Are Amazon really dumping Amazon Vendors?

There was a lot of noise recently about Amazon dumping vendors and forcing them to become merchants using Seller Central instead of Vendor Central if they wanted to sell their products on the marketplace. Questions were asked as to why a raft of Amazon Vendors suddenly stopped getting orders and many were indeed told to become self-serve third party merchants instead of 1st party vendors. So are Amazon really dumping vendors?

According to the latest earnings call from Amazon the answer is no. Brian Olsavsky told investors that all Amazon care about is price convenience and selection. They definitely don’t care if it’s a Vendor relationship with Amazon acting as the retailer or if it’s a merchant selling the goods so long as they are available and a great deal for customers.

“I can’t highlight anything related shifting in channel there, but I would say that we remain indifferent on whether we’re focused on price convenience and selection for our customers. And whether product is a retail offering or third-party offering is not that important to us. As long as it’s in stock, as long as it’s priced competitively. So, as you know our 3P selection has, our 3P percent of units has been increasing over time and increased again in this quarter to 54% of units. We continue to invest very heavily in our systems both for retail vendors and also for third-party merchants invest billions of dollars a year on behalf of then making Amazon a better place for customers to buy and increasingly not only vendor sales, but also third-party merchant sales. In particular on Prime Day, I think you’ll see that we had more than $2 billion of products bought from small and medium-sized businesses. So when we win, we win together with our vendor partners and also our seller partners.”
– Brian Olsavsky, Senior Vice President and Chief Financial Officer, Amazon

What is clear is that Amazon’s third party business is growing faster than their 1st party business – merchant sales are growing faster than Amazon Vendors. The entire retail operation is growing however, and this means that over time Amazon simply don’t have the resources to stock everything themselves as a retailer and so smaller vendors are being migrated to become merchants. This isn’t a deliberate strategy by Amazon according to Brian. Amazon will still have vendor relationships, just probably much bigger ones.