to brand image you are not interested in being present with the same brand in Seller and Vendor because in the latter you will have a price reduction and also in format, “You have to take advantage of this profitability by creating your own brand for Vendor or using other catalog references that can complement it”.
European distributors
At the end of February we learned that Amazon will cut its relationship with European distributors starting next April. During the round table, the speakers also expressed their opinion about this decision by the company. “It gives me the feeling that Amazon wants a one-on-one relationship with brands. The fact of eliminating European distributors is going to force many brands to have to take a step forward and start having a greater presence on Amazon to control what a distributor was previously controlling.”reiterated Candle.
For his part, Lazarus believes that Amazon is going to ensure that the properties of the brand registry are the ones that sell in the Vendor format as a priority: “In my opinion they are going to try to push this type of transformation. But they won’t be doing it any time soon. It’s going to be very difficult.”.
In parallel, the president of bottleas a distributor selling on Amazon, stressed that “This decision is taken with a grain of salt”: “You have to understand how you add value to Amazon, whether as a distributor, own brand or direct manufacturer, and try to analyze and take advantage of that competitive advantage that you may have to facilitate Amazon’s work because even if it publicly announces that it needs to have more margin, lower the cost structure and one way is to speak directly with the manufacturer, you can also save money by avoiding having to manage so many manufacturers”. Definitely, “It is a difficult balance to balance”he added, while conveying a message of reassurance to distributors who sell on Amazon: “There are different alternatives, and if they don’t work, my advice is to reinvent yourself, create your own brand and maximize what you can”.