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For many larger sellers, making the transition from Amazon Vendor Central to Seller Central represents a pivotal strategic move. This shift offers heaps of benefits, empowering Brands with greater control, flexibility, and potential for growth.

As many Brands know, Vendor Central is difficult to navigate, updating product listings is near impossible, and trying to raise your wholesale prices when inflation hits is next to impossible.

Let’s delve into the advantages of migrating from Amazon Vendor Central to Seller Central.

1. Enhanced Control and Autonomy: Transitioning to Seller Central hands you the reins of your operations. Unlike Vendor Central, where Amazon places orders directly with, you, the vendor, Seller Central enables you to manage your inventory, pricing, and promotions independently. This increased autonomy allows you to respond swiftly to market trends, adjust pricing strategies, and optimize product listings for better visibility.

2. Direct Relationship with Customers: Seller Central fosters direct engagement with customers, facilitating personalised interactions and feedback. By owning the customer relationship, you can gather valuable insights into preferences, purchase behavior, and satisfaction levels. This direct communication channel not only enhances customer service but also enables you to tailor offerings to meet evolving needs, fostering brand loyalty and trust.

3. Flexible Pricing and Promotions: With Seller Central, you have the flexibility to set your own prices and run promotional campaigns, empowering you to experiment with different pricing strategies and promotional tactics. This agility is particularly advantageous in competitive markets, allowing you to adjust prices dynamically, capitalize on demand surges, and maximize profitability.

4. Access to Amazon Advertising Tools: Seller Central provides access to a suite of powerful advertising tools, including Sponsored Products, Sponsored Brands, and Sponsored Display ads. Leveraging these tools, you can enhance product visibility, drive targeted traffic to your listings, and boost sales. By strategically allocating advertising budgets and optimizing ad performance, you can amplify their reach and maximise return on investment (ROI).

5. Lower Fees and Higher Margins: While Vendor Central entails various fees and deductions, such as co-op fees, chargebacks, and wholesale discounts, Seller Central offers a more transparent fee structure and potentially higher margins. By selling directly to consumers, you can bypass intermediaries and mitigate some of the costs associated with the wholesale model, thereby improving profitability.

6. Expanded Market Opportunities: Seller Central opens the door to additional sales channels and geographic markets, enabling you to reach a broader audience and tap into new revenue streams. Through programs like Fulfillment by Amazon (FBA) and Amazon Global Selling, you can effortlessly expand your reach beyond domestic borders, capitalise on international demand, and diversify your customer base.

7. Agility in Product Innovation and Assortment: With Seller Central, you have the freedom to introduce new products, test innovative concepts, and adjust your product assortment based on market dynamics and consumer preferences. This agility fosters a culture of innovation, enabling you to stay ahead of competitors, capitalise on emerging trends, and continuously evolve your offerings to meet evolving customer needs.

8. Better Cashflow: Depending on the terms you’ve negotiated with the Amazon Vendor Central team, most Vendor Central sellers get paid 60 days after they’ve shipped the goods to An Amazon warehouse.
With Seller Central (after the first 30 days), payments from sales hit your bank account every fortnight. This massively frees up cashflow for your business and helps you stay liquid and more profitable.

9. Tip: Explore a Vendor Central / Seller Central ‘Hybrid’ model: Some of the Brands I work with run both a Vendor and a Seller Central account side-by-side. They usually add new products to Seller Central while maintaining their Vendor Central Account with their existing catalogue. Others have taken their best-selling Vendor Central Products and migrated them the Seller Central, leaving the remainder in Vendor.

In conclusion, migrating from Amazon Vendor Central to Seller Central unlocks a myriad of benefits for sellers, ranging from enhanced control and flexibility to increased profitability and market expansion. By embracing this transition, sellers can position themselves for sustained growth, adapt to changing market conditions, and thrive in the competitive e-commerce landscape.

I have lots of hands-on experience, having worked with 4 VC clients in Australia to set up on Seller Central. If this is something you’re thinking about doing, get in touch with me, Chris over at www.amasphere.com.au…

Build to Sell: A Q&A with Una Brands – The only Aggregator based in Australia

Q: What is the state of the FBA acquisitions market in Australia and globally?

The acquisition market for FBA businesses is booming at the moment! There are a few factors that are driving this. The first and most obvious driver is the COVID related spike in e-commerce that created increased profits for FBA business. Secondly, the aggregator “roll up” model was relatively unproven but it has now been shown to be highly successful. Thirdly, there is a wall of “dry powder” (investment capital) which is waiting to be deployed in the institutional and private equity markets. These three factors combined mean that we are very definitely in a sellers market for FBA businesses.

Q: How are FBA businesses valued?

FBA businesses are valued by applying a multiple to the annual profit. The profit figure that we use is the trailing 12 month Seller Discretionary Earnings (SDE) which is the Revenue – COGS – Amazon fees.

Q: What is a typical multiple for an FBA business?

The recent Empire Flippers report provides a range of current multiples for FBA businesses being 2.5 – 3.5x the annual SDE. We would need to take a holistic view of the brand before being able to determine the multiple. 

Q: How can I prepare my business for sale?

There are four key focus areas in order to prepare your business for sale:

1. Create clean financials and customers metrics. Using accounting software or third-party dashboards, such as Xero, MYOB, and Helium 10 provides investors with a clear, transparent, and accurate view of the financials. This enables investors to create a fair valuation of the business.
2. Automate and streamline your business processes by using 3rd party software and outsourcing to virtual assistants.
3. Streamline your business strategy. Focus on your core product lines, geographical locations, and sales channels. Simple businesses with a clear focus promote stronger valuation multiples relative to more complex business models.
4. Ensure that your business is compliant with Amazon policy, blackhat activity is an extreme red flag for potential investors. It’s also vital to make sure that you have registered for trademarks and patents wherever possible to protect your IP.

Q: What makes a business more valuable?

Simple streamlined business:

• Investors put significant value on the simplicity of your business, specifically in reference to the product line. Brand’s which have revenues derived from a few high performing SKUs are significantly more valuable than businesses with hundreds of SKUs.
• Operational simplicity provides investors with clarity and assurance of success in the future, and thus improves the business valuation.

Financial history and market growth:

• The financial performance of the business and the broader market are directly proportional to the valuation. It is optimal to sell the business during a period of time when you can clearly show long term sustainable growth, with limited downside volatility and strong positive market growth in the future.

Customer experience:

• Amazon has become increasingly popular over the past 5 years, which has resulted in a significant level of competition. Investors provide a significant level of value to brands which have a large number of very positive reviews and a strong best seller ranking. Characteristics which drive success in competitive markets.

Q: Which categories are attractive from a valuation perspective?

For Una Brands, the most attractive categories at the moment are the categories of Home & Living, Children/Baby, Garden/Outdoor, Pets, Sport, Health & Beauty. We don’t buy businesses in apparel because the return rates are very high and the fashion cycle requires very fast product development. We stay away from supplements because of the regulatory complexity. We also stay away from commoditised electronics because return rates tend to be high and the R&D requirements are relatively onerous.

Q: Why do owners of eCommerce brands look to sell or exit?

When we talk to sellers there are a few common reasons for people to want to sell their business. Firstly, many brand owners are highly entrepreneurial – they enjoy building businesses and seeing their ideas come to life. They are less excited by the mundane operational functions that increase in complexity as the business grows. Hence, many brand owners choose to exit once their brand has been established to then move onto their next challenge.

Secondly, a lot of sellers saw record sales last year during COVID. It’s unclear how revenues will be affected as the world comes out of lockdown and a lot of sellers are seeing now as a good moment to cash out and take some of the chips off the table.

Thirdly, brand owners have a lot of ideas for their business but often they don’t have the time or the capital to do everything they want to. Sellers realise that they can oftentimes grow the brand faster by partnering with someone like Una Brands, and they get to participate in that upside through the profit share.

Q: How does the acquisition process work?

The acquisition process has been designed to be highly efficient and streamlined. In fact, the entire process takes just approximately five weeks from the initial conversation for the seller to receive the cash settlement in their bank account.

Throughout this process, the Una Brands team provides a valuation based on the data provided by the business in order to acquire 100% of the brand. After negotiations, Una Brands conducts in depth due diligence into the business where we look at legal, operations and financial data. In conjunction, the creation of the purchase agreement is started. Once this is signed, the money is transferred into the seller’s account and the deal has been finalised. It is important to note that no action is taken and no integrations begin until the money hits the sellers account.

Q: What happens to the brand after acquisition?

After acquisition, Una Brands integrates various functions such as operations, supply chain, logistics, finance and legal into its centralised operations to streamline costs where dedicated functional experts take over to implement the value creation plan. Once integrated into the Una Brands platform, our experts increase revenues through optimisation of channel diversification, product/category expansion, PPC, geographical expansion and marketing. Throughout this process, the seller has the option to stay involved on a product management and strategic level through the consulting agreement.

Contact Una-Brands for more info: Website: https://www.una-brands.com/

It’s almost been 12 months since Amazon opened its doors for business with physical products.

I chatted recently to Danny McMillan about how Amazon Australia has faired in 2018 and where I see things moving in the next few years.

You can listen to our conversation in a 2-part conversation here:

Amazon Australia (Pt1) – The Good, The Bad & The Ugly

Amazon Australia (Pt2) – The Good, The Bad & The Ugly