Amazon provides selling opportunities for all sizes and types of brands, but sometimes a brand feels like they fall somewhere in between the VC (vendor central) and SC (seller central) offerings. In these cases is it recommended and beneficial for a brand to use both? And how do brands keep that all sorted and optimized?
We’ve written extensively before about the hybrid model of selling on Amazon, and how it can help resolve the unique challenges of being a wholesale-only vendor to Amazon. But it’s definitely not as simple as flicking a switch. There are unintended consequences when initiating this transition, which can dramatically affect sales.
If you are a brand that is already a vendor with Amazon and are considering the switch to SC, or you want to try out a hybrid solution, we have a few recommendations to make the transition go as smoothly as possible.
Different Platforms for Different Needs
Amazon’s VC platform looks pretty familiar to suppliers. Amazon buys wholesale, sets prices, creates promotions, and deals with shipping and customer service. All the brand has to do is ship the product to Amazon and everything else is taken care of.
However, some brands can experience downsides to being on VC, such as:
- Minimum quantities per wholesale order, making it difficult to test out small amounts of a new product.
- A 90-day lead time from the time Amazon puts in an order with a vendor to when that product hits the “shelves”. This is a really long time in comparison to how fast you can get a product up on Amazon in SC.
- The brand has no control over shipping or customer service. For some brands and products this is a good thing, but if you’re experimenting with a new product it’s nice to have a little more control.
- Amazon can end their relationship with a vendor whenever they like.
VC works very much like selling to any big box retailer for them to sell direct to the consumer, but you may have noticed that retailers following this model are not the predictable successes they once were. So what now? How do you stay ahead of the curve when it comes to consumer demand?
Shortening the time from concept to production to sales allows brands to jump onto trends faster and give the consumer what they want, when they want it. One of the biggest benefits of listing on SC is greater control over supply chain, stock levels and advertising customization. Brands don’t have to wait for Purchase Orders - they can list new products and start selling them immediately.
Why use a Hybrid VC/SC model?
Being a vendor on Amazon can work really well. Especially if your brand has a consistent set of products that you can keep shipping to Amazon in consistent quantities. But what happens when you want to test the market with a new product and don’t want to create a huge number of them? That’s where operating on SC in conjunction with your VC account can be beneficial.
The way manufacturing takes place is getting faster, along with the buying habits of shoppers. Brands are creating and testing products on the market before going ahead full-steam. While it used to take months or even years to bring a new product to market, with focus groups, test pricing, and all, a brand can now bring a new product to market in mere weeks.
The internet is largely responsible for making this possible. Brands can use crowdsourcing, largely via social channels, to determine what’s going to sell and what’s not. This crowdsourcing often determines the direction of a new product and the customers feel more ownership over the product and loyalty to the brand as a result.
The Amazon SC platform makes it easier than ever for brands to be a part of this crowdsourcing movement. If a brand wants to test a variation of an existing product, or something new altogether, it can list it on Amazon with relative ease, test out the market, and make changes to the product. If the product ends up performing well over time and the quantities are increasing the brand can then consider moving that product over to VC.
Further reading: find our previous post on the differences between the two platforms and the pros and cons of using a hybrid method, or listen to our podcast episode on the same topic.
VC to SC Transition Hiccups
Unfortunately, the transition from VC to SC may not be a completely smooth one for brands. SC requires a lot more work from the brand, from pricing, to shipping and customer service, as well as advertising; the brand has a lot more control. This new found control means a brand could potentially drop the ball if they’re accustomed to Amazon dealing with all of this for them.
One other problem that occurs when a product is moved from VC to SC is that the buy box will most likely still be owned by Amazon. This can cause a lag in sales for the product until Amazon runs out of inventory, but sellers can make their way around it by using FBA for the product listed on SC. This allows a brand operating as a seller to take advantage of Amazon’s capabilities in shipping and customer service, while reducing their time to market and quantities, in comparison with products listed on VC.
You do still want shoppers to know that your product listed in SC is the same product as what Amazon may still be selling, so you’ll want to keep the same UPC/ASIN/Sku, but you could help your listings stand out by creating product bundles that will give the products a new ASIN to help differentiate between sellers. You can also give your SC listings a competitive edge by offering strategic pricing to align with the vendor offer created by Amazon. This means, if Amazon’s offer is set at $49, you might set your offer at $48.95.
Navigating the Vendor-Seller Hybrid Model
Requires Skill and Experience
So now that you’re managing pricing for your products, how do you know when to modify pricing? First, there are a few things to consider when adjusting your price: How many units are you moving through? Are you able to get back into stock? What is the Buy Box price? For example, if you are trying to move through inventory you know you won’t be replenishing, it makes sense to price below the Buy Box price to get the sale. If it’s an evergreen item and there are only a few units between competitors, it may be worth riding out the wave and maintaining profitability.
Pricing is such a significant part of your business, it is imperative to regularly manage it. You can manually manage it on a daily or weekly basis. Utilize software tools to automate your price, or set programmed limits in SC. Ultimately, the goal is to maintain a healthy margin but also win the Buy Box, because if you’re not winning the Buy Box, your business is at risk of missing out on potential sales.
Owning Your Brand
If you want to enhance your brand experience on Amazon and bring new products to the market quickly, while still benefiting from the perks of being a vendor, a hybrid model could work really well for you.
Bobsled can help you navigate both platforms and decide which products fit best on each. We work with clients on both platforms, many of whom employ a hybrid strategy. We can help you to avoid some of these issues and capitalize on the benefits of this strategy. Contact us today to see how we can help your brand.