Manufacturer brands should take note of Amazon’s latest policy change for selling products on its marketplace.
With many brands moving their ranges from Vendor to Seller Central, Amazon is beginning to enforce its Standards for Brands Selling in the Amazon Store policy.
If you’re a manufacturer brand and want to know how this policy may affect your business, listen up.
This article will cover:
- What the Standards for Brands Policy is
- How it affects brands selling on Amazon
- The implications for hybrid sellers
- When Amazon enforces the policy
What is Amazon’s Standards for Brands Policy?
The Standards for Brands Selling in the Amazon Store Policy, or SBSAS (formerly known as the Manufacturer on Amazon policy, or MOA), sets out Amazon’s right to decide how products are sold on its marketplace.
While the SBSAS policy has already been launched for the US marketplace, it has yet to be rolled out in the EU. Here, the “Manufacturer on Amazon” policy still applies to vendors and sellers.
Manufacturer brands need to be aware of this new policy as it can directly threaten their chosen distribution model.
The SBSAS policy states:
“[…] In order to preserve […] customer experience, we may choose to source products from some Brands for sale by Amazon only. […]”
This doesn’t only sound restrictive.
Amazon becomes even more assertive in the following paragraphs:
“[…] Other Brands can operate as sellers in the Amazon store if they can consistently maintain our standards for customer experience. However, to prevent customer confusion, if any of the Brand’s products are sold by Amazon, the Brand may not also sell those products as a seller in the Amazon store. […]”
How does it affect brands selling on Amazon?
Manufacturer brands that sell to Amazon and want to move to Seller Central will be most affected by this policy change.
If their move is motivated by wanting to escape Amazon’s annual vendor negotiations or to set uncompetitive customer prices, this policy will come into effect to prevent that.
Brands moving to Seller Central to “trick” Amazon’s systems have become a considerable headache for the online retailer.
That’s because they jeopardise not only Amazon’s hard-earned customer trust but also its efforts to improve margins across categories.
Lastly, the SBSAS policy will also affect 3P sellers who may never have sold directly to Amazon.
If their products are highly relevant in a category, Amazon may require sellers to move their selection to Vendor Central.
Again, it’s about ensuring a good customer experience.
When product availability and competitiveness are key, Amazon may prefer to own the inventory and set customer prices itself.
What are the implications for hybrid sellers?
Brands that sell through Vendor and Seller Central are so-called hybrid sellers. Amazon generally tolerates this hybrid approach but reserves the right to enforce the SBSAS policy without prior notice.
In other words, Amazon can require any brand to offer their products only via Vendor Central. This puts existing hybrid sellers at risk of continuing their business freely with Amazon.
First reports from the US indicate that Amazon is cracking down on hybrid sellers. Amazon takes away their ability to list new products and removes them from the Buy Box.
The approach targets sellers that are considered uncompetitive when comparing their prices with those of other retailers.
While it is noteworthy that Amazon now compares 3PS prices with those of other retailers, it aligns with its customer experience focus.
Hybrid sellers using 3P to increase their selling prices will have to address the underlying root cause for low prices on the Amazon marketplace or risk being penalised by stricter enforcement of the SBSAS policy.
Building selective distribution networks and enforcing MAP policies will become increasingly important for brands to manage the resale of their products on Amazon.
When does Amazon enforce its manufacturer policy?
Manufacturer brands that either sell exclusively via Seller Central or are moving selection from 1P to 3P are most affected by the SBSAS policy change.
Amazon has begun enforcing this policy on 3P sellers that are jeopardising a good customer experience on its marketplace:
Either through uncompetitive pricing or by moving unprofitable 1P selection to Seller Central.
As long as you focus on providing a good customer experience, you are unlikely to be affected by Amazon’s SBSAS policy.
This also applies to brands that follow a hybrid selling approach. You’re unlikely to run into any trouble if you are using 3P to improve CX, e.g., by:
- Improving availability when Amazon runs out of stock;
- Selling seasonal products your Vendor Manager rejected to list;
- Reintroducing CRAP’ed selection;
- Facilitating your test & learn capabilities with NPDs’
If you’re trying to address low margins and Amazon’s price follower strategy, moving from Vendor to Seller Central may not be your best option.
That’s because Amazon’s SBSAS policy poses a real risk to this business strategy.
Instead, reviewing your distribution channels and setting up MAP policies or selective distribution agreements (SDA) will be more effective levers to get a grip on the (re-) sale of your products.
Brands already following a hybrid selling strategy should keep in mind that Amazon is unlikely to tolerate uncompetitive price offers for their customers.
So it’s best to adopt a customer-centric approach. Using 3P to support Amazon’s in-stock position and as a test & learn platform.
Need advice for your Amazon business?
If you want to better understand the implications of the SBSAS policy on your Amazon business, get in touch. I offer tailored advice to help you assess your situation.