January 7, 2025 • 49 mins
Navigating the complexities of transitioning from Vendor Central to Seller Central can be daunting, but it's a journey many brands must take for better margins. In this episode, Noah Wickham, our expert guest and Sales Director at My Amazon Guy, explores the Amazon Vendor Central and Seller Central platforms and analyzes what makes each one a fit for different businesses. Whether you're a large brand looking for streamlined operations through 1P or a smaller player craving control and flexibility with 3P, this conversation is packed with valuable information to help you decide your best path forward.
Noah discusses logistics and profitability strategies for third-party sellers, highlighting the benefits of Amazon's Fulfilled by Amazon (FBA) service. He mentions why the Prime badge can be a game-changer for boosting sales and how competitive shipping rates can set Amazon sellers apart. He emphasizes that as Amazon shifts its focus from growth to profitability, it is imperative to understand the impact on vendor relationships and the strategic value of hybrid selling models combining 1P and 3P approaches.
Learn about the increasing financial demands on 1P sellers and the rising prominence of 3P sellers, who now dominate a significant portion of Amazon's marketplace. Join us for an episode filled with actionable insights to refine your Amazon strategy.
You can learn more about Noah and My Amazon Guy in the following links:
https://www.linkedin.com/in/noahwickham/
https://myamazonguy.com/
https://youtube.com/myamazonguy
Want to chat with us about this podcast? Send us a text message here
The Planet Amazon podcast, brought to you by Phelps United, addresses all things Amazon and other eCommerce marketplaces. In each episode, we talk with Brands, Agencies, and Sellers about Amazon news, new features, policies, brand policies, logistics, marketing, issues, and challenges, among other topics.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Announcement (00:00):
Welcome to the Planet Amazon podcast with Adam
Schaefer, where we explore theworld of Amazon and other
e-commerce marketplaces.
Join us as we delve into thelatest strategies and tactics
for successful selling on theworld's largest online
marketplace.
Adam Shaffer (00:17):
Hello, I'm Adam Schaefer and welcome to another
exciting episode of the PlanetAmazon podcast, where we talk
about all things Amazon.
Today, we're tackling a topicthat sparks a lot of debate
among brands navigating Amazon,and that's the big question
Amazon Vendor Central versusAmazon Seller Central.
Which is right for your brand?
(00:37):
Which is right for yourgo-to-market?
To help us unpack this, I'mthrilled to welcome Noah Wickham
, sales Director at my AmazonGuy.
Noah is a seasoned e-commerceexpert who has worked with over
400 brands to scale theirpresence and drive impressive
growth on Amazon and beyond.
With a proven track record inlaunching successful brands,
(00:57):
optimizing operations andleading strategic ad campaigns,
noah brings a wealth ofknowledge to our discussion
today.
Not to mention, he's a Googlead certified professional, which
underscores his expertise indigital marketing and delivering
ROI driven results.
So if you've ever wonderedwhich Amazon platform is the
best fit for your business, youwon't want to miss this
(01:18):
conversation.
Let's dive in and welcome Noah.
Thanks for joining the show.
Yeah, thanks for having me.
I'm happy to be here.
Thanks, and before we get intothe nitty gritty, because right
now it's an interesting time onAmazon, where there's a lot of
pressure on brands to eithershift from 1P to 3P, or the
(01:39):
brands are getting squeezedenough that they're trying to
make this decision forthemselves whether they want to
venture over to the 3P side ofthe house.
But before we get there, I wanteverybody to know a bit more
about you and I want to know abit more about you.
So can you just tell us alittle bit more about your
background and I hit some of it,but I'd love to know a bit more
.
Noah Wickham (01:58):
Yeah, absolutely.
So.
You hit, I think, the majorpoints right.
So I'm Noah Wickham.
I'm a sales director here overat my Amazon Guy formerly brand
director.
But my history in thee-commerce space is very, you
know, widely varied, right?
So I've been in the e-commercespace for over a decade.
At this point I've had my ownbrands that I've worked with.
(02:20):
I have done Shopify, Walmart,Amazon with.
I have done Shopify, Walmart,Amazon, eBay is actually funny
enough how I got my startreselling products 12, 13 years
ago.
Overall, mostly I've workedwith anything from mom and pop,
small startup companies all theway up to Fortune 500 Enterprise
(02:41):
.
So my experience is variedacross the board in e-commerce,
but I have kind of taken my homeand my stance within the Amazon
community, as is, in my opinion, the number one place to be if
you are in e-commerce.
Adam Shaffer (02:56):
Wow, so a real veteran.
So thanks again for joining ustoday.
So let's start with the bigquestion and we'll start
drilling down from there, butlet's try to.
So let's start with the bigquestion and we'll start
drilling down from there, butlet's try to.
And maybe everybody knows this,but let's just repeat it For
those unfamiliar can you explainthe core differences between
Vendor Central and SellerCentral?
Noah Wickham (03:15):
Yeah, absolutely so.
Vendor Central, often referredto as 1P, and then Seller
Central, often referred to as 3P.
Vendor Central is where,essentially, you are taking your
products and you arewholesaling them off to Amazon,
who is then going ahead andselling them on their own
platform, listed as them, soldby them, fulfilled by them,
(03:36):
whereas 3P, a lot of times youhave multiple options.
You have FBM and FBA, fulfilledby merchant, fulfilled by
Amazon.
On the 3P side, you are theseller of the product.
Amazon can be the one whoactually ships the product out
if it is an FBA product, butmore often than not, in the 3P
side, you are the onecontrolling the entire show,
(03:57):
whereas on the 1P vendor centralside, amazon controls a large
majority of the show.
They control the listing, howeverything is viewed, the
pricing, et cetera, and so youare much more kind of hands-off
in that capacity.
Adam Shaffer (04:10):
And so, again, you have selling to Amazon.
So you're the brand, you'reselling it directly to Amazon.
Amazon, in this case, is the 1Pand they're reselling it on
their platform 3P.
It could be that the brand hastheir own store on Amazon and
they're sellinglling it on theirplatform 3P.
It could be that the brand hastheir own store on Amazon and
they're selling it on theplatform, or they're using other
(04:31):
3Ps.
Is that right?
Noah Wickham (04:33):
Correct.
Yeah, they could be using other3Ps so you can have resellers
if it is Seller Central.
So you could still be awholesaler and working through
other options outside of justAmazon for selling on Seller
Central.
Adam Shaffer (04:49):
Yeah, I mean, and what we do.
You know, one of the things wedo is we're an agency but we're
also a seller and so in manycases we'll go to the brand and
say, hey, don't sell to Amazon,sell it to us and we'll sell it
on Amazon for you and we'llprotect your price and protect
your brand and develop yourbrand.
And it's a pretty compellingoffer as long as we could make
(05:09):
it work for them financially.
So tell us what you think thebiggest advantages of Vendor
Central are and then jump overand tell us what you think the
bigger and more importantadvantages on Seller Central
would be.
Noah Wickham (05:24):
Yeah, I see Vendor Central as being the hub for
especially extremely largebrands, right?
So Vendor Central if you're abrand that you are not wanting
to necessarily dive intounderstanding Amazon trying to
deal with other competitors,things like that Vendor Central
(05:44):
is very appealing because youcan work out how much you're
going to actually spend onadvertising.
You get the immediate impact ofAmazon being the seller right,
and Amazon has a lot of pull inwhat makes a good product versus
a bad product.
So there are some benefits inthat capacity as well, as you
get a little bit more controlover your entire logistics
(06:05):
workflow with Vendor Central.
It's the only area that I don'tlike there with their logistics
is, you know, we don't getreally all that much forecasting
for how much inventory isneeded.
But nowadays, vendor Central canbe a very viable place if you
are a very, very large brand andyou're trying to you know, only
sell, for instance, to oneseller, right.
So if you are a very, verylarge brand and you're trying to
only sell, for instance, to oneseller, right.
(06:27):
So if you're a wholesaler ingeneral and you have an account
of 50 other people who areselling your product, it's a lot
easier to control your brandpresence on the platform if you
just sell it to Amazon and workthrough Amazon to have that
overall control, if that makessense.
Now, vice versa, seller Central.
What's the pros there?
It's that control aspect, right.
(06:49):
So, yes, selling just Amazongives you that level of control
where only Amazon is going to bechanging things.
But same thing with SellerCentral If you are selling it
yourself, you get full controlover your branding.
You get full control over howyour title looks, what your
bullet points are, what theproduct images are, your pricing
when you run promotions, whenyou don't run promotions.
(07:11):
So there's a lot of net benefitas a three-piece seller that you
necessarily can't reallycontrol much on the Amazon
platform.
Still on your own, if you're a1P seller where Amazon still is
the one who gets control of that3P, you get that full brand
identity, that full ownershipover what does my listing look
(07:32):
like, what does my store looklike, how much am I doing
advertising, as well as the ideathat you're likely going to see
a little bit of a profitdifference between the two 1P.
A lot of times you're going tobe seeing necessarily an easier
profit margin and moreconsistent profit margin from
Amazon purchasing the productfrom you, whereas with 3P you
(07:54):
get to dictate when am I runninga promotion?
What is my price going to be?
If you're going to be sellingit at a higher sale volume, then
you would be on 1P.
You can be making a betterprofit margin than you
necessarily would have been.
Adam Shaffer (08:11):
So what's interesting with Vendor Central?
Like I agree, I think it's goodfor the largest brands, but I
think it does take some pricingcontrol away and what will
happen is that Amazon will stilldictate the pricing.
So if you have a wide channeland you have other resellers
(08:32):
selling in other channels, itcould wind up creating a lot of
conflict with them when, if youare doing it yourself as a 3P,
that pricing is really important.
Noah Wickham (08:53):
That pricing is really important and that's what
we run into so often is thatthey're trying the brands are
trying to control what thepricing would be, and not to all
the time with 1P.
That happens is if, forinstance, you are selling to
Amazon but you're also sellingto, let's say, walmart and
(09:14):
you're selling to Nordstrom orsome other type of retail market
, you will very frequently seeif one of those retail markets
decides to do some form ofpromotion where the product is
now 20% off, 30% off.
It doesn't matter what.
The actual cost that you end upselling the product at Amazon
will then match that.
But if Amazon's not meeting themargins that they are, neither
(09:37):
are you when it comes to whatthey will be willing to purchase
the product for.
So pricing in general 1P versus3P is always one of the bigger
aspects when it comes to kind ofprofitability and how you
handle the overall market there.
Adam Shaffer (09:51):
And then you know, explain.
I think a lot of people thinkoh, I'm 3P and you started to
say it.
But I'm a 3P, so that means Ihave to ship all these products
to these customers.
And it's not like that at all.
Noah Wickham (10:09):
Amazon is the fulfillment if you want it to be
so, just explain that whatfulfilled by merchant and
fulfilled by Amazon.
Yeah, there are so many optionsnowadays when it comes to how
you go about shipping andfulfilling products.
I mean, even if you are a 3Pseller central seller of your
product you can send productinto Amazon and have them still
fulfill it through FBA.
Secondarily to that, even ifyou still don't want to be the
(10:31):
one shipping out your ownproduct and fulfilling it, there
are a million different 3PLcompanies that you can work with
in this day and age in whichthey will ship out the product
for you, and a lot of times youcan still get prime shipping on
Amazon even with those 3PLs asan FBM.
So there's a lot of differentvariation option around how
logistics can work for yourproducts.
(10:52):
As a 3PL seller, I'm alwaysgoing to be a firm believer in
the idea that FBA is usuallygoing to be the best, just
because you get the badging forPrime and you get that shipped
by Amazon.
The two-day shipping guaranteeall of those situations as well.
And then, on top of that,Amazon has released things such
as AWD, which is essentiallyjust their warehousing platform,
(11:12):
so their warehouse distribution, where you can send products
direct from your manufacturerinto AWD and then from there
Amazon will trickle thoseproducts into FBA for
fulfillment as you need them.
So it really cleans up theentire logistics process to make
it.
So.
Yeah, if you don't want to shipyour own products, that's
(11:33):
totally fine.
There's not going to be a hugeheavy lift between switching
from 1P to 3P or vice versa.
Adam Shaffer (11:42):
And that Prime badge is incredibly important.
I mean, maybe you could talk abit more about that, because if
you don't have seller fulfilledprime meaning that you ship at
BM but you're not able to putthat prime medallion on there it
definitely affects sales.
Noah Wickham (11:57):
Oh, absolutely.
The prime medallion is one ofthe, I think, bigger converting
factors and I think it has beenpurposefully made that way,
right, in the sense of peopleare so accustomed and so used to
that prime badging instantlymeaning two-day shipping right,
it's one of the reasons that itcreated Amazon as the behemoth
(12:17):
of a platform that it is.
It's just from peopleunderstanding and knowing that
they are going to get fastshipping times if something is
prime.
So the prime badging is a huge,huge conversion where I've seen
sellers that are FBM go fromFBM to then FBA, see an instant
uptick of nearly doubling insales just from having that.
Adam Shaffer (12:38):
So what I've also found and unless we're just not
great at understanding whatshipping prices are when you try
to do shipping yourself, notwith Amazon is that no matter
what, amazon's FBA pricing forshipping is still the lowest
price in town.
Now if you want to shipsomething USPS or mail, maybe on
(13:01):
something very small and light,you could do well, but even on
small and light with Amazon'sFBA the pricing is great.
So I don't know how people canbeat that other than get it up
to Amazon where you can.
There's a cost to get it upthere, but their shipping is
amazing.
Noah Wickham (13:17):
Yeah, I think it's interesting because their
shipping pricing is amazing, andI will say that they've done
very well at making that pricingmore available, even to like
FBM sellers, right.
So Amazon has a platform thatpurchased a couple of years ago
called Vico, and Vico isactually a free to use platform.
(13:39):
It just charges a little bitextra on every single shipped
unit.
It just charges a little bitextra on every single shipped
unit, but it takes the pricingthat Amazon has been able to
curate from shipping millions ofproducts every single day and
passes it on to you as theseller.
Now, is that a viable option asan FBM seller?
Absolutely.
Is it still something in thatcapacity where it's going to
(14:02):
beat Amazon's actual fulfillment?
Probably not.
Amazon can always have cheaperfulfillment than pretty much
anyone because, again, they'redoing millions of orders at this
point in time.
I would imagine that UPSshipment-wise Amazon is Amazon
trucks everywhere justdelivering stuff all day long in
every neighborhood.
Adam Shaffer (14:20):
So what's interesting is how do I put it?
What I'm seeing and what isdefinitely happening right now
(14:42):
is Amazon, who used to be reallyfocused on growth, and they
still care about growth.
I mean, that's very importantto them, but they're much more
fixated on profitability now.
So where there were brandsgetting maybe a bit of a free
ride, they're now squeezing moreand more.
So every year, they have ameeting with their brands that
they buy from and they negotiatewith them, always trying to get
(15:04):
a better deal.
So they're trying to get betterpricing, better allowances,
more marketing funds, and so thesqueeze has been on, and what
I'm seeing is that it's too muchfor some of these brands to
bear, so they're lookingelsewhere, and so is there.
I mean, I have my own beliefson this, but do you see a play
(15:24):
for brands that are hybrid, thatsell to Amazon and also sell 3P
, or do you think you need to beone or the other?
Noah Wickham (15:32):
There is room for a hybrid play, right.
So there's always going to beroom for a hybrid play.
Now, that being said, manypeople know about, for instance,
the Vendor Central Purge thatstarted a couple months back.
Adam Shaffer (15:44):
Tell us more about it in case people don't know
that.
Noah Wickham (15:46):
Yeah, absolutely so.
The Vendor Central Purge isessentially where.
Back in I believe, august 2024,amazon sent out a letter where
essentially they said hey, bythis date we are going to no
longer be purchasing productfrom you.
Moving forward, you are nolonger going to be a part of the
1P Vendor Central network,anything like that.
Now everyone thought that theywere doing that just once, and
(16:10):
then, I believe it was aboutfour or five weeks later, they
sent out another letter.
Five weeks after that, anotherletter, and so it very quickly
turned into people being able toline up and say, oh, every X
weeks Amazon is sending thisletter out to more and more
vendor central sellers and theyare kicking them off the
(16:32):
platform.
Now, some insider knowledge thatI kind of learned as well from
having talked to a coupledifferent vendor central reps,
as well as talking to a lot ofpeople who are higher up on the
vendor central side, is that itseems that the exact margin is
that if you sell a productsomewhere between zero and $60,
(16:53):
amazon a couple of years agoabout two years ago got new
investors around the VendorCentral 1P platform and they're
looking at getting only roughly60% margins.
So that means that if you are aproduct or a seller who is
selling to Amazon and Amazoncan't seem to get 60% sales
margins on your product, you'reprobably not going to be lasting
(17:17):
much longer.
From my knowledge and everything, the Vendor Central purge will
probably stop when Amazon hasroughly only around the top 1%.
It seems like from what I'veseen on who's been kicked off,
if you're doing less than about$3 million a year on Vendor
Central, you're likely notwithin the realm of what Amazon
(17:39):
will keep Now.
They haven't released anythingrecently in 2025 as of yet, for
any new people being kicked offthe platform, but the dates that
people had suspected go all theway out into April.
So I guess we'll continue tosee if the vendor central purge
continues to happen.
But again, if you're kind of,you know trying to make that
(18:00):
profitability with Amazon.
Amazon from a lot of vendorcentral clients I've talked to
and brands I've talked to thisyear during their renegotiation
phase before the new year, itdoes seem very much like Amazon
is trying to push people toeither choose to stay on the
platform a much, much lowerprofitability to themselves or
(18:23):
to just go off the platformentirely without Amazon having
to necessarily kick them off.
Adam Shaffer (18:28):
I didn't realize that.
So you're saying that you thinkthat it's more of a margin
thing than a revenue thing?
Noah Wickham (18:35):
I think it's a mix of both right.
So, by and large, I think theway that you can look at it is
like this If someone istypically making $3 million plus
on the Amazon platform fromVendor Central, more than likely
Amazon is probably having amuch higher margin on that right
and they're also someone who'sprobably willing to invest money
.
So, for instance, amazon's feeswhen it comes to Vendor Central
(18:59):
, such as their ability tocommit certain amount of ad
dollars.
Then try and say hey, you haveto spend our $250,000 allotment
per year.
If you're doing $3 million,that's probably within the realm
of your capability, whereas ifyou're doing less than that,
you're not.
Adam Shaffer (19:16):
The 60% margin is what I've heard how do they do
60%?
I mean that's shocking.
I didn't know that one.
I knew the size, but I didn'tknow that 60% margin, because
we're definitely talking to alot more brands now than ever
that are being squeezed or, likeyou said, getting that letter
or thinking they're going to getthe letter, and so it's created
(19:37):
a boon for call it agencies andthree Ps that do buy and sell
agency work.
So really, really interesting,but let's stay with that for a
little bit.
So if you're a brand, are therecertain categories that you
could make the threshold withAmazon?
(19:57):
Are there certain industriesyou think are better to be
selling to Amazon, or is it notindustry or category specific?
Noah Wickham (20:06):
I mean it's always going to be somewhat category
specific, right?
So I talked about the 60%margins that you know they're
typical margins there, thebeauty brands of the world, you
know electronics.
So these are all the categoriesas well.
(20:38):
When you think of thosecategories that are also about
the top 1% of vendors right onvendor central platform, you
know the top 6,000 or so, whichwould encompass the top 1% all
do roughly more than 3% of theplatform.
A weird little fact aboutVendor Central right now is that
(21:03):
about 100 different vendorsmake up roughly 60% of all
vendor central sales.
Adam Shaffer (21:10):
So a hundred, a hundred brands or vendors make
up what percent.
Noah Wickham (21:17):
About 60%, 60 to 70%, it's, it's.
Uh, I probably pulled thenumbers actually while we're
here, but it's it's a hugemargin where it's, think, you
know, the Microsoft's of theworld, the Dell, the you know
brands that are just massive andselling the vendor central now
thing is, the brand itselfdoesn't necessarily have to be
(21:38):
the one selling the product tovendor central at the end of the
day, right so that, uh, youknow, 60 could be made up of uh
100, 200 different sellers whoare supplying that through a
wholesale network to Amazon.
Adam Shaffer (21:53):
Yeah, I got it.
But brands like Apple andSamsung and all that stuff,
they're killing it.
No, of course, always.
What I found is that so we'llmeet a brand and we'll say, okay
, you're selling on Amazon.
We work with them to figure outwhat they're doing on Amazon,
between what they sell to Amazon.
And then there's other three Psthat are selling this stuff,
(22:15):
because outside of the topbrands nobody's really that
clean, and so we'll look at thewhole thing and say, okay,
you're doing about this muchmoney on Amazon, let's take your
ASINs and put it through theAmazon Seller Central calculator
.
Do you understand?
Can you explain maybe, what thecalculator is and how people
use it?
Because we use it foreverything.
Noah Wickham (22:37):
All the time.
I love the that's probably thesingle best piece of technology
Amazon has given to sellers isthe profitability calculator.
99% of the time, yourprofitability on Seller Central
is just going to be higher.
It just will that will onVendor Central.
That being said, I thinkthere's a merit to utilizing
(23:01):
something like the profitabilitycalculator to see oh I am going
to make more profit on SellerCentral but still thinking about
the volume aspect of things.
Right, so you can always makemore profit.
Amazon 1P vendor central isusually always going to be more
of a volume game than anything,and you're probably not going to
see the same volume on 3P,especially if you do like a
(23:23):
instant switch over from one orthe other.
I usually see about a six-monthdowntrend in overall sales
volume when someone switchesfrom 1P to 3P, even if it's at a
higher profit margin.
You might end up making moreprofit at the end of the year,
but you're probably going to beselling less overall.
Adam Shaffer (23:41):
What I found with the calculator is that what we
first will do is we'll take thereasons, we'll put it through
the calculator and then we'llsay hey, if you were to sell as
a 3P without anybody helping you, with you just doing it
yourself, no fees to anybody,just you solo, this is how much
money you would make per unit onevery one of these ASINs, based
(24:03):
on their fee, their FBA,shipping up to Amazon, blah,
blah, blah.
Shipping up to Amazon, blah,blah, blah.
And when you look at it, if theproducts are too heavy and the
average selling price is too low, there's no way to make money.
So it's almost like, in manycases, somehow Amazon is able to
buy some of this stuff thatthey would still lose.
(24:23):
So there's definitely thismoment in time where, if you try
to do it yourself, you're goingto die and you have to keep on
selling it to Amazon, but Amazonat that point might not even
want to be selling it anymore.
Noah Wickham (24:35):
Yeah, the Vendor Central purge to me has come
from the aspect of I don'tbelieve Vendor Central has ever
been profitable for Amazon.
So everyone knows that theirnew CEO everything came in back
in 2022.
Back in 2022, when he firstcame in, amazon in general was
(24:58):
not doing wellprofitability-wise.
They were actually a lot oftimes in the negative in a lot
of their areas.
He has since added fees,charged everything, the wazoo
and everything, which has causedit to be more expensive.
Now the vendor central side ofAmazon specifically back in 2023
, got new investors into it.
(25:19):
Part of that new investment istrying to make vendor central an
actual profitable endeavor.
You talk about the big and bulkyitems.
Amazon was never making moneydelivering those big and bulky
items.
The way that they wereessentially running the business
model was yes, we can purchasethis from you for $10.
(25:39):
We will sell it for $30, eventhough for you to sell it and
ship at $30 would cost $28.
We own the shipping, so we canjust eat that entire cost of
shipping as a you know cost ofdoing business right.
Realistically, of course,anyone can look then and say,
(26:00):
yeah, that does make sense.
Eventually it will catch up toyou and I think that's exactly
what has happened here with that.
Adam Shaffer (26:07):
That's what I, that's what I think too, because
you know, like we have sillythings I don't want to say silly
, they're huge sellers butthings like bird food right,
bird food it'll be somethinglike 1499 for a 10 pound bag.
I'm just making it up, it'ssomething like that, and there's
no way that you could ship itand so.
But Amazon has been doing itand so, like I try to explain,
(26:30):
that's why we run it through thecalculator.
First we say, look, if you wereto do it yourself and your
stuff weighs 10, 15 pounds andyou're only selling it for $9.99
or $19.99, you're not going tobe able to make money.
So I wouldn't shift.
But then there's plenty that wetake and it's higher ASP,
(26:50):
lighter products, and they couldmake a lot more money.
So you really got to look atthe two, because I mean, there's
been.
So we seem to get a lot morepeople that have bulky products
coming to us saying can you helpus?
Because Amazon must be pushingthem.
Noah Wickham (27:06):
Amazon.
I mean, that's the thing.
Amazon has been the dominatorof the last mile Right In the
customer journey for so long,and so they just kind of ate
that fee and now it's like, ohyeah, when people look at it
from a profitability standpointit doesn't make much sense,
especially they would have to alot of times.
I see you know a place likethat and brands like that.
(27:29):
If they were to sell it and doit themselves through Amazon or
through their own shipping,doesn't matter They'd end up
having to double, if not triple,their pricing to even make it
work from a profitability,feasibility standpoint.
Adam Shaffer (27:42):
So I totally agree , you couldn't do it.
I mean the stuff that you buyat Home Depot, like a bag of
mulch or something.
If you try to buy it on Amazon,it's hard because they'll bring
pallets of this stuff to HomeDepot and people take them
themselves and leave from thestore.
But it's not like that with theshipping.
So it's interesting that for somany years, like you said,
they've been doing it.
But I definitely see themclawing back on that now.
(28:03):
I'll change the topic just alittle bit.
Same with Vendor Central andSeller Central differences.
Is there a difference withadvertising?
Noah Wickham (28:21):
Is there a different way that you would go
about?
You know 3P versus 1Padvertising is.
You know your click-through andconversion factor, right?
So you're probably going toconvert a little bit better on
your advertising, no matter whatwhen you are 3P, just because
again you have that sold by,shipped by Amazon.
Badging makes things a lot morecomfortable for the end
(28:41):
consumer at the end of the day,so the advertising there is
always going to have a bit of ahigher conversion rate.
That being said, I also feelthat 1P advertising is usually
fairly limited comparatively towhat you can do with 3P, because
, again, with 3P, you have muchmore control over the entire
customer journey, includingthings such as doing promotions,
doing specific sponsored brandcampaigns, sponsored display
(29:05):
campaigns.
Amazon recently allows theability to do sponsored product
campaigns on other websites,right?
So things like that come alongand make 3P advertising more
versatile, whereas 1Padvertising is a bit more
straightforward in how you canreally get a conversion.
So you can get a much betteroverall advertising rate on 1P,
(29:29):
but you're not going to have asmuch of an ability to grow your
product and your brand on 1P asyou will with 3P with the
versatility that you have.
Adam Shaffer (29:39):
Okay, so you actually have more flexibility
with advertising on 3P.
That's good to have.
Okay, so, so you actually havemore flexibility with
advertising on 3P.
That's good to know.
And then, what about?
I don't want to scare the otherbrands that are listening in
and trying to decide, but whatdo you have to be much better at
?
As if, if you're going tobecome a 3P seller, what do you
have to be really good at ascompared to if you're just
(29:59):
selling to Amazon and fulfillingtheir POs?
Noah Wickham (30:11):
Ooh, everything kind of you know.
So you have to understand.
Yeah, I mean you have tounderstand SEO.
You have to understand.
You have to understand SEO.
You have to understandadvertising a lot more.
You have to understand how tobe strategic in your promotions.
There are things such as evenremarketing campaigns.
These are all things wherebeing your own three-piece
seller, you usually are going tohave a bit of a hard time
(30:32):
grasping how much there actuallyis to the Amazon platform for
you to be doing every single day.
So even things when it comes totroubleshooting is one of the
biggest areas that I see.
You know one piece sellers whoare making a transition.
They don't realize that.
You know they don't have a repthat they can ask to solve a
(30:52):
problem for them anymore, right?
They have to go throughcustomer, you know seller
support which, as we all know,sucks.
There's just so manyintricacies to being a seller
versus a wholesaler, right?
So there are a lot of 1P brandsI have talked to and worked
with that they don't really doanything on 1P.
They sell the product to Amazon.
(31:13):
Amazon created the listings,did everything for them, and
that's they wipe their handsclean at the end of the day,
whereas you know, transitioningover to 3P, they have to manage
everything themselves.
They have to manage thelistings, they have to make
updates to the SEO, they have tomake sure that their
advertising is staying on budgetand on track, things like that.
Adam Shaffer (31:35):
What about the logistics and products?
Is there a difference betweenshipping to Amazon when they
give you POs or shipping it toFBA yourself?
Noah Wickham (31:42):
Yeah, I think not majorly.
The major difference isobviously, when you're talking
logistics is Amazon will say,hey, we would like to purchase
this PO which contains this manyunits for this price, right.
So they send you a PO everyweek two weeks depends on the
seller right and that PO will bean exact amount, Whereas
(32:05):
switching over to the 3P side,you have to do that forecasting
yourself right.
You have to figure out how manyunits am I going to send in,
what makes sense to send inbased on my sales volume.
I will be bluntly honest, Ithink forecasting is one area
that, like 99% of sellers justare really, really bad at when
they get started on 3P.
Adam Shaffer (32:26):
And being out of stock is not good, but having
too much stock is bad news.
Noah Wickham (32:31):
There's no fine line there, unfortunately.
Amazon will charge you forhaving too little stock and
they'll charge you for havingtoo much stock.
Adam Shaffer (32:40):
And so how does returns work with 1P versus 3P?
Is there a difference?
Because they all go back to thebrand or what?
Noah Wickham (32:48):
Yeah, there's multiple different ways you can
set it up, obviously, right.
So the 1P side of thingsobviously is much, much easier
on that end, simply becauseAmazon handles end-to-end
everything there.
The 3P side, you can set it upin a few different ways, right?
So you can have it added backinto inventory.
If it's still sellable, you canhave it liquidated.
If it's not sellable, you canhave Amazon Warehouse take it
(33:12):
and sell it as a used product aswell.
So there's a lot of versatilityyou can do on the three piece
side versus the one piece side.
It's kind of just like oh,amazon deals with it and then
they send you know anything,they have to back to us if they
want to Cool.
Adam Shaffer (33:28):
I hate returns.
Everybody hates returns, don'twe all?
Yeah, it's an ugly part of thebusiness, and especially when
you get scammed by a customer,that's the worst.
Noah Wickham (33:47):
But that means that they took something old and
put it in a box and sent itback to you and kept the new
thing.
It's never nice or fun.
My, uh, my favorite favoritestory, uh, from back in the day
with one of my brands is that,uh, I end up getting a bunch of
returns from somebody whoordered like 25 products at once
, uh, so they and these were bigbulky, uh like metal shelving
type things, um, and they end upreturning all 25 uh, which I
thought was odd.
(34:07):
So amazon approved the return.
Once it came through, I had toask amazon to send it back and
to check the boxes.
Lo and behold, they had filledthe boxes with rocks.
Oh, come on 100.
This was back before amazon hada lot better checks and
balances around the returns.
Obviously that they do nowadays, but that used to be a super
common thing.
That would happen a box ofrocks awesome so yeah, that was
(34:31):
that.
That's one of my funnier returnstories on amazon.
Adam Shaffer (34:35):
That, uh, I've heard some amazing stories where
somebody would buy cleats fortheir kids and send back the old
ones every year when they grewout of them.
So every year they were buyingthem and sending back the old
ones.
It's kind of gross, butwhatever, people are people, so
hopefully there's a lot less ofthem than the good guys.
So, talking aboutrecommendations for brands, so
(34:58):
if the brand, okay, say hey,noah, okay, we want to make the
move, we want to move from 1P to3P, what would the process be?
How would you advise them?
Noah Wickham (35:12):
First and foremost , the number one thing I will
tell anyone who is currently 1Pif they want to go 3P, is if you
do not have your seller centralaccount set up set up before
you even think about doinganything else, make sure you
actually have a seller centralset up, tied to your brand
registry.
There are no issues therewhatsoever, because the amount
(35:33):
of 3P that I've started to workwith where they're like, oh, we
don't have a 1P, we can't, or,sorry, 1p that I've worked with
that don't have a 3P it'sbaffling, right.
So always, always, always, makesure you have a seller central
that is active, available andattached to your brand registry.
Now the thing is, if you are ina scenario in which Amazon is
(35:59):
still trying to purchase yourproducts and everything and
you're wanting to migrate awayfrom 1P, that's a much trickier
process than if Amazon does theold boot and kicks you off.
If Amazon does the old boot andkicks you off, you're scot-free
.
You can transfer all yourlistings to Seller Central.
You can do everything you want.
You should have a fairly easytime there.
(36:20):
Now, if you're not, you have togo through a process where,
essentially, you have to getAmazon to ungate your products
from them being the primarycontributor, because that is the
biggest issue with people whoare trying to go from 1P to 3P,
where Amazon technically ownsthe ability to sell and list the
(36:41):
product and the ability to makechanges on the product.
They are considered the primarycontributor to the listing and
even if you are the brandregistered owner, amazon still
gets final say.
So that process in of itselfespecially if Amazon still wants
to purchase from you it's notan easy one.
Amazon still wants to purchasefrom you.
(37:03):
It's not an easy one,unfortunately.
I would, uh I would alwaysadvise uh you know whether I'm
talking to someone or somebodyis listening to this and looking
for advice.
Uh, reach out to someone whohas experience in the realm of
doing this, because it uh is along and tedious process,
unfortunately, uh, especially ifyou don't know what you're
doing, uh, especially if Amazonpushes back and is you're doing,
especially if Amazon pushesback and is like, no, we're not
(37:24):
going to release these becauseyou either get to sell them to
us or not sell them at all,which I have seen happen a few
times, which is never fun todeal with, unfortunately.
Adam Shaffer (37:34):
Okay, that's interesting.
I mean, if the product is beingsold through distribution and
there are other three-piecesellers on it and Amazon's
buying it direct and selling it,so you have multiple sellers on
the ASIN, it's probably alittle easier, but if it's
completely clean, it's hard.
Noah Wickham (37:50):
Yeah, it's a little bit easier.
The primary thing that you'retrying to get from Amazon when
switching from 1P to 3P is thatcontribution rate, so the
ability to change a listingimage, change your title, change
your bullet points right.
Amazon will restrict peoplefrom being able to do that,
especially if they're stillselling the product.
(38:11):
So if Amazon is ever selling aproduct, they get the final say
in how everything on there works, even if the brand owns a brand
registry?
Absolutely.
Amazon gets primarycontribution rights for any
products that is being soldthrough Vendor Central, so they
get to have the final say on howeverything looks.
It's a lot easier to makechanges to listings through
(38:32):
Vendor Central than it isthrough Seller Central.
So, for instance, one of thethings I'll always have people
who are switching from 1P to 3Pdo is keep their 1P account
active and open because we canat least in that capacity, even
in the middle of this transition, make changes to the listings,
push through title changes, andAmazon's much more open and
(38:54):
flexible to it if you're makingthose changes through vendor
than if you are trying to pushthem through seller.
Adam Shaffer (39:01):
Okay, and then continuing on.
So basically, make sure youhave a three-piece store set up,
make sure you have your brandregistered to attach to it If
you don't have the rights tosell the product.
You got to figure it out andwork with somebody to get the
rights to sell the product,because Amazon might want to
still continue to sell it andthey might not let it go that
(39:22):
easy.
So you need to find aprofessional to help you
navigate this.
But so now you're selling, yougot the rights, you're selling
it, you create your 3P store.
What's next?
Noah Wickham (39:33):
Got to get all your product listings up.
You're selling it right.
You got to make sure you'restill optimizing.
And the biggest thing I thinkthat people will find as an
issue switching from 1P to 3P isthat they are not used to the
actual customer journey, right.
So I always tell people whenthey switch from 1P to 3P,
(39:55):
expect somewhere between a 40%and 60% sales drop off for the
first six months.
Now, that being said, we talkedabout the profitability
calculator a little bit earlier.
That profitability calculatorwill help us again see how bad
off are we going to be,comparatively to where we
actually were with vendorcentral as well.
(40:15):
But, all that being said, ittypically will.
You'll see it uptick again onceyou actually get selling and
get the product actually incustomers' hands.
So 3P is a much differentcustomer journey than 1P because
again you don't have the big,bold Amazon badge that shows
that it's sold, shipped byAmazon.
(40:36):
You have to actually convincecustomers.
You now have less of anopportunity to be overall pick
badge for your product becauseyou are selling it yourself,
even if it's FBA.
So there's a lot intricaciespeople need to think about with
3P, not necessarily saying it'salways going to be better than
(40:56):
1P right and same thing with 1P.
It's not necessarily betterthan 3P.
I think there is a fine linefor each, but for most sellers I
would say, at the very least ahealthy mix.
I don't think one or the otheris always the option.
Adam Shaffer (41:12):
And the evaluation that the brands need to go
through is simply what is theirrelationship with Amazon, if
they're selling 1P or not, andcan they take ASINs that aren't
focused on by Amazon, put themon their own 3P or get a
different 3P selling them, startbuilding that way.
But I guess it's the margins.
(41:35):
Like can you or can't you makemore money doing this, unless
they're throwing you off?
Maybe you shouldn't leave, butif they're throwing you off, you
got to bite the bullet and doit.
So I think that's part of theevaluation process.
Like are they going to do it toyou?
Noah Wickham (41:49):
Yeah, you got to bite that bullet.
You also got to see again,there are different fees and
different allocations thatthey're requiring.
So again, I've seen a lot ofbrands where they have had an
increase in their allocationbudget that they have to have to
250k this year and that's up ahundred to 150k.
Adam Shaffer (42:06):
So that 250k is, is there spent on advertising.
Noah Wickham (42:09):
No.
So that well, it's a mix.
So that's actually Amazon's ownbudget where, essentially, you
have to have that much inoverall kind of fee generation.
So you have to commit that muchas well as yes to advertising
as well as to overall process.
So's again up $100,000 to$150,000 over prior years, which
(42:30):
you know that's a big jump andthat's actually one of the
bigger things that I'm seeingthis year, with a lot of 1P
where a lot of people aretelling me this is probably
going to be their last year,just because Amazon gave short
notice.
People are telling me this isprobably going to be their last
year just because Amazon gaveshort notice.
They always give short noticeon contract changes,
unfortunately, and they don'ttake any different than what the
(42:51):
contract says, even if you tryand negotiate, unfortunately.
Adam Shaffer (42:54):
The larger brands that I talk to have to also pay
for a person.
Do you hear about that?
They need to have an Amazon rep.
Noah Wickham (43:07):
And that's not cheap.
That's you know.
That's part of that 250 K.
Uh, is that's going towards umhaving that rep associated?
Because normally you the wayyou used to be vendor is you
would get invited to theplatform, then you would have a
rep assigned to you.
Uh, and then from there thatrep would just be a part of your
ecosystem.
They would work with Tom brands.
Wasn't a charge there, none ofthe fees were affected with that
.
Nowadays, yeah, you have to payfor that rep, which is insanity
(43:31):
.
I had a client I was workingwith last year where they had
gone.
I think it was like a year anda half without a rep.
They don't know what happenedto their previous one, but one
day the email stopped workingand then Amazon never assigned
them a new rep and I thinkthat's kind of indicative also
of the fact that nobody'sgetting vendor central invites
anymore from reps or anything.
(43:52):
I was at Accelerate last year.
I met one vendor central repand they were like, yeah, it's
pretty much a skeleton crew overthere.
Adam Shaffer (43:59):
Really Okay.
That's interesting information.
And so when you think about itall, you seem like you're pretty
agnostic.
1p or 3P, where do you lean?
I mean, I are currently 3P andhave never been 1P.
Noah Wickham (44:15):
Don't expect to ever be 1P at this point and I
would not push you to ever go to1P.
If you are 1P, however, andyou've never been 3P, I would
(44:38):
push you to go at least a mix ofthe two.
There is not much benefit for a3P seller to move to 1P, but
there's a lot of benefit, in mymind, for a 1P to move to 3P.
It's one of those that, if youstart out as 1P, it's probably
(44:58):
fantastic for you, especially inthe Amazon world, and 3P is
going to seem like especially inthe Amazon world, and 3P is
going to seem like a terrible,terrible time because of how
much you have to do on theplatform.
But realistically, I think 3Psellers in general, especially
if you're doing anything lessthan probably 5 million 3P, 1p
(45:20):
would not be worth theinvestment to even try and get
on the platform.
So 5 million a year, yeah,which realistically is pretty
small as far as Amazon.
No.
Adam Shaffer (45:32):
I mean, it's still a decent account.
Noah Wickham (45:34):
It's a decent account, but from a 1P
perspective kind of pittanceright, and so that's the big
thing to take in mind is.
I also just don't think 1P isever going to be handing out
invitations except for top, top,top 1% brands.
Adam Shaffer (45:50):
Yeah, I mean in 3P is I mean people.
I don't think the end userscompletely understand that so
much of what they buy is comingfrom a 3P.
It's being shipped by Amazon,which is all that matters in its
prime, but about close to 70%of the gross merchandise value
on Amazon is 3P.
So you know, the tip of thespear is really Amazon selling,
(46:11):
like you said, those big, big,big brands, but the balance of
the stuff is other people.
Yeah Well, and that's againthat's the big thing it's.
Noah Wickham (46:19):
You know it's something like 30, 40% of all
sales come from, you know,vendor central.
But of those 30, 40%, you know60, 70% of it comes from a
hundred different brands, youknow.
So it's really, it's really asmall margin that makes up, uh,
the overall but granted Amazon'sginormous right.
Adam Shaffer (46:40):
So that's part of that, it's kind of the fun of it
.
So you know, coming down to theend here, what are we not
talking about?
That's important for people toknow, about?
1p versus 3P what are wemissing?
Noah Wickham (46:53):
The number one thing that you know people need
to understand 1P versus 3P.
I think I kind of startedtouching on it there.
But if you're 3P, don't everthink about going 1P.
Realistically it's not worth it.
If you ever are thinking aboutgoing 1P, you're probably a top
1% brand on the platform and thereality is, even if you are a
(47:16):
top 1%, you're probably going tobe still making more money on
3P from a profitabilityperspective.
If you're 1P right now and youhaven't gotten a letter from
Amazon anytime soon or anytimerecently, be fearful.
I don't see Vendor Centralliving another two, three, four
years.
Even if they're making allthese changes for their
(47:38):
profitability and making a moreprofitable solution for them, it
probably just won't berealistically.
People have been saying VendorCentral has been dying for the
last five years.
I think last year was a goodnail in the coffin.
Whether that final nail hitsthis year, next year or the year
after, unsure, but it'sdefinitely on the downtrend and
(48:01):
I would prep for it if you'renot already.
Adam Shaffer (48:04):
And if people need help, I mean, obviously they
could always talk to us atPhelps United, but how do they
reach you, noah, and you knowhow can you help?
Yeah absolutely.
Noah Wickham (48:15):
People can always check us out uh our website,
myamzonguycom.
So right there, that sign justmyamzonguycom is our website.
Uh, we do tons of 1p to 3p uhtransitions all the time.
Um, it's one of the things thatwe have a special account
program for as well.
Um work with clients all thetime.
Like that you can also reachout to uh me specifically.
(48:37):
If you just want to shoot anemail over to sales at
myamsonguy, I'm always happy tohelp anyone and chat with anyone
on uh seeing if it would wouldbe something we can help them
out with.
Adam Shaffer (48:46):
Great, I mean super important, very relevant
topic, and really thank you somuch for helping us talk about
it, navigate it and think aboutit.
This is something that I thinkmost brands are thinking about
right now.
Noah Wickham (48:59):
Absolutely.
It's a huge topic in space andI'm sure it will get more insane
as the year goes on.
Adam Shaffer (49:05):
Yeah, well, good for everybody to think about it
Always, every year, rethinkabout your strategy, rethink
your strategy.
Make sure that it's the rightstrategy for your brand, and
companies like my Amazon guy andPhelps United are here to help.
There's a lot of love and helpwe can give, so think about that
.
Don't do it by yourself.
No, do not Do not.
(49:26):
Thank you.
Thanks, noah.
Thanks for joining us today.
Noah Wickham (49:29):
Thanks, Sam.
Announcement (49:32):
Thank you for watching another episode of the
Planet Amazon podcast, where wetalk all things Amazon.
If you want to learn about howto accelerate your sales on
Amazon, visit Phelps United'swebsite at phelpsunitedcom.
Welcome to the Planet Amazon podcast with Adam
Schaefer, where we explore theworld of Amazon and other
e-commerce marketplaces.
Join us as we delve into thelatest strategies and tactics
for successful selling on theworld's largest online
marketplace.
Adam Shaffer (00:17):
Hello, I'm Adam Schaefer and welcome to another
exciting episode of the PlanetAmazon podcast, where we talk
about all things Amazon.
Today, we're tackling a topicthat sparks a lot of debate
among brands navigating Amazon,and that's the big question
Amazon Vendor Central versusAmazon Seller Central.
Which is right for your brand?
(00:37):
Which is right for yourgo-to-market?
To help us unpack this, I'mthrilled to welcome Noah Wickham
, sales Director at my AmazonGuy.
Noah is a seasoned e-commerceexpert who has worked with over
400 brands to scale theirpresence and drive impressive
growth on Amazon and beyond.
With a proven track record inlaunching successful brands,
(00:57):
optimizing operations andleading strategic ad campaigns,
noah brings a wealth ofknowledge to our discussion
today.
Not to mention, he's a Googlead certified professional, which
underscores his expertise indigital marketing and delivering
ROI driven results.
So if you've ever wonderedwhich Amazon platform is the
best fit for your business, youwon't want to miss this
(01:18):
conversation.
Let's dive in and welcome Noah.
Thanks for joining the show.
Yeah, thanks for having me.
I'm happy to be here.
Thanks, and before we get intothe nitty gritty, because right
now it's an interesting time onAmazon, where there's a lot of
pressure on brands to eithershift from 1P to 3P, or the
(01:39):
brands are getting squeezedenough that they're trying to
make this decision forthemselves whether they want to
venture over to the 3P side ofthe house.
But before we get there, I wanteverybody to know a bit more
about you and I want to know abit more about you.
So can you just tell us alittle bit more about your
background and I hit some of it,but I'd love to know a bit more
.
Noah Wickham (01:58):
Yeah, absolutely.
So.
You hit, I think, the majorpoints right.
So I'm Noah Wickham.
I'm a sales director here overat my Amazon Guy formerly brand
director.
But my history in thee-commerce space is very, you
know, widely varied, right?
So I've been in the e-commercespace for over a decade.
At this point I've had my ownbrands that I've worked with.
(02:20):
I have done Shopify, Walmart,Amazon with.
I have done Shopify, Walmart,Amazon, eBay is actually funny
enough how I got my startreselling products 12, 13 years
ago.
Overall, mostly I've workedwith anything from mom and pop,
small startup companies all theway up to Fortune 500 Enterprise
(02:41):
.
So my experience is variedacross the board in e-commerce,
but I have kind of taken my homeand my stance within the Amazon
community, as is, in my opinion, the number one place to be if
you are in e-commerce.
Adam Shaffer (02:56):
Wow, so a real veteran.
So thanks again for joining ustoday.
So let's start with the bigquestion and we'll start
drilling down from there, butlet's try to.
So let's start with the bigquestion and we'll start
drilling down from there, butlet's try to.
And maybe everybody knows this,but let's just repeat it For
those unfamiliar can you explainthe core differences between
Vendor Central and SellerCentral?
Noah Wickham (03:15):
Yeah, absolutely so.
Vendor Central, often referredto as 1P, and then Seller
Central, often referred to as 3P.
Vendor Central is where,essentially, you are taking your
products and you arewholesaling them off to Amazon,
who is then going ahead andselling them on their own
platform, listed as them, soldby them, fulfilled by them,
(03:36):
whereas 3P, a lot of times youhave multiple options.
You have FBM and FBA, fulfilledby merchant, fulfilled by
Amazon.
On the 3P side, you are theseller of the product.
Amazon can be the one whoactually ships the product out
if it is an FBA product, butmore often than not, in the 3P
side, you are the onecontrolling the entire show,
(03:57):
whereas on the 1P vendor centralside, amazon controls a large
majority of the show.
They control the listing, howeverything is viewed, the
pricing, et cetera, and so youare much more kind of hands-off
in that capacity.
Adam Shaffer (04:10):
And so, again, you have selling to Amazon.
So you're the brand, you'reselling it directly to Amazon.
Amazon, in this case, is the 1Pand they're reselling it on
their platform 3P.
It could be that the brand hastheir own store on Amazon and
they're sellinglling it on theirplatform 3P.
It could be that the brand hastheir own store on Amazon and
they're selling it on theplatform, or they're using other
(04:31):
3Ps.
Is that right?
Noah Wickham (04:33):
Correct.
Yeah, they could be using other3Ps so you can have resellers
if it is Seller Central.
So you could still be awholesaler and working through
other options outside of justAmazon for selling on Seller
Central.
Adam Shaffer (04:49):
Yeah, I mean, and what we do.
You know, one of the things wedo is we're an agency but we're
also a seller and so in manycases we'll go to the brand and
say, hey, don't sell to Amazon,sell it to us and we'll sell it
on Amazon for you and we'llprotect your price and protect
your brand and develop yourbrand.
And it's a pretty compellingoffer as long as we could make
(05:09):
it work for them financially.
So tell us what you think thebiggest advantages of Vendor
Central are and then jump overand tell us what you think the
bigger and more importantadvantages on Seller Central
would be.
Noah Wickham (05:24):
Yeah, I see Vendor Central as being the hub for
especially extremely largebrands, right?
So Vendor Central if you're abrand that you are not wanting
to necessarily dive intounderstanding Amazon trying to
deal with other competitors,things like that Vendor Central
(05:44):
is very appealing because youcan work out how much you're
going to actually spend onadvertising.
You get the immediate impact ofAmazon being the seller right,
and Amazon has a lot of pull inwhat makes a good product versus
a bad product.
So there are some benefits inthat capacity as well, as you
get a little bit more controlover your entire logistics
(06:05):
workflow with Vendor Central.
It's the only area that I don'tlike there with their logistics
is, you know, we don't getreally all that much forecasting
for how much inventory isneeded.
But nowadays, vendor Central canbe a very viable place if you
are a very, very large brand andyou're trying to you know, only
sell, for instance, to oneseller, right.
So if you are a very, verylarge brand and you're trying to
only sell, for instance, to oneseller, right.
(06:27):
So if you're a wholesaler ingeneral and you have an account
of 50 other people who areselling your product, it's a lot
easier to control your brandpresence on the platform if you
just sell it to Amazon and workthrough Amazon to have that
overall control, if that makessense.
Now, vice versa, seller Central.
What's the pros there?
It's that control aspect, right.
(06:49):
So, yes, selling just Amazongives you that level of control
where only Amazon is going to bechanging things.
But same thing with SellerCentral If you are selling it
yourself, you get full controlover your branding.
You get full control over howyour title looks, what your
bullet points are, what theproduct images are, your pricing
when you run promotions, whenyou don't run promotions.
(07:11):
So there's a lot of net benefitas a three-piece seller that you
necessarily can't reallycontrol much on the Amazon
platform.
Still on your own, if you're a1P seller where Amazon still is
the one who gets control of that3P, you get that full brand
identity, that full ownershipover what does my listing look
(07:32):
like, what does my store looklike, how much am I doing
advertising, as well as the ideathat you're likely going to see
a little bit of a profitdifference between the two 1P.
A lot of times you're going tobe seeing necessarily an easier
profit margin and moreconsistent profit margin from
Amazon purchasing the productfrom you, whereas with 3P you
(07:54):
get to dictate when am I runninga promotion?
What is my price going to be?
If you're going to be sellingit at a higher sale volume, then
you would be on 1P.
You can be making a betterprofit margin than you
necessarily would have been.
Adam Shaffer (08:11):
So what's interesting with Vendor Central?
Like I agree, I think it's goodfor the largest brands, but I
think it does take some pricingcontrol away and what will
happen is that Amazon will stilldictate the pricing.
So if you have a wide channeland you have other resellers
(08:32):
selling in other channels, itcould wind up creating a lot of
conflict with them when, if youare doing it yourself as a 3P,
that pricing is really important.
Noah Wickham (08:53):
That pricing is really important and that's what
we run into so often is thatthey're trying the brands are
trying to control what thepricing would be, and not to all
the time with 1P.
That happens is if, forinstance, you are selling to
Amazon but you're also sellingto, let's say, walmart and
(09:14):
you're selling to Nordstrom orsome other type of retail market
, you will very frequently seeif one of those retail markets
decides to do some form ofpromotion where the product is
now 20% off, 30% off.
It doesn't matter what.
The actual cost that you end upselling the product at Amazon
will then match that.
But if Amazon's not meeting themargins that they are, neither
(09:37):
are you when it comes to whatthey will be willing to purchase
the product for.
So pricing in general 1P versus3P is always one of the bigger
aspects when it comes to kind ofprofitability and how you
handle the overall market there.
Adam Shaffer (09:51):
And then you know, explain.
I think a lot of people thinkoh, I'm 3P and you started to
say it.
But I'm a 3P, so that means Ihave to ship all these products
to these customers.
And it's not like that at all.
Noah Wickham (10:09):
Amazon is the fulfillment if you want it to be
so, just explain that whatfulfilled by merchant and
fulfilled by Amazon.
Yeah, there are so many optionsnowadays when it comes to how
you go about shipping andfulfilling products.
I mean, even if you are a 3Pseller central seller of your
product you can send productinto Amazon and have them still
fulfill it through FBA.
Secondarily to that, even ifyou still don't want to be the
(10:31):
one shipping out your ownproduct and fulfilling it, there
are a million different 3PLcompanies that you can work with
in this day and age in whichthey will ship out the product
for you, and a lot of times youcan still get prime shipping on
Amazon even with those 3PLs asan FBM.
So there's a lot of differentvariation option around how
logistics can work for yourproducts.
(10:52):
As a 3PL seller, I'm alwaysgoing to be a firm believer in
the idea that FBA is usuallygoing to be the best, just
because you get the badging forPrime and you get that shipped
by Amazon.
The two-day shipping guaranteeall of those situations as well.
And then, on top of that,Amazon has released things such
as AWD, which is essentiallyjust their warehousing platform,
(11:12):
so their warehouse distribution, where you can send products
direct from your manufacturerinto AWD and then from there
Amazon will trickle thoseproducts into FBA for
fulfillment as you need them.
So it really cleans up theentire logistics process to make
it.
So.
Yeah, if you don't want to shipyour own products, that's
(11:33):
totally fine.
There's not going to be a hugeheavy lift between switching
from 1P to 3P or vice versa.
Adam Shaffer (11:42):
And that Prime badge is incredibly important.
I mean, maybe you could talk abit more about that, because if
you don't have seller fulfilledprime meaning that you ship at
BM but you're not able to putthat prime medallion on there it
definitely affects sales.
Noah Wickham (11:57):
Oh, absolutely.
The prime medallion is one ofthe, I think, bigger converting
factors and I think it has beenpurposefully made that way,
right, in the sense of peopleare so accustomed and so used to
that prime badging instantlymeaning two-day shipping right,
it's one of the reasons that itcreated Amazon as the behemoth
(12:17):
of a platform that it is.
It's just from peopleunderstanding and knowing that
they are going to get fastshipping times if something is
prime.
So the prime badging is a huge,huge conversion where I've seen
sellers that are FBM go fromFBM to then FBA, see an instant
uptick of nearly doubling insales just from having that.
Adam Shaffer (12:38):
So what I've also found and unless we're just not
great at understanding whatshipping prices are when you try
to do shipping yourself, notwith Amazon is that no matter
what, amazon's FBA pricing forshipping is still the lowest
price in town.
Now if you want to shipsomething USPS or mail, maybe on
(13:01):
something very small and light,you could do well, but even on
small and light with Amazon'sFBA the pricing is great.
So I don't know how people canbeat that other than get it up
to Amazon where you can.
There's a cost to get it upthere, but their shipping is
amazing.
Noah Wickham (13:17):
Yeah, I think it's interesting because their
shipping pricing is amazing, andI will say that they've done
very well at making that pricingmore available, even to like
FBM sellers, right.
So Amazon has a platform thatpurchased a couple of years ago
called Vico, and Vico isactually a free to use platform.
(13:39):
It just charges a little bitextra on every single shipped
unit.
It just charges a little bitextra on every single shipped
unit, but it takes the pricingthat Amazon has been able to
curate from shipping millions ofproducts every single day and
passes it on to you as theseller.
Now, is that a viable option asan FBM seller?
Absolutely.
Is it still something in thatcapacity where it's going to
(14:02):
beat Amazon's actual fulfillment?
Probably not.
Amazon can always have cheaperfulfillment than pretty much
anyone because, again, they'redoing millions of orders at this
point in time.
I would imagine that UPSshipment-wise Amazon is Amazon
trucks everywhere justdelivering stuff all day long in
every neighborhood.
Adam Shaffer (14:20):
So what's interesting is how do I put it?
What I'm seeing and what isdefinitely happening right now
(14:42):
is Amazon, who used to be reallyfocused on growth, and they
still care about growth.
I mean, that's very importantto them, but they're much more
fixated on profitability now.
So where there were brandsgetting maybe a bit of a free
ride, they're now squeezing moreand more.
So every year, they have ameeting with their brands that
they buy from and they negotiatewith them, always trying to get
(15:04):
a better deal.
So they're trying to get betterpricing, better allowances,
more marketing funds, and so thesqueeze has been on, and what
I'm seeing is that it's too muchfor some of these brands to
bear, so they're lookingelsewhere, and so is there.
I mean, I have my own beliefson this, but do you see a play
(15:24):
for brands that are hybrid, thatsell to Amazon and also sell 3P
, or do you think you need to beone or the other?
Noah Wickham (15:32):
There is room for a hybrid play, right.
So there's always going to beroom for a hybrid play.
Now, that being said, manypeople know about, for instance,
the Vendor Central Purge thatstarted a couple months back.
Adam Shaffer (15:44):
Tell us more about it in case people don't know
that.
Noah Wickham (15:46):
Yeah, absolutely so.
The Vendor Central Purge isessentially where.
Back in I believe, august 2024,amazon sent out a letter where
essentially they said hey, bythis date we are going to no
longer be purchasing productfrom you.
Moving forward, you are nolonger going to be a part of the
1P Vendor Central network,anything like that.
Now everyone thought that theywere doing that just once, and
(16:10):
then, I believe it was aboutfour or five weeks later, they
sent out another letter.
Five weeks after that, anotherletter, and so it very quickly
turned into people being able toline up and say, oh, every X
weeks Amazon is sending thisletter out to more and more
vendor central sellers and theyare kicking them off the
(16:32):
platform.
Now, some insider knowledge thatI kind of learned as well from
having talked to a coupledifferent vendor central reps,
as well as talking to a lot ofpeople who are higher up on the
vendor central side, is that itseems that the exact margin is
that if you sell a productsomewhere between zero and $60,
(16:53):
amazon a couple of years agoabout two years ago got new
investors around the VendorCentral 1P platform and they're
looking at getting only roughly60% margins.
So that means that if you are aproduct or a seller who is
selling to Amazon and Amazoncan't seem to get 60% sales
margins on your product, you'reprobably not going to be lasting
(17:17):
much longer.
From my knowledge and everything, the Vendor Central purge will
probably stop when Amazon hasroughly only around the top 1%.
It seems like from what I'veseen on who's been kicked off,
if you're doing less than about$3 million a year on Vendor
Central, you're likely notwithin the realm of what Amazon
(17:39):
will keep Now.
They haven't released anythingrecently in 2025 as of yet, for
any new people being kicked offthe platform, but the dates that
people had suspected go all theway out into April.
So I guess we'll continue tosee if the vendor central purge
continues to happen.
But again, if you're kind of,you know trying to make that
(18:00):
profitability with Amazon.
Amazon from a lot of vendorcentral clients I've talked to
and brands I've talked to thisyear during their renegotiation
phase before the new year, itdoes seem very much like Amazon
is trying to push people toeither choose to stay on the
platform a much, much lowerprofitability to themselves or
(18:23):
to just go off the platformentirely without Amazon having
to necessarily kick them off.
Adam Shaffer (18:28):
I didn't realize that.
So you're saying that you thinkthat it's more of a margin
thing than a revenue thing?
Noah Wickham (18:35):
I think it's a mix of both right.
So, by and large, I think theway that you can look at it is
like this If someone istypically making $3 million plus
on the Amazon platform fromVendor Central, more than likely
Amazon is probably having amuch higher margin on that right
and they're also someone who'sprobably willing to invest money
.
So, for instance, amazon's feeswhen it comes to Vendor Central
(18:59):
, such as their ability tocommit certain amount of ad
dollars.
Then try and say hey, you haveto spend our $250,000 allotment
per year.
If you're doing $3 million,that's probably within the realm
of your capability, whereas ifyou're doing less than that,
you're not.
Adam Shaffer (19:16):
The 60% margin is what I've heard how do they do
60%?
I mean that's shocking.
I didn't know that one.
I knew the size, but I didn'tknow that 60% margin, because
we're definitely talking to alot more brands now than ever
that are being squeezed or, likeyou said, getting that letter
or thinking they're going to getthe letter, and so it's created
(19:37):
a boon for call it agencies andthree Ps that do buy and sell
agency work.
So really, really interesting,but let's stay with that for a
little bit.
So if you're a brand, are therecertain categories that you
could make the threshold withAmazon?
(19:57):
Are there certain industriesyou think are better to be
selling to Amazon, or is it notindustry or category specific?
Noah Wickham (20:06):
I mean it's always going to be somewhat category
specific, right?
So I talked about the 60%margins that you know they're
typical margins there, thebeauty brands of the world, you
know electronics.
So these are all the categoriesas well.
(20:38):
When you think of thosecategories that are also about
the top 1% of vendors right onvendor central platform, you
know the top 6,000 or so, whichwould encompass the top 1% all
do roughly more than 3% of theplatform.
A weird little fact aboutVendor Central right now is that
(21:03):
about 100 different vendorsmake up roughly 60% of all
vendor central sales.
Adam Shaffer (21:10):
So a hundred, a hundred brands or vendors make
up what percent.
Noah Wickham (21:17):
About 60%, 60 to 70%, it's, it's.
Uh, I probably pulled thenumbers actually while we're
here, but it's it's a hugemargin where it's, think, you
know, the Microsoft's of theworld, the Dell, the you know
brands that are just massive andselling the vendor central now
thing is, the brand itselfdoesn't necessarily have to be
(21:38):
the one selling the product tovendor central at the end of the
day, right so that, uh, youknow, 60 could be made up of uh
100, 200 different sellers whoare supplying that through a
wholesale network to Amazon.
Adam Shaffer (21:53):
Yeah, I got it.
But brands like Apple andSamsung and all that stuff,
they're killing it.
No, of course, always.
What I found is that so we'llmeet a brand and we'll say, okay
, you're selling on Amazon.
We work with them to figure outwhat they're doing on Amazon,
between what they sell to Amazon.
And then there's other three Psthat are selling this stuff,
(22:15):
because outside of the topbrands nobody's really that
clean, and so we'll look at thewhole thing and say, okay,
you're doing about this muchmoney on Amazon, let's take your
ASINs and put it through theAmazon Seller Central calculator
.
Do you understand?
Can you explain maybe, what thecalculator is and how people
use it?
Because we use it foreverything.
Noah Wickham (22:37):
All the time.
I love the that's probably thesingle best piece of technology
Amazon has given to sellers isthe profitability calculator.
99% of the time, yourprofitability on Seller Central
is just going to be higher.
It just will that will onVendor Central.
That being said, I thinkthere's a merit to utilizing
(23:01):
something like the profitabilitycalculator to see oh I am going
to make more profit on SellerCentral but still thinking about
the volume aspect of things.
Right, so you can always makemore profit.
Amazon 1P vendor central isusually always going to be more
of a volume game than anything,and you're probably not going to
see the same volume on 3P,especially if you do like a
(23:23):
instant switch over from one orthe other.
I usually see about a six-monthdowntrend in overall sales
volume when someone switchesfrom 1P to 3P, even if it's at a
higher profit margin.
You might end up making moreprofit at the end of the year,
but you're probably going to beselling less overall.
Adam Shaffer (23:41):
What I found with the calculator is that what we
first will do is we'll take thereasons, we'll put it through
the calculator and then we'llsay hey, if you were to sell as
a 3P without anybody helping you, with you just doing it
yourself, no fees to anybody,just you solo, this is how much
money you would make per unit onevery one of these ASINs, based
(24:03):
on their fee, their FBA,shipping up to Amazon, blah,
blah, blah.
Shipping up to Amazon, blah,blah, blah.
And when you look at it, if theproducts are too heavy and the
average selling price is too low, there's no way to make money.
So it's almost like, in manycases, somehow Amazon is able to
buy some of this stuff thatthey would still lose.
(24:23):
So there's definitely thismoment in time where, if you try
to do it yourself, you're goingto die and you have to keep on
selling it to Amazon, but Amazonat that point might not even
want to be selling it anymore.
Noah Wickham (24:35):
Yeah, the Vendor Central purge to me has come
from the aspect of I don'tbelieve Vendor Central has ever
been profitable for Amazon.
So everyone knows that theirnew CEO everything came in back
in 2022.
Back in 2022, when he firstcame in, amazon in general was
(24:58):
not doing wellprofitability-wise.
They were actually a lot oftimes in the negative in a lot
of their areas.
He has since added fees,charged everything, the wazoo
and everything, which has causedit to be more expensive.
Now the vendor central side ofAmazon specifically back in 2023
, got new investors into it.
(25:19):
Part of that new investment istrying to make vendor central an
actual profitable endeavor.
You talk about the big and bulkyitems.
Amazon was never making moneydelivering those big and bulky
items.
The way that they wereessentially running the business
model was yes, we can purchasethis from you for $10.
(25:39):
We will sell it for $30, eventhough for you to sell it and
ship at $30 would cost $28.
We own the shipping, so we canjust eat that entire cost of
shipping as a you know cost ofdoing business right.
Realistically, of course,anyone can look then and say,
(26:00):
yeah, that does make sense.
Eventually it will catch up toyou and I think that's exactly
what has happened here with that.
Adam Shaffer (26:07):
That's what I, that's what I think too, because
you know, like we have sillythings I don't want to say silly
, they're huge sellers butthings like bird food right,
bird food it'll be somethinglike 1499 for a 10 pound bag.
I'm just making it up, it'ssomething like that, and there's
no way that you could ship itand so.
But Amazon has been doing itand so, like I try to explain,
(26:30):
that's why we run it through thecalculator.
First we say, look, if you wereto do it yourself and your
stuff weighs 10, 15 pounds andyou're only selling it for $9.99
or $19.99, you're not going tobe able to make money.
So I wouldn't shift.
But then there's plenty that wetake and it's higher ASP,
(26:50):
lighter products, and they couldmake a lot more money.
So you really got to look atthe two, because I mean, there's
been.
So we seem to get a lot morepeople that have bulky products
coming to us saying can you helpus?
Because Amazon must be pushingthem.
Noah Wickham (27:06):
Amazon.
I mean, that's the thing.
Amazon has been the dominatorof the last mile Right In the
customer journey for so long,and so they just kind of ate
that fee and now it's like, ohyeah, when people look at it
from a profitability standpointit doesn't make much sense,
especially they would have to alot of times.
I see you know a place likethat and brands like that.
(27:29):
If they were to sell it and doit themselves through Amazon or
through their own shipping,doesn't matter They'd end up
having to double, if not triple,their pricing to even make it
work from a profitability,feasibility standpoint.
Adam Shaffer (27:42):
So I totally agree , you couldn't do it.
I mean the stuff that you buyat Home Depot, like a bag of
mulch or something.
If you try to buy it on Amazon,it's hard because they'll bring
pallets of this stuff to HomeDepot and people take them
themselves and leave from thestore.
But it's not like that with theshipping.
So it's interesting that for somany years, like you said,
they've been doing it.
But I definitely see themclawing back on that now.
(28:03):
I'll change the topic just alittle bit.
Same with Vendor Central andSeller Central differences.
Is there a difference withadvertising?
Noah Wickham (28:21):
Is there a different way that you would go
about?
You know 3P versus 1Padvertising is.
You know your click-through andconversion factor, right?
So you're probably going toconvert a little bit better on
your advertising, no matter whatwhen you are 3P, just because
again you have that sold by,shipped by Amazon.
Badging makes things a lot morecomfortable for the end
(28:41):
consumer at the end of the day,so the advertising there is
always going to have a bit of ahigher conversion rate.
That being said, I also feelthat 1P advertising is usually
fairly limited comparatively towhat you can do with 3P, because
, again, with 3P, you have muchmore control over the entire
customer journey, includingthings such as doing promotions,
doing specific sponsored brandcampaigns, sponsored display
(29:05):
campaigns.
Amazon recently allows theability to do sponsored product
campaigns on other websites,right?
So things like that come alongand make 3P advertising more
versatile, whereas 1Padvertising is a bit more
straightforward in how you canreally get a conversion.
So you can get a much betteroverall advertising rate on 1P,
(29:29):
but you're not going to have asmuch of an ability to grow your
product and your brand on 1P asyou will with 3P with the
versatility that you have.
Adam Shaffer (29:39):
Okay, so you actually have more flexibility
with advertising on 3P.
That's good to have.
Okay, so, so you actually havemore flexibility with
advertising on 3P.
That's good to know.
And then, what about?
I don't want to scare the otherbrands that are listening in
and trying to decide, but whatdo you have to be much better at
?
As if, if you're going tobecome a 3P seller, what do you
have to be really good at ascompared to if you're just
(29:59):
selling to Amazon and fulfillingtheir POs?
Noah Wickham (30:11):
Ooh, everything kind of you know.
So you have to understand.
Yeah, I mean you have tounderstand SEO.
You have to understand.
You have to understand SEO.
You have to understandadvertising a lot more.
You have to understand how tobe strategic in your promotions.
There are things such as evenremarketing campaigns.
These are all things wherebeing your own three-piece
seller, you usually are going tohave a bit of a hard time
(30:32):
grasping how much there actuallyis to the Amazon platform for
you to be doing every single day.
So even things when it comes totroubleshooting is one of the
biggest areas that I see.
You know one piece sellers whoare making a transition.
They don't realize that.
You know they don't have a repthat they can ask to solve a
(30:52):
problem for them anymore, right?
They have to go throughcustomer, you know seller
support which, as we all know,sucks.
There's just so manyintricacies to being a seller
versus a wholesaler, right?
So there are a lot of 1P brandsI have talked to and worked
with that they don't really doanything on 1P.
They sell the product to Amazon.
(31:13):
Amazon created the listings,did everything for them, and
that's they wipe their handsclean at the end of the day,
whereas you know, transitioningover to 3P, they have to manage
everything themselves.
They have to manage thelistings, they have to make
updates to the SEO, they have tomake sure that their
advertising is staying on budgetand on track, things like that.
Adam Shaffer (31:35):
What about the logistics and products?
Is there a difference betweenshipping to Amazon when they
give you POs or shipping it toFBA yourself?
Noah Wickham (31:42):
Yeah, I think not majorly.
The major difference isobviously, when you're talking
logistics is Amazon will say,hey, we would like to purchase
this PO which contains this manyunits for this price, right.
So they send you a PO everyweek two weeks depends on the
seller right and that PO will bean exact amount, Whereas
(32:05):
switching over to the 3P side,you have to do that forecasting
yourself right.
You have to figure out how manyunits am I going to send in,
what makes sense to send inbased on my sales volume.
I will be bluntly honest, Ithink forecasting is one area
that, like 99% of sellers justare really, really bad at when
they get started on 3P.
Adam Shaffer (32:26):
And being out of stock is not good, but having
too much stock is bad news.
Noah Wickham (32:31):
There's no fine line there, unfortunately.
Amazon will charge you forhaving too little stock and
they'll charge you for havingtoo much stock.
Adam Shaffer (32:40):
And so how does returns work with 1P versus 3P?
Is there a difference?
Because they all go back to thebrand or what?
Noah Wickham (32:48):
Yeah, there's multiple different ways you can
set it up, obviously, right.
So the 1P side of thingsobviously is much, much easier
on that end, simply becauseAmazon handles end-to-end
everything there.
The 3P side, you can set it upin a few different ways, right?
So you can have it added backinto inventory.
If it's still sellable, you canhave it liquidated.
If it's not sellable, you canhave Amazon Warehouse take it
(33:12):
and sell it as a used product aswell.
So there's a lot of versatilityyou can do on the three piece
side versus the one piece side.
It's kind of just like oh,amazon deals with it and then
they send you know anything,they have to back to us if they
want to Cool.
Adam Shaffer (33:28):
I hate returns.
Everybody hates returns, don'twe all?
Yeah, it's an ugly part of thebusiness, and especially when
you get scammed by a customer,that's the worst.
Noah Wickham (33:47):
But that means that they took something old and
put it in a box and sent itback to you and kept the new
thing.
It's never nice or fun.
My, uh, my favorite favoritestory, uh, from back in the day
with one of my brands is that,uh, I end up getting a bunch of
returns from somebody whoordered like 25 products at once
, uh, so they and these were bigbulky, uh like metal shelving
type things, um, and they end upreturning all 25 uh, which I
thought was odd.
(34:07):
So amazon approved the return.
Once it came through, I had toask amazon to send it back and
to check the boxes.
Lo and behold, they had filledthe boxes with rocks.
Oh, come on 100.
This was back before amazon hada lot better checks and
balances around the returns.
Obviously that they do nowadays, but that used to be a super
common thing.
That would happen a box ofrocks awesome so yeah, that was
(34:31):
that.
That's one of my funnier returnstories on amazon.
Adam Shaffer (34:35):
That, uh, I've heard some amazing stories where
somebody would buy cleats fortheir kids and send back the old
ones every year when they grewout of them.
So every year they were buyingthem and sending back the old
ones.
It's kind of gross, butwhatever, people are people, so
hopefully there's a lot less ofthem than the good guys.
So, talking aboutrecommendations for brands, so
(34:58):
if the brand, okay, say hey,noah, okay, we want to make the
move, we want to move from 1P to3P, what would the process be?
How would you advise them?
Noah Wickham (35:12):
First and foremost , the number one thing I will
tell anyone who is currently 1Pif they want to go 3P, is if you
do not have your seller centralaccount set up set up before
you even think about doinganything else, make sure you
actually have a seller centralset up, tied to your brand
registry.
There are no issues therewhatsoever, because the amount
(35:33):
of 3P that I've started to workwith where they're like, oh, we
don't have a 1P, we can't, or,sorry, 1p that I've worked with
that don't have a 3P it'sbaffling, right.
So always, always, always, makesure you have a seller central
that is active, available andattached to your brand registry.
Now the thing is, if you are ina scenario in which Amazon is
(35:59):
still trying to purchase yourproducts and everything and
you're wanting to migrate awayfrom 1P, that's a much trickier
process than if Amazon does theold boot and kicks you off.
If Amazon does the old boot andkicks you off, you're scot-free
.
You can transfer all yourlistings to Seller Central.
You can do everything you want.
You should have a fairly easytime there.
(36:20):
Now, if you're not, you have togo through a process where,
essentially, you have to getAmazon to ungate your products
from them being the primarycontributor, because that is the
biggest issue with people whoare trying to go from 1P to 3P,
where Amazon technically ownsthe ability to sell and list the
(36:41):
product and the ability to makechanges on the product.
They are considered the primarycontributor to the listing and
even if you are the brandregistered owner, amazon still
gets final say.
So that process in of itselfespecially if Amazon still wants
to purchase from you it's notan easy one.
Amazon still wants to purchasefrom you.
(37:03):
It's not an easy one,unfortunately.
I would, uh I would alwaysadvise uh you know whether I'm
talking to someone or somebodyis listening to this and looking
for advice.
Uh, reach out to someone whohas experience in the realm of
doing this, because it uh is along and tedious process,
unfortunately, uh, especially ifyou don't know what you're
doing, uh, especially if Amazonpushes back and is you're doing,
especially if Amazon pushesback and is like, no, we're not
(37:24):
going to release these becauseyou either get to sell them to
us or not sell them at all,which I have seen happen a few
times, which is never fun todeal with, unfortunately.
Adam Shaffer (37:34):
Okay, that's interesting.
I mean, if the product is beingsold through distribution and
there are other three-piecesellers on it and Amazon's
buying it direct and selling it,so you have multiple sellers on
the ASIN, it's probably alittle easier, but if it's
completely clean, it's hard.
Noah Wickham (37:50):
Yeah, it's a little bit easier.
The primary thing that you'retrying to get from Amazon when
switching from 1P to 3P is thatcontribution rate, so the
ability to change a listingimage, change your title, change
your bullet points right.
Amazon will restrict peoplefrom being able to do that,
especially if they're stillselling the product.
(38:11):
So if Amazon is ever selling aproduct, they get the final say
in how everything on there works, even if the brand owns a brand
registry?
Absolutely.
Amazon gets primarycontribution rights for any
products that is being soldthrough Vendor Central, so they
get to have the final say on howeverything looks.
It's a lot easier to makechanges to listings through
(38:32):
Vendor Central than it isthrough Seller Central.
So, for instance, one of thethings I'll always have people
who are switching from 1P to 3Pdo is keep their 1P account
active and open because we canat least in that capacity, even
in the middle of this transition, make changes to the listings,
push through title changes, andAmazon's much more open and
(38:54):
flexible to it if you're makingthose changes through vendor
than if you are trying to pushthem through seller.
Adam Shaffer (39:01):
Okay, and then continuing on.
So basically, make sure youhave a three-piece store set up,
make sure you have your brandregistered to attach to it If
you don't have the rights tosell the product.
You got to figure it out andwork with somebody to get the
rights to sell the product,because Amazon might want to
still continue to sell it andthey might not let it go that
(39:22):
easy.
So you need to find aprofessional to help you
navigate this.
But so now you're selling, yougot the rights, you're selling
it, you create your 3P store.
What's next?
Noah Wickham (39:33):
Got to get all your product listings up.
You're selling it right.
You got to make sure you'restill optimizing.
And the biggest thing I thinkthat people will find as an
issue switching from 1P to 3P isthat they are not used to the
actual customer journey, right.
So I always tell people whenthey switch from 1P to 3P,
(39:55):
expect somewhere between a 40%and 60% sales drop off for the
first six months.
Now, that being said, we talkedabout the profitability
calculator a little bit earlier.
That profitability calculatorwill help us again see how bad
off are we going to be,comparatively to where we
actually were with vendorcentral as well.
(40:15):
But, all that being said, ittypically will.
You'll see it uptick again onceyou actually get selling and
get the product actually incustomers' hands.
So 3P is a much differentcustomer journey than 1P because
again you don't have the big,bold Amazon badge that shows
that it's sold, shipped byAmazon.
(40:36):
You have to actually convincecustomers.
You now have less of anopportunity to be overall pick
badge for your product becauseyou are selling it yourself,
even if it's FBA.
So there's a lot intricaciespeople need to think about with
3P, not necessarily saying it'salways going to be better than
(40:56):
1P right and same thing with 1P.
It's not necessarily betterthan 3P.
I think there is a fine linefor each, but for most sellers I
would say, at the very least ahealthy mix.
I don't think one or the otheris always the option.
Adam Shaffer (41:12):
And the evaluation that the brands need to go
through is simply what is theirrelationship with Amazon, if
they're selling 1P or not, andcan they take ASINs that aren't
focused on by Amazon, put themon their own 3P or get a
different 3P selling them, startbuilding that way.
But I guess it's the margins.
(41:35):
Like can you or can't you makemore money doing this, unless
they're throwing you off?
Maybe you shouldn't leave, butif they're throwing you off, you
got to bite the bullet and doit.
So I think that's part of theevaluation process.
Like are they going to do it toyou?
Noah Wickham (41:49):
Yeah, you got to bite that bullet.
You also got to see again,there are different fees and
different allocations thatthey're requiring.
So again, I've seen a lot ofbrands where they have had an
increase in their allocationbudget that they have to have to
250k this year and that's up ahundred to 150k.
Adam Shaffer (42:06):
So that 250k is, is there spent on advertising.
Noah Wickham (42:09):
No.
So that well, it's a mix.
So that's actually Amazon's ownbudget where, essentially, you
have to have that much inoverall kind of fee generation.
So you have to commit that muchas well as yes to advertising
as well as to overall process.
So's again up $100,000 to$150,000 over prior years, which
(42:30):
you know that's a big jump andthat's actually one of the
bigger things that I'm seeingthis year, with a lot of 1P
where a lot of people aretelling me this is probably
going to be their last year,just because Amazon gave short
notice.
People are telling me this isprobably going to be their last
year just because Amazon gaveshort notice.
They always give short noticeon contract changes,
unfortunately, and they don'ttake any different than what the
(42:51):
contract says, even if you tryand negotiate, unfortunately.
Adam Shaffer (42:54):
The larger brands that I talk to have to also pay
for a person.
Do you hear about that?
They need to have an Amazon rep.
Noah Wickham (43:07):
And that's not cheap.
That's you know.
That's part of that 250 K.
Uh, is that's going towards umhaving that rep associated?
Because normally you the wayyou used to be vendor is you
would get invited to theplatform, then you would have a
rep assigned to you.
Uh, and then from there thatrep would just be a part of your
ecosystem.
They would work with Tom brands.
Wasn't a charge there, none ofthe fees were affected with that
.
Nowadays, yeah, you have to payfor that rep, which is insanity
(43:31):
.
I had a client I was workingwith last year where they had
gone.
I think it was like a year anda half without a rep.
They don't know what happenedto their previous one, but one
day the email stopped workingand then Amazon never assigned
them a new rep and I thinkthat's kind of indicative also
of the fact that nobody'sgetting vendor central invites
anymore from reps or anything.
(43:52):
I was at Accelerate last year.
I met one vendor central repand they were like, yeah, it's
pretty much a skeleton crew overthere.
Adam Shaffer (43:59):
Really Okay.
That's interesting information.
And so when you think about itall, you seem like you're pretty
agnostic.
1p or 3P, where do you lean?
I mean, I are currently 3P andhave never been 1P.
Noah Wickham (44:15):
Don't expect to ever be 1P at this point and I
would not push you to ever go to1P.
If you are 1P, however, andyou've never been 3P, I would
(44:38):
push you to go at least a mix ofthe two.
There is not much benefit for a3P seller to move to 1P, but
there's a lot of benefit, in mymind, for a 1P to move to 3P.
It's one of those that, if youstart out as 1P, it's probably
(44:58):
fantastic for you, especially inthe Amazon world, and 3P is
going to seem like especially inthe Amazon world, and 3P is
going to seem like a terrible,terrible time because of how
much you have to do on theplatform.
But realistically, I think 3Psellers in general, especially
if you're doing anything lessthan probably 5 million 3P, 1p
(45:20):
would not be worth theinvestment to even try and get
on the platform.
So 5 million a year, yeah,which realistically is pretty
small as far as Amazon.
No.
Adam Shaffer (45:32):
I mean, it's still a decent account.
Noah Wickham (45:34):
It's a decent account, but from a 1P
perspective kind of pittanceright, and so that's the big
thing to take in mind is.
I also just don't think 1P isever going to be handing out
invitations except for top, top,top 1% brands.
Adam Shaffer (45:50):
Yeah, I mean in 3P is I mean people.
I don't think the end userscompletely understand that so
much of what they buy is comingfrom a 3P.
It's being shipped by Amazon,which is all that matters in its
prime, but about close to 70%of the gross merchandise value
on Amazon is 3P.
So you know, the tip of thespear is really Amazon selling,
(46:11):
like you said, those big, big,big brands, but the balance of
the stuff is other people.
Yeah Well, and that's againthat's the big thing it's.
Noah Wickham (46:19):
You know it's something like 30, 40% of all
sales come from, you know,vendor central.
But of those 30, 40%, you know60, 70% of it comes from a
hundred different brands, youknow.
So it's really, it's really asmall margin that makes up, uh,
the overall but granted Amazon'sginormous right.
Adam Shaffer (46:40):
So that's part of that, it's kind of the fun of it
.
So you know, coming down to theend here, what are we not
talking about?
That's important for people toknow, about?
1p versus 3P what are wemissing?
Noah Wickham (46:53):
The number one thing that you know people need
to understand 1P versus 3P.
I think I kind of startedtouching on it there.
But if you're 3P, don't everthink about going 1P.
Realistically it's not worth it.
If you ever are thinking aboutgoing 1P, you're probably a top
1% brand on the platform and thereality is, even if you are a
(47:16):
top 1%, you're probably going tobe still making more money on
3P from a profitabilityperspective.
If you're 1P right now and youhaven't gotten a letter from
Amazon anytime soon or anytimerecently, be fearful.
I don't see Vendor Centralliving another two, three, four
years.
Even if they're making allthese changes for their
(47:38):
profitability and making a moreprofitable solution for them, it
probably just won't berealistically.
People have been saying VendorCentral has been dying for the
last five years.
I think last year was a goodnail in the coffin.
Whether that final nail hitsthis year, next year or the year
after, unsure, but it'sdefinitely on the downtrend and
(48:01):
I would prep for it if you'renot already.
Adam Shaffer (48:04):
And if people need help, I mean, obviously they
could always talk to us atPhelps United, but how do they
reach you, noah, and you knowhow can you help?
Yeah absolutely.
Noah Wickham (48:15):
People can always check us out uh our website,
myamzonguycom.
So right there, that sign justmyamzonguycom is our website.
Uh, we do tons of 1p to 3p uhtransitions all the time.
Um, it's one of the things thatwe have a special account
program for as well.
Um work with clients all thetime.
Like that you can also reachout to uh me specifically.
(48:37):
If you just want to shoot anemail over to sales at
myamsonguy, I'm always happy tohelp anyone and chat with anyone
on uh seeing if it would wouldbe something we can help them
out with.
Adam Shaffer (48:46):
Great, I mean super important, very relevant
topic, and really thank you somuch for helping us talk about
it, navigate it and think aboutit.
This is something that I thinkmost brands are thinking about
right now.
Noah Wickham (48:59):
Absolutely.
It's a huge topic in space andI'm sure it will get more insane
as the year goes on.
Adam Shaffer (49:05):
Yeah, well, good for everybody to think about it
Always, every year, rethinkabout your strategy, rethink
your strategy.
Make sure that it's the rightstrategy for your brand, and
companies like my Amazon guy andPhelps United are here to help.
There's a lot of love and helpwe can give, so think about that
.
Don't do it by yourself.
No, do not Do not.
(49:26):
Thank you.
Thanks, noah.
Thanks for joining us today.
Noah Wickham (49:29):
Thanks, Sam.
Announcement (49:32):
Thank you for watching another episode of the
Planet Amazon podcast, where wetalk all things Amazon.
If you want to learn about howto accelerate your sales on
Amazon, visit Phelps United'swebsite at phelpsunitedcom.
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