We’ve been selling FBA for nearly a year and a half now and selling through Vendor Central for nearly a year. There are a lot of good points brought up here but I’m going to offer some counter points.
First, we are selling at nearly 8X the volume, same time this year compared to last, when we were exclusive FBA. I’m not 100% certain selling exclusively FBA would net us this sort of growth, to be honest. Our FBA sales at this time last year were slowing down. Although I can not attribute all the growth to being on Amazon alone, from a shopper’s perspective, they’re far more confident to buy a product sold by Amazon vs Fulfilled by Amazon. Especially for our product, a relative unknown brand in a rather niche market.
There are a lot of negatives as other have stated, I’m not going to lie. Our payment terms of 90 days nearly shut the company down at the beginning of the year due to cash flow problems. We had tremendous holiday sales, but we didn’t see a dime of that until March. Unless you’ve got plenty of operating capital to do this, I would seriously weigh the benefits vs. cost, then weigh it again before I proceed.
There are also certain programs available to Vendors rather than Sellers. For example, Amazon’s basic retail Analytics does a pretty good job at forecasting demand. So far with about 50 weeks of data, they are almost always typically within 4% of predicted demand to actual units sold. Unless there are some external forces we can’t forecast, it’s always good to know how many units you’ll likely need at any given time. We are able to keep our warehouse shelf space relatively thin for the volume we’re moving.
However, Vendor’s Analytics lacks a lot of the real-time features in Seller’s reports, and I have no visibility into visitor info unless I pony up for Premium Analytics report, which they won’t even sell me. IF you can get premium Analytics report, it has market share analysis and competitor sales info which comes in very handy.
Another good thing is Vendor accounts order en-bulk. Like several hundred units at a time. And there are no “stale units” because you don’t get charged storage fee. We have a couple of really slow moving items that was part of the initial purchase order that are still on the shelves, that would potentially be subject to long term storage cost soon. We had to request 2 cartons worth of products back from FBA because they’re not selling and we’re staring long term storage fees in the face.
Again, however. Because as Vendors you must ship Amazon’s orders to their fulfillment warehouses, you end up shipping out 20 smaller shipments all across the country. It’s time consuming, cost in-effective, and difficult to track. We’ve been dinged multiple times for sending the wrong unit to the wrong warehouse.
There are other marketing tools at your disposal through a vendor account that’s not available to Seller accounts. THAT along would make up for the difficulty of converting to Vendor account, IMO. The Vine program is a great example. You can get trusted reviews from hall of fame reviewers on your new products before they hit the shelves. And we all know what positive reviews from trusted source can make or break a product. You can also set up self serviced coupons, which has been pretty effective for us as well to move certain slow moving products by offering incentives on a specific ASIN.
In the end, if you look at strictly the 8X growth we’ve experienced year over year, it’s easy to say sure, the Vendor account is totally worth it. We probably would have done things a little differently now that we know what to expect, and it was a total shock to the system at first.
However, I would say, if you’ve got a good thing going with FBA and moving tons of inventory and near the top of your category’s top seller’s list, and is happy with FBA as is, I would definitely think twice about moving to Vendor’s side. If you have a good product but is struggling to gain sales because you don’t have a trusted name brand that stands out? If you’ve been invited to the dark side, do it.