Amazon Cuts Ties With EU Distributors - Great News For Amazon Wholesale & Arbitrage Sellers?
- AccrueMe Team
- Feb 17, 2023
- 3 min read
Amazon's recent decision to cut ties with EU distributors is causing ripples across the e-commerce landscape. The move is part of a broader effort by Amazon to reduce costs and streamline its operations. While some analysts speculate that this decision may negatively impact third-party sellers on the platform, the reality is that this move may actually be good for 3rd party sellers selling brand name products on Amazon.
Unfair Competition?
The key reasons why some see Amazon's decision to stop buying directly from distributors is good news for 3rd party sellers is that it may level the playing field. In the past, Amazon has been accused of giving preferential treatment to products it sourced directly from manufacturers or distributors.
Historically, Amazon has sold many brand name products on it's marketplace that it has sourced from distributors and manufacturers through Amazon Vendor Central. Vendor Central (vs Seller Central) is where Amazon buys inventory directly from brands and distributors to sell its self on the Amazon Platform as "Sold By Amazon".
Because Amazon sells products on the Amazon Marketplace via the Amazon Retail Division, many believe Amazon Marketplace gives Amazon Retail an unfair advantage over 3rd party sellers on the Amazon Marketplace platform. Typically, this advantage is described as Amazon Marketplace giving Amazon Retail priority on the "Buy Box" or not enforcing the same rules and regulations for Amazon Retail as it does for 3rd party sellers.
Amazon's dichotomy between marketplace operator and marketplace participant has drawn anti-trust scrutiny in many of the marketplaces where Amazon operates. Particularly, Amazon recently agreed to make some changes to its marketplace to comply with EU Anti-Trust Regulations.
Is This Good News For Amazon Wholesale & Arbitrage Sellers?
Amazon's 1st Party Vendor Central program is designed to allow Amazon to maintain a consistent supply of top-brands at consistent prices. Over the years, purchasing inventory from both distributors and brands has allowed Amazon to offer a wider range of products by accessing a distributor's entire diverse catalog rather than just a single brands offerings.
Amazon's increasing access to diverse product selections led to Amazon Retail selling on many brand name listings on the marketplace and using it's control of the marketplace to favor Amazon Retail over Amazon Third Party Sellers on those product listings.
It seem as if this new move will result in Amazon Selling a smaller range of brand name products (focusing only on the top brand in each category) itself freeing up more name brand listings for 3rd party sellers to fairly compete on.
Amazon also implied that these distributors that formerly sold through Vendor Central are welcome to begin selling on the Seller Central platform as third party sellers. Again, this is good news for current 3rd party sellers because 1. if these distributors choose to sell as 3rd party sellers, their products will compete on an even playing field with other 3rd party sellers (rather than the advantage Amazon had when selling the same products) and 2. many distributors may now be more willing to sell to 3rd party sellers to replace the volume from Amazon Vendor Central.
Despite the change in Europe, it appears Amazon will be holding a Vendor Summit in the US in March.
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This Amazon EU distributor cut could reshape wholesale and arbitrage! Leveling the playing field might benefit sellers. Previously, Amazon's direct sourcing was seen as favoring its own retail, impacting competition. Now, with a more even landscape, third-party sellers can explore opportunities. Just like navigating the challenges of Slope, sellers need strategy and agility to win.
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