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Amazon Alert: One Vendor Coming Soon?

12 Mar 2019 Elizabeth McHugh

in Amazon, Retail

With a quick shift to a new selling model, Amazon has again evinced its dominance over brands in the marketplace. Just last week thousands of vendors did not receive their Purchase Orders (POs) from Amazon, and the resulting communication was vague at best. This step was the first in a series making it look as though Amazon is moving to the rumored One Vendor strategy. This setup will force smaller vendors to shift towards a marketplace model and sell as third-party sellers, rather than relying on a wholesale relationship with Amazon.

The key here is the size of the brand. In monitoring Stella Rising’s own clients, we have found that vendors executing less than $10MM in annual sales have been affected and have not received POs in the past two weeks. Amazon will seemingly continue to purchase directly from vendors selling over $10MM in product. Furthermore, Amazon will direct third-party sellers generating over $10MM to the retail side. Essentially, Amazon is eliminating the freedom to choose between platforms. An exception to this rule appears to be brands in the Luxe Beauty category, considering that this category is gated from third-party sellers.

While we are not surprised, this move by Amazon was abrupt. Brands have been forced to navigate a changing landscape – and answer big business questions – all within a matter of days. “Fortunately, with our finger on the pulse of Amazon, Stella Rising has been able to support our clients through this rapid adjustment,” remarked Rina Yashayeva, VP of Marketplace Strategy. “Amazon has been focused on growing its marketplace business rather than the vendor side, leveraging a hands off of the wheel approach,” Yashayeva continued. The recent shift allows Amazon to re-allocate resources such as Vendor Managers and warehouse space to instead prioritize relationships with top volume sellers. 

Amazon has resumed ordering from select vendors this week, dependent on whether those vendors had Brand Registry. That program works to protect a brand’s trademark. As the fallout continues, brands should have explicit conversations regarding their Amazon strategy. Don't hesitate to contact us as questions arise about how best to navigate your brand's ever-changing relationship with Amazon.

Amazon Retail