The Advantage of Multi-Channel Reach
By Jim Tompkins
CEO, Tompkins International
It has been a very busy time for everyone trying to keep up with the latest news from Amazon. From the closure of their recently opened pop-up stores to the deluge of changes to their Vendor Central program and subsequent lifting of their restrictive seller pricing policies, the eCommerce giant has been quite unpredictable lately.
Most notably, on March 4, Amazon did something huge and completely unexpected. If you did not hear about it, do not worry, you were not supposed to. Amazon did it swiftly and quietly, without a warning. Everything changed for tens of thousands of small to medium sized businesses selling on Amazon through the first-party (1P) model when their weekly purchase orders never appeared.
On that day, Amazon sent out communications saying the move was nothing more than a technical glitch, but the next morning, many sellers’ worst fears were realized when another communication was sent out to certain sellers saying that the move was not a mistake and that those sellers would be better served through Amazon’s third-party (3P) service.
The sellers that were expelled from the 1P program appear to have two things in common, they had less than $10 million in sales per year and they did not have a dedicated Vendor Manager at Amazon (Vendor Manager is a service Amazon provides to sellers for about $250,000 per year).
This might have been a very shrewd business move; after all, Amazon is king when it comes to analytics, and perhaps their data shows that these businesses would do better under the 3P model. The problem is that the decision was made without any input from 1P sellers and executed without warning. Thousands of small businesses have been left to flounder without revenue until they can set up a 3P account. Of course, setting up an account is only one part of the equation. Remember, 1P sellers are used to having everything handled by Amazon and of course, having their listing boosted by Amazon. Now, many businesses will have to learn how to market their products from scratch and will most likely lose sales as their listing will no longer be a priority for Amazon.
The good news is, according to most experts and Amazon insiders, 3P is actually the more desirable model with better results for sellers, especially smaller businesses. The difficulty lies in building the business and managing logistics but it does not have to be a do-it-yourself endeavor. Using the 3P platform, MonarchFx can help you build a world class business that leverages Amazon’s platform without being beholden to Amazon. MonarchFx is a smarter logistics solution comprised of best-in-class supply chain companies focused on delivering cost-effective, high service level fulfillment solutions to brands and retailers. We work with you to develop the optimal demand-driven logistics solution for your business and then help you execute with our nationwide distributed logistics and fulfillment network.
If you are a former 1P seller wondering how you will be able to set up an entirely new business model in time to make next month’s rent relax, this is what we do. As experts in the logistics and fulfillment business, we can accurately assess your business capabilities and recommend the best fulfillment strategy for you. For clients with their own distribution centers looking to sell under Seller Fulfilled Prime (SFP), we can provide the guidance you need to successfully pass the requirements test and trial period.
Amazon may be the world’s biggest retailer, but it is not the only one. By partnering with MonarchFx, you get the advantage of multi-channel reach without the complications of multi-channel sourcing. Whereas Amazon only fulfills orders for Amazon through their warehouses, MonarchFx can help you sell across multiple channels and fulfill those orders from our warehouses. Multi-channel reach through uni-channel fulfillment increases sales while simplifying operations and reducing costs.
Utilizing the MonarchFx Distributed Inventory Flow Forecasting (DIFF) system, sellers can model their demand and flow inventory for the optimal locations to improve delivery time and reduce cost. The DIFF system dramatically reduces the safety stock that is traditionally required to plan inventory into multiple locations.
MonarchFx provides access to the most advanced forecasting and data systems to better target your products and increase sales. With top notch analytics, you will be able to maximize revenues, minimize costs and stay ahead of your competition.
While arguably the better business model, there is a downside to 3P. The downside is that the management of everything from product listings to customer service is now your responsibility. Sure, it gives you back the power over your own brand, but it is a lot of work. As experts in the fulfillment business, we can help you every step of the way. From crafting engaging product listings to providing effective price management and exceptional customer service, we can help with it all.
Whether you were a casualty of Amazon’s recent vendor purge or you are looking to expand your sales by listing on Amazon, we can help you build a successful 3P business.
- Video: Initial Results with MonarchFx
- White Paper: Achieving Revenue Gains from Distributed Logistics