The day Amazon vendors receive their access to Vendor Central is supposed to be a day of happiness, but it’s actually a very important moment in your business. While Amazon consultants will make your business believe it is the easiest way to generate sales from Amazon without too much risk, the reality is far from it. While selling your products to Amazon via a wholesale relationship is easier than being a seller on the platform, your business inefficiencies will quickly become more visible. These inefficiencies if not monitored or solved has the potential to kill your business without management being aware of it.
What are business inefficiencies?
What most Amazon vendors do not recognize or are aware of, is that Amazon is a data company first. Amazon likely has determined whether the vendor’s product selection is fit for a particular category and customers’ current intent for these products. Amazon also has determined which products are being searched for by their customers that are leading to no results or results that are not leading to products being added to shopping carts.
By the time Amazon sends Vendor Central access, it is likely that they know more about your business than what they will make known to the vendor.
Examples of business inefficiencies
Is the business contribution profit negative or profitable? Does the business know how many of your products are profitable? Not many Amazon vendors have this information in hand or know this offhand.
Does the business have access to the right tools related to reporting to ensure that they have a 360-degree view of their vendor business without the need for Amazon’s reporting? Understanding your analytics is important to keep Amazon honest about investments in promotions and advertising. SKU-level reporting is critical to ensure that investment is only done on profitable ASINs.
Does the brand have its resellers/distributors under control to ensure that no sales can be made to Amazon without the brand’s consent? Amazon has used distributors to grow their selection, but brands should ensure channel control is established and retained. A lack of channel control will negatively impact pricing as Amazon compares SKUs across platforms to offer customers the best pricing available.
What can vendors do to fix these inefficiencies?
Amazon vendors should understand their business, look at analytics related to sales, partners/vendors used and look at their Amazon inventory. Asking resellers or distributors for data as part of their contracts to sell your inventory is critical in understanding what is really happening with your online business.
Understanding your product mix such as what are your hero SKUs or what are loss leaders. Importantly understanding margins which should not be blended but rather be based per SKU should quickly showcase which advertising campaigns should be stopped to ensure that profitability can occur. The use of custom reporting and the right software that can showcase opportunities or pitfalls which might not be visible is key for long term sustainability.
Let Equity Commerce help you resolve these ineffincies and become a sustainable and profitable Amazon vendor or seller. Let’s get started – reach out to us today.