In a time of great uncertainty where dealing with Amazon is becoming a must in business, the established status quo of 1P vs. 3P is no longer as clear cut. Industry-leading businesses are quickly adopting this new Amazon strategy, so I want to talk about why it might be good for you, what all the acronyms mean and where to start in terms of growing your business by using an Amazon hybrid model. 

What Is The Amazon Hybrid Model?

Simply put, a hybrid model with Amazon uses both Seller Central and Vendor Central to grow your business. Using both services will give you the best of both worlds i.e. the ability to use services such as Amazon Vine and the option to fulfill via FBA. I’ll talk more about the pros, cons, and opportunities later in this post, but the important takeaway should be that you’ll have a lot more options available through a hybrid model than if you were just a Vendor or Seller.

Is A Hybrid Model Right For Me?

The annoyingly vague answer to this question is “It depends”, you must first meet the criteria to be a Vendor on Amazon to open a Vendor Central account AND have the resource available to manage a Seller Central account full time.

You should be clear on what you want to achieve by going down this route and not opening another Amazon account just because you can. It should form a large part of your overall strategy, and as such, should be given the attention it deserves.

Things You Can Achieve With The Hybrid Model

• Optimised margin across your whole range – Certain lines will fit best into either Seller or Vendor Central. It will take some analytical work to determine the best split, but the results can be very beneficial.
• Absolute control over your product listings – Traditionally, Sellers have less control over a listing, so using Vendor Central to list an item and piggybacking it from a Seller Central account will give you complete control over how the page is presented.
• Access to the best deal and promo events – Vendors will always have better options when Prime Day and Black Friday roll around. By having access to both types of accounts, you get the flexibility of promoting a line through Vendor Central and making the most of the halo effect through Seller Central.
• Tools for kick-starting new line demand – With the ability to ship lines into the FC through FBA and enrol them for Vine through Vendor Central, you can drive new line demand quicker than ever before.

For more advice on strategy from experts in the industry, email us at Etopia. We can schedule a call and define exactly what’s best for your business. 

What Is Seller Central?

Seller Central is a platform offered by Amazon to allow 3rd party sellers access to the marketplace and sell products directly to consumers. These Sellers are referred to as 3rd party sellers or simply 3Ps.

In a vast number of cases, these 3Ps are listing items on the platform and directly fulfilling the products from their own warehouse locations. They also deal with any and all customer service enquiries, including returns requests and the logistics involved with accepting returned goods. 

The other 3rd Party model involves heavy use of FBA (Fulfilled By Amazon) where they let Amazon do a vast majority of the hard work.

What Is FBA?

FBA is what I call Vendor Central Lite. Essentially you can ship stock into an Amazon FC for a small fee and they take care of shipping when it sells. They will even take care of your customer service queries and dealing with any returns you may incur. 

This is key to making a Hybrid model successful and is the most valuable tool available to businesses who have a Seller Central account.

What Is Vendor Central?

Vendor Central is an invite-only platform for businesses who want to sell directly to Amazon. That is Amazon orders directly from you, which is sold directly to the consumer. You do not have to deal with customer enquiries, returns, or pesky VAT. With Vendor Central comes Brand Analytics, Brand Registry, and better support from the Amazon side. All this means you have the opportunity to create more attractive listings and better protect them from 3rd party sellers.

Benefits and Opportunities Of The Amazon Hybrid Model

• Better listing quality and price control
• Best of both worlds analytics options
• Most efficient way to launch a new product
• Avoid HAZMAT and dangerous goods issues
• Prevent lines from being dropped by Amazon and not replenished

Potential Drawbacks Of An Amazon Hybrid Model

• Workload – Without a doubt, the workload will be higher using the hybrid model. It is not uncommon to hire another team member just to manage the Seller Central side of the business separate from any Vendor Central operations.
• VAT – You will be responsible for managing all VAT through Seller Central, which is fine if you are used to selling directly to consumers. However, if you are not, this can come with a lot of challenges.
• Chargebacks – Ask any Vendor what their least favourite part of dealing with Amazon is, and I’ll bet they say chargebacks. If left unchecked, chargebacks can eat huge chunks out of your profitability, and it can be a full-time job to get on top of. It is vital to have a good plan in place for avoiding chargebacks in the first place, but if you do start receiving them, get to the root cause immediately and reverse them as soon as possible.

Conclusion

There are many pros and cons to all aspects of dealing with Amazon as a Seller or Vendor. The drawbacks of the hybrid model are limited and always come back to the number of resources you have available. I firmly believe that if you have the capacity then the hybrid model is the future for selling on Amazon. The proof is in the clients we deal with daily. We often have big brands approaching us to ask how they can go the hybrid route and how we can deliver them a best-in-class strategy for growth. 

If you would like more information on anything you have read here or would like to discuss the potential benefit the hybrid model would bring to your business, email me at billy@etopiaconsultancy.co.uk