Problem

Can the profitability of an item be increased by transitioning from vendor central to seller central?

Midland Radio has been providing radios and other household electronics for the last 50 years. It is one of the leading suppliers of two-way and weather alert radios, along with other innovative radio technologies.

Similar to other companies selling products on Amazon, Midland Radio decided to transition from selling their products to Vendor Central to selling their products directly on Amazon themselves, through Seller Central. One of the main concerns about transitioning from the Amazon Vendor Central platform to the Amazon Seller Central platform, is the financial implications around such a decision. Many businesses have come to rely on the steady purchase orders that Amazon sends to them through Vendor Central and are concerned with the impact it might have on their business if they transition to Seller Central.

Approach

1. Restrict Selling the Product to Amazon

By restricting Amazon’s access to the product, Amazon would no longer be the main supplier of the product once their stock runs out. This allowed Midland Radio or the next company holding stock to become the seller of record in the buy-box. Once the products had been restricted from being sold to Amazon through Vendor Central, Midland Radio then set up their Seller Central account with the guidance of our team.

2. Prevent Other Distributors/ Retailers from Selling on Amazon

Once the products were no longer being sold to Amazon through Vendor Central and the inventory Amazon had for that given product from earlier purchases had ran out, there were third-party resellers also selling the product. These third-party resellers were then also restricted from selling the product to Amazon. Once these third-parties also no longer had inventory, and only Midland Radio had their items in stock on Amazon, Amazon’s A9 algorithm selected Midland Radio as the seller of record.

3. Begin Selling the Products on Amazon via Seller Central

Account Setup– Initially, we had Midland Radio set up their Seller Central account, leading them through the process and helping them complete their brand registry.

Sent Inventory to Seller Central– Once Amazon was nearly out-of-stock on an item they previously purchased from Midland Radio, we began sending in inventory for the same product through the Seller Central that was just setup.

Updated Product Details– We updated content on product detail pages and worked alongside Midland Radio, training the company on product fulfillment and shipping to Amazon’s warehouse.

Results

Profitability Increased Significantly

We demonstrated while working with Midland Radio that not only could we help them gain more control of the sale price and customer experience for their items by transitioning to Seller Central, but they were also able to see a dramatic increase in the revenue per unit sold. Here are some of the Midland Radio products we worked with:

AVPH3

  • Vendor Central:
    • Net Revenue:        $14.68
  • Seller Central:
    • Net Revenue:        $24.14
    • Difference:             $9.46
  • Percent Increase:         64.4%

LXT630VP3

  • Vendor Central:
    • Net Revenue:       $32.05
  • Seller Central:
    • Net Revenue:       $40.83
    • Difference:            $8.78
  • Percent Increase:        27.4%

75-822

  • Vendor Central:
    • Net Revenue:       $58.50
  • Seller Central:
    • Net Revenue:       $86.79
    • Difference:            $28.30
  • Percent Increase:        48.4%

Net revenue is the key target for this review. It is the only way to make a true apples to apples comparison of the financials.

Impact

  1.   Midland Radio saw an over 60% increase for some products:
    • AVPH3 – 64.4% net revenue increase per unit sold
    • LXT630VP3 – 27.4% net revenue increase per unit sold
    • 75-822 – 48.4% net revenue increase per unit sold
  1. They were listed as buy-box seller.
  2. They had continuous residual increase of revenue for some products.