Amazon Cutting Vendor Central Accounts

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Amazon recently notified thousands of brands using their vendor central platform that their 1P (first-party) accounts will be closed on November 9, 2024. This decision has left sellers on the platform scrambling to find alternative sales channels.

According to Amazon, this was a strategic move on their part to “restructure” internal resources, effectively cutting off small businesses and brands from the vendor central platform. Moving forward, only enterprise companies will be able to sell on the platform.

“Managing vendor central certainly causes a lot of logistical challenges for Amazon because they’ve built this huge network,” says Stephen Gary, president of Accelerazon. “Having vendors that aren’t doing large volumes just creates a lot of management for them, and there are bigger fish to fry.”

Amazon’s Impact on Small Businesses

Even though this decision was made to help restructure Amazon’s resources, small businesses on the vendor central platform are being forced to transition on short notice. Some may even transition to seller central, where Amazon is simply the website to buy the product while the seller takes care of fulfillment and shipping.

Stephen Gary, president of Accelerazon.

Unlike vendor central, in which Amazon handles all shipping and fulfillment, seller central is more work for small businesses.

“Many of these smaller sellers have never sold third-party on Amazon ─ they don’t know how,” Gary says. “Without previous experience on seller central, they don’t know how to set up their listings, how to do direct fulfillment or how things work.”

Especially right in the middle of Q4, this transition is going to be a struggle for most small businesses on the platform.

Gary’s advice for a smooth transition? Get an outside company to help.

“My biggest advice would be to find agencies that work with seller central,” he says. “What brands are used to in the vendor model is having a vendor or account manager who helps them plan for inventory and build their listings. But trying to navigate this giant marketplace with very high competition would be a lot easier with the help of people, agencies or firms with experience in this.”

Amazon’s Impact on Consumers

Even though small businesses on Amazon’s vendor central platform are getting the brunt of the impact, consumers may also bear some of the burden.

“I’m going to guess that there will be a sharp decline of available Prime products for a short period of time,” Gary says. “In the short run, as brands make this transition, they’re going to need time to build out their listings and get everything set up. So consumers may need to shop a little earlier this year because some products won’t have that same quick turnaround as before.”

While the next holiday season may go back to normal, this year will be a tight squeeze in getting products shipped on time.

Underlying Opportunities for Sellers

Despite the seemingly gloomy news, Amazon’s decision doesn’t just come with downsides. “The seller central platform actually allows companies to have more control over their brand, such as their positioning, pricing and executing product launches,” notes Gary.

The vendor central platform was great for smaller businesses to get started on Amazon, but seller central will allow them to thrive. Vendor central limits brands’ ability to control their own pricing, discounting or storage. While seller central comes with more work, it offers businesses a chance to grow in ways that vendor central can’t.

“Brands have a lot more control on the seller central platform along with a closer direct relationship with their customers,” Gary says. “There’s a lot of information to be gained and a great deal more upsides to transitioning over to the new platform. It’s certainly going to be a big roadblock, but I think a lot of brands will find that if they partner with the right agencies to set them up for success, this could ultimately be a huge positive.”