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Mistake #2 – Mismanaging Amazon’s Platforms and Underutilizing FBA (Wholesaler and Manufacturer Mistakes Series)

In the complex ecosystem of Amazon, one of the most prevalent yet overlooked mistakes I encounter among wholesalers is the mismanagement of the platform's selling options—specifically, the choice between Vendor Central and Seller Central—and the underutilization of Fulfillment by Amazon (FBA). 

This misstep can significantly hinder a business's flexibility, profitability, and growth potential on the world's largest e-commerce platform. At MrPrime.com, we specialize in guiding businesses through these pivotal decisions, exemplified by our work with brands like Bare by Vogue and Brush Baby.

Vendor Central: A Double-Edged Sword

Vendor Central might appear alluring due to its hands-off approach, allowing businesses to sell directly to Amazon. Yet, this path is fraught with challenges: lengthy payment terms up to 90 days, unpredictable order volumes, and the hassle of returns and breakages. 

Moreover, once Amazon takes ownership of your products, it has complete control over pricing, which can lead to detrimental effects on your off-Amazon retail relationships or stagnate sales due to overpricing.

The Transition: Bare by Vogue and Brush Baby

Our experience with Bare by Vogue epitomizes the pitfalls of over-reliance on Vendor Central. Initially confined to this platform, they faced limitations that stifled their growth potential. By transitioning to Seller Central and adopting FBA, we unlocked new levels of operational flexibility and market exposure. This strategic pivot quadrupled their sales while maintaining stable profit margins per unit—a testament to the efficacy of diversifying sales channels and leveraging Amazon's logistics prowess through FBA.

Similarly, Brush Baby benefited from a customized hybrid model. We meticulously analyzed their product lineup, identifying items that would thrive under Vendor Central's purchasing terms and those better suited for Seller Central, coupled with FBA for enhanced fulfillment efficiency. This nuanced approach allowed Brush Baby to maximize Amazon's offerings without being tethered to the drawbacks of either platform exclusively. The result was a significant boost in ROI, improved control over inventory and pricing, and a more robust presence across Amazon's marketplace.

The Power of FBA and Strategic SKU Allocation

FBA's value lies not just in logistics support but in the elevation of brand visibility and consumer trust via the Prime badge. However, indiscriminate enrollment of products into FBA can erode profit margins due to its associated fees. Our approach focuses on a careful selection of SKUs—typically 5-10% of a brand's catalog—that show the highest potential for sales uplift and can justify the FBA fees.

This targeted strategy ensures that our clients like Bare by Vogue and Brush Baby not only increase their sales volume but do so efficiently and profitably.

Conclusion

Navigating the intricacies of Vendor Central, Seller Central, and FBA demands a strategic mindset and a deep understanding of each platform's advantages and limitations. At MrPrime.com, we've demonstrated through our work with Bare by Vogue and Brush Baby that a thoughtful transition between these platforms, underpinned by a strategic use of FBA, can dramatically enhance sales, profitability, and market control.

For wholesalers and manufacturers on Amazon, success isn't just about selling; it's about selling smart. By recognizing and rectifying common mistakes such as mismanaging Amazon's platforms and underutilizing FBA, businesses can unlock new levels of growth and operational excellence.

Author

Robert Prime

Owner at MrPrime.com Amazon Ranking, Growth and Support Services. Co-owner of LoveReading network the U.K.'s largest book recommendation site. 22 years in eCommerce business. Forbes Business Council member.

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