Amazon’s notoriously difficult Vendor negotiations, ever-increasing costs and complex pricing algorithms have many brands questioning whether the 1P Vendor model is right for them. Switching to a Hybrid model on Amazon could be the perfect solution.
It goes without saying that there is no one-size-fits-all when it comes to deciding what your brand’s selling model with Amazon should be. However, while the 1P model follows a more traditional supplier-retailer relationship and works well for some brands, transitioning to a Hybrid model can provide more control over pricing and inventory as well as the ability to build a stronger brand presence on the marketplace.
Hybrid model on Amazon: The best of both worlds
A Hybrid model allows brands selling on Amazon to leverage both Vendor (1P) and Seller (3P) models, by choosing a distribution mix that is most profitable. This approach lets you proactively manage your portfolio across 1P and 3P to help drive certain brand objectives that may be difficult to achieve through the Vendor model alone. Here are three reasons why brands might opt for selling via a Hybrid model on Amazon.1. Access to customer data
Continual analysis of customer data is key to success on the marketplace. As a third-party seller on Amazon, you gain access to a vast amount of customer data via Brand Analytics within Seller Central allowing you to make data-driven decisions on marketing and content to drive conversions.2. Reintroducing CRaP ASINs
Brands with large product catalogues often find that they struggle to make some parts of their product portfolio work commercially when selling via the 1P model on Amazon. In some cases, these underperforming products where Amazon Can’t Realise any Profit (CRaP) may even be at risk of getting delisted. Switching to selling CRaP ASINs on Amazon via Seller Central, rather than through Vendor Central, can help you to manage costs and maximise profitability in the long run.3. Test & Learn approach
Amazon is the perfect place to try out new product development as it gives a brand the opportunity to test products in a real-world environment. Soft-launching new products via Seller Central with a split-testing approach allows you to gain valuable insights and ensure retail readiness on the marketplace.
Considering a Hybrid model?
Whilst Amazon won't necessarily encourage its prominent Vendors to move to the 3P model, sometimes brands can't sell to Amazon profitably enough to cover their costs. When run strategically, a Hybrid model allows brands to better ensure product availability, get more control of their pricing, obtain meaningful data analysis that is only available via Seller Central and choose the product distribution mix that is most profitable to their business.
We offer our own 3P solution, Molzi Retail where we act as the marketplace seller for consumer brands. We handle all aspects from Amazon administration and fees, to managing reviews, customer service and fulfilment. With our 3P Retail Solution, you get the benefit of Molzi by Brainlabs’ global Amazon expertise, but instead of paying us a fee, you give us a cost price.
For more information on how we could support you in developing your Amazon strategy, or if you are interested in us becoming the authorised marketplace seller for your brand, please don’t hesitate to contact us.