?????? The gameboard has been reset by Amazon once again. Make your move or get pawned off. (Part 1 of a 2-part post). ICYMI, Amazon notified many small & mid size mfg they would be forced to move from 1P --> 3Pin just two months. ???? There’s no notice like no notice! ????
With Amazon rearranging the pieces so late in the year – during Q4 and annual planning – what do you need to consider?
???????? THE REALITY: This isn’t the first Amazon played this gambit (remember 2018???). If you sell in low-margin categories (e.g. grocery, household goods, etc) this is TOUGH; however, if you’re in a HIGH MARGIN category, consider this a forced move to higher ground.
??1P VS 3P: Who Wins head-to-head? Depends on your business, but mostly 3P. I'll break down the key pieces here and next post.
??MARGIN GAINS (Depends): A math problem, but an easy one. 3P has increased fees over 1P (about 15% more). BUT… by selling as a 3P, you set your price and get to keep all the RETAIL margin AND the MANUFACTURER margin. So if retail margin is over 15%, you're castling?into better profits. That’s why you see low-margin pawns in categories like grocery, household paper, etc., and high-margin kings in electronics, home appliances, etc. It’s just basic math. Check out the video for a more detailed explanation.
??PRICING & INVENTORY (3P WINS): I'm over simplifying, but a major power play for 3P here. 1P product prices are controlled by Amazon and dynamically adjusted based on the prices of competitive stores. As a 3P, you can move freely and are not tied to the lowest retailer out there. Logistics are similar – you get to control (mostly) how much inventory you push into play, whether through Amazon’s warehouses or holding your own pieces in a self-managed warehouse. No more being at the mercy of the grand high overlord! ??
??PART 2: In part 2, we’ll discuss:
– Content SEO Data (because why settle for a rook move?)
– Content SEO Fields (the knight in shining armor)
– Other mysterious pieces (don’t worry, I’ll reveal all the strategies soon!)
See you next week for the next move!
Hit me up in the comments or send me a DM.
#amazonsellercentral #amazonvendorcentral #ecommerce #amazon
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