Amazon is rapidly scaling back its Vendor Central program, pushing more brands into the third-party (3P) seller model. This shift is not new, but the pace has accelerated significantly in recent months, affecting brands with vendor accounts under around $10 million in annual sales.
If your brand has been impacted, you’ll need a thorough understanding of what this means and how you can adapt quickly.
The Evolution of Amazon’s Selling Model
Amazon’s early business model was built on a vendor-based structure—brands sold their products directly to Amazon, which then retailed them to consumers. However, over time, the third-party seller model has overtaken the traditional vendor approach.
In the fourth quarter of 2024, third-party sellers accounted for 62% of paid units sold on Amazon’s platform. For Amazon, the third-party model is far more profitable.1 Unlike the vendor model, where Amazon has to invest in inventory and manage purchasing, the 3P model shifts inventory costs to businesses. Every product listed by a third-party seller is financed by the seller, not Amazon, minimizing Amazon’s risk and maximizing its revenue.
The Vendor Purge: A Growing Trend
While Amazon has made occasional vendor cuts in the past, the current wave of firings represents a systematic shift. Every month, more brands—some generating upwards of $5-10 million in revenue—are being pushed out of Vendor Central and forced into the Seller Central model, receiving messages from Amazon that explain their vendor relationship will be terminated as part of a “strategic realignment”. Affected brands are encouraged to transition to independent third-party sellers, where they can still access Amazon’s customer base and fulfillment options.
Amazon appears to be reserving vendor relationships for only the largest global brands—think Crayola, Procter & Gamble, or other mass-market giants—while phasing out smaller vendors that don’t fit its long-term strategy.
To recap, here’s why Amazon is moving away from Vendor Central:
- Minimizing Inventory Risk: When Amazon buys products wholesale, it assumes the risk of unsold inventory. By shifting more brands to Seller Central, Amazon reduces this liability and transfers inventory costs to sellers.
- Streamlining Vendor Management: Amazon appears to be consolidating its vendor relationships to focus on large, mass-market brands like Procter & Gamble and Crayola, reducing the administrative burden of managing smaller suppliers.
- Maximizing Revenue Streams: Unlike the 1P model, where Amazon purchases inventory outright, the 3P model generates multiple revenue streams through fees on fulfillment, advertising, and other services, making it more lucrative for the platform.
For affected brands, this transition can be disruptive, particularly if they have relied solely on Vendor Central revenue for years. Shifting from a 1P vendor to a 3P seller requires new expertise, operational changes, and strategic adjustments to maintain visibility and sales performance.
What This Means for Brands
For brands accustomed to Vendor Central, the transition to Seller Central can be intimidating, but it also presents new opportunities:
Full Pricing Control
In Vendor Central, Amazon dictates pricing, sometimes leading to unexpected changes. In Seller Central, brands manage their own pricing, allowing for better profit margins and more strategic pricing adjustments.
Greater Inventory Flexibility
Vendor Central required brands to sell wholesale to Amazon, which then controlled stock levels. Seller Central allows brands to handle their own inventory, giving greater control over supply chain decisions.
Expanded Advertising & Marketing Opportunities
Seller Central offers a wider range of promotional tools, including Brand Tailored Promotions and Prime Exclusive Discounts. Brands also gain access to advanced analytics tools such as Search Catalog Performance and Business Reports, enabling data-driven marketing decisions.
Enhanced Product Launch Capabilities
Vendor Central often imposed purchase restrictions limiting how brands could introduce new products. With Seller Central, brands can launch new products faster, test variations, and create multi-pack offerings without Amazon-imposed constraints.
More Logistics & Fulfillment Options
Unlike Vendor Central, where Amazon dictates fulfillment terms, Seller Central allows brands to choose between FBA, FBM, or Seller Fulfilled Prime (SFP). This flexibility helps brands optimize logistics based on their unique needs and cost structures.
What Brands Can Do Next
If your brand has recently been dropped from Vendor Central, now is the time to pivot. Transitioning to the third-party Seller Central model can be complex, but it also offers greater control over pricing, inventory, and customer relationships. At Amplifyy, we specialize in helping brands navigate this shift successfully so they can maintain—and even grow—their presence on Amazon.
Here are some steps you can take immediately:
- Assess Your Inventory & Supply Chain: Ensure you have the logistics in place to support a seller account, whether through FBA or a hybrid fulfillment strategy.
- Optimize Your Listings for 3P Selling: Unlike Vendor Central, the 3P model requires a hands-on approach to product listings, advertising, and pricing strategy.
- Understand the Financial Impact: Moving from wholesale to direct selling changes your cash flow and cost structure. Planning ahead is essential.
- Leverage Amazon Ads and SEO: Without the benefit of Amazon retail backing your products, a strong advertising and search strategy is crucial.
- Seek Expert Guidance: The transition to 3P selling comes with challenges, but with the right team in place, brands can thrive in this model.
Don’t Get Left Behind
The shift from Vendor Central to the 3P model is happening now—and it’s happening fast. Many brands we’ve spoken with didn’t anticipate this change and are scrambling to adapt. But remember that while this transition may feel disruptive, Seller Central still gives you an opportunity to take control of your pricing, inventory, and marketing strategies.
If your brand has been affected, Amplifyy is here to help. With our deep expertise in Amazon account management, we can guide your transition, optimize your listings, and keep your brand competitive in this new landscape.
If you’ve been impacted by Amazon’s vendor cuts, you need to take action. Contact Amplifyy today to explore your options and secure your future on Amazon.
Sources:
