Vendor Summit | Panel Discussion Day 1

Session Transcript

Paul Sonneveld
All right, everyone, we are back for our last session of the day, our panel discussion. This is really a free Q&A session. And most of our experts are back for this. So let me just bring them back on screen. We have Martin joining us, Kara from Flying Targets, Alexandra. And Ryan is also back. And let's make sure that I think I have got everyone there. So just give a little bit of context on how the session will run.  We have collated most of the questions through Mentimeter there. And you've all shared your votes with us, which is great. I propose I'm going to go through them one by one, top to bottom, as well as some of the questions we did again around tooth questions around direct fulfillment, and some of the questions we didn't get to in terms of Ryan.

I'm going to take the liberty here to direct a question to someone as I ask it, and then I'll give to one or two of you the chance to perhaps build on your peers answer as we go. All right. Well, maybe I want to just start with you, Ryan, as we didn't get to answer all the questions in your session. Let me make sure I bring them up. Let me start with this one. Yeah. How do you estimate, and this is in the context for those of you that weren't at the previous session, how do you estimate long-term sustainable inventory for a net new item without overcommitting? In other words, how do you make sure that you don't end up with a whole lot of inventory in Amazon's warehouse that you then have to go and deal with? 

Ryan Craver
Panel, doesn't it feel like Paul set this up as like a quiz show? He set out the rules, and then the way he's asking the question, I'm like, nervous all of a sudden. Anyways. 

Kara Babb
Surprise. 

Paul Sonneveld
It's, it's way. No one's worked this out. But I've been doing this for a couple of years now. And I've got the best job because I just get to ask the questions. And you guys get to do the hard work. So luckily, you guys are the experts and not me. So this question is certainly for you, but anyone else, you feel free to share their perspectives. 

Ryan Craver
Yeah for sure. So, very difficult question to answer, right? Estimating whether a program is going to be successful and then, if that is successful, how much inventory does it need? If it isn't successful, how do we get rid of the inventory that we had bought to gauge whether it would be successful? So generally, what we look to do is we try to launch any new product on multiple marketplaces at once. 

So what I would encourage you to do is to think through not just Amazon 1P, but also think about other marketplaces that you can launch on or other retailers you can launch on or have a clearance channel if you need to pull the ripcord. Let me give you an example. We just had a very large running shoe brand that launched into a new classification that they had never sold. That classification was launched on Amazon, and the question to us was, is, well, how much do we make? We told them we can't definitively tell you except buy the minimums and then have a place to pull the record if and when you need to do so. 

So they bought the minimums from the factory. They brought them in. We launched the program. Luckily, it was successful. So that we blew through it, however, then creating a lack of stock and then some difficulty with Amazon. However, as long as you launch and then you follow as you see the launch, and you follow some of the key metrics to understand whether you have a winner or not. 

So do you have a decently high conversion rate relative to the rest of the category, yet you're spending minimal spend? Do you have enough session growth on your key listings week over week over week? You generally should be able to manipulate the supply chain to then buy in so that you do not have out of stocks over time. However, if it didn't go well, then they had the option to sell it to TJ Maxx, Ross, Burlington to get out of that particular product. That's just a specific example that we've had more recently. 

Kara Babb
I can speak to some tools that I've had success with estimating this because it is really challenging to your point, Ryan, and I think also, if you're in a large organisation that has to balance supply chain and manufacturing and cost needs across multiple business units, I've had success either leveraging a tool like Stackline or SmartScout is another option. 

Look at a like item, look to see what its average monthly run rate is, looking back and see when it launched. And you can kind of guide your team through if you look at like, the ramp. So, right. So, obviously, products should take about six months to ramp on Amazon. Sometimes you can fast-track that with a big advertising or external traffic bush. But that's where I've had luck because when I was at Amazon, that's how we back in the day would do our forecasting is we would look at a like item and look to see if we transferred demand to this one. What could that run rate potentially be? 

Ryan Craver
Right, or the category groupings of rankings. So, fifty to a hundred did approximately this many units, a hundred to two hundred did this many units. Totally agree. 

Paul Sonneveld
I did want to just have a follow-up question there, Ryan, which is a few years ago, there was a lot of talk about Born to Run, right? It sort of fits into this bucket. I mean, what is your view? And if others have views on Born to Run as well, I'd love to just hear what's your perspective on that program right now? Is it worth it? Should should, you know, vendors ignore it, or the smaller vendors getting into this? I mean, what's useful here for our audience? 

Ryan Craver
We believe it's worthwhile to use, just use it in moderation. So don't try to force too many units if you're allowed to force too many units. So definitely we think it's a program that's benefited a number of brands. We continue to push it as a recommendation for those brands that have either a new product or have a product they loaded that hasn't necessarily seen POs or seen any particular push from the algorithm. With that said, if we think that there's a potential to push POs outside of born to run, we will usually launch something on 3P to try and force the system to see the demand. And if the system sees the demand, generally it starts ordering it. 

Kara Babb
Yeah, I'm aligned with that. Like, if a client doesn't have a hybrid situation where they're like through an authorised reseller, like front row or pattern or somebody, then Born to Run can be helpful. It's definitely, you need to make sure your internal team has a very structured process to manage it. Because if you have a certain amount left after a certain number of weeks, you know, you get charged. And so if it can't just be a set it and forget it type deal. 

But it does address the core challenge with Amazon, which is kind of a, chicken and the egg situation where oftentimes a product page won't even go live without traffic to it. But you can't get traffic to a product page without an order or without inventory on hand. And you can't get a PO without traffic to the page. So you know, it's it, you either have to use Born to Run sparingly to Ryan's point, or you have to have a hybrid type. Actually, most of my clients, I recommend that if they launch a hybrid strategy, which is usually my go-to, that they launch new products on the 3P side first, because then that also gives them some leverage when they're negotiating with Amazon on costs. 

Ryan Craver
Uh-oh. Paul, we need to have another summit. Should we do that summit tomorrow, the 3P summit? 

{All Laughs}

Paul Sonneveld
Yeah. There is another day, but unfortunately, I'm fully booked with other speakers tomorrow. But I'm gladly take your suggestions and work them into the program. Let's talk about a different type of hybrid, right? Not 3P versus 1P, but we're talking sort of on the 1P side, Amazon warehouse versus direct fulfillment. This touches probably on all of your topics. This touches on how do you think about this from new product launches, from broader vendor negotiation strategies, from moving from 3P to 1P and even around account closures, which you've all sort of covered. Maybe Martin, let me start with you. This topic of direct fulfillment and considering that as a lever for negotiation. How has that evolved over the last few years? 

Martin Heubel
I think A lot of brands are finding themselves in a situation where, of course, fulfillment speed of Amazon has significantly increased and where also especially larger brands are increasingly being restrained from moving away from the vendor model. Right. So we're talking about a hybrid. We're talking about a 3P approach. But the reality is that for any brand that generates usually more than fifteen million in annual net sales will get actively being prevented by Amazon's retail teams from moving, particularly in the US towards a hybrid or 3P scenario, particularly if the intention of the brand is to escape vendor negotiations or difficult becoming trade term negotiations. 

You can be lucky, particularly if Amazon is constrained in terms of the resources that they associate in the category through Vendor Managers. But probably it's a strategy that's mostly available for mid to long tail vendors. Insofar, of course, direct fulfillment can play a significant role if, as previously for our audience, the question was relating to, for example, what is the inventory level that we should plan for new items? Direct fulfillment is ideal for this because you can make this inventory available from the get-go out of your own warehouse or a third-party warehouse. and thereby also stock it with much less of a risk. 

The big downside here is, of course, that you have less reach and that you potentially are not going to get the prime eligibility that you're looking for across all states, particularly in the US. So if you're having a warehouse out of which you fulfill in the east side, then it will be very difficult, obviously, to kind of transfer this to the entirety of the United States. In Europe, it's a little bit different, but the same principle applies, so to say. There is the EU-enabled vendor flex and direct fulfillment setup, but you will need to actively work on hitting certain benchmarks in order to be prime eligible here as well. 

Kara Babb
Yeah, that's a good point. I actually just had the direct fulfillment conversation come up with my client and our Vendor Manager. Over the last five years, outbound shipping, inbound shipping costs weren't as much of an issue for Amazon, probably five to eight years. But within the last few years, they're trying to put more of the responsibility or the onus on shipping onto the vendor, have it to share costs. 

So now they're asking that vendors not only enable all three channels, like direct fulfillment, PO, and potentially direct import, if it makes sense with their supply chain, so that Amazon can pick the most cost-effective option for them. But they're also asking brands to spin up additional nodes across the U.S. to Martin's point. So having mid-U.S. coverage as well as the East Coast and West. And it's, you know, your question, David, around the hybrid strategy is a little bit different. 

So with a true hybrid, what you can get away with is a 1P vendor having 1P and then an authorised reseller solution, which I've had a lot of success with with larger brands. But it's not so much 3P FBM versus DF. DF is to enable Amazon to offset some of their costs so that you can have potentially a lower net PPM ask. Because they're not having to cover all the outbound shipping and they can flex as normal. Whereas 3P FBM is fundamentally kind of shifting over either to a hybrid model or to entirely to 3P it's also different warehouses. You know, 3P FBM is actually fulfilled by Amazon still, whereas direct fulfillment is obviously fulfilled by the brand. 

Alexandra Carmody
Yeah, I think that's the really the big call out. I agree with you, Kara, around it's less direct fulfillment versus 3P FBM. And it's more of figuring out like what you can support as the brand. Does it make sense in terms of your overall strategy? But it really only works if like the segmentation of your SKUs is very different between your 1P SKUs and your 3P SKUs. That segmentation will give a comfortability to Amazon because most of the time what at least we try and recommend if you're considering hybrid is it's a net new product that Amazon maybe had low POs on or doesn't want to carry, or it's a subset of SKUs that Amazon started to kind of like slowly wean down on either way. That opens up an opportunity for the idea of a hybrid and also gives a little bit more control back to the brand that to play around with things like pricing, to play around with things maybe they can't get in a 1P environment. 

Paul Sonneveld
I do wonder just from a negotiations point of view, Martin, like if I'm proposing as a vendor to move some inventory from the warehouse to direct fulfillment, I mean, what sort of, what sort of price should I be able to extract from Amazon for that? I mean, it will be a different vendor code obviously, but I mean, what, I mean, if all terms stay the same, then obviously it's going to be a massive win for Amazon, right? It's like a free lunch. What do you think is reasonable? 

Martin Heubel
I think it's important to run the numbers, right? What are you saving by not having to ship goods towards a fragmented setup of different fulfillment centers if you do not have a consolidation or a pickup service such as a WePay combined with an Amazon freight? What are actually the cost savings that you're having? But also considering that if you're taking this volume out of the equation with existing carriers, well, then those contracts with those carriers will carry less volume. 

So you actually may risk having worse contracts with them. And this is often sometimes what is really overlooked in all of this conversation, right? But you're absolutely right. If you're moving towards a different supply chain setup, you always need to ask yourself the question, who is the beneficiary here? Is it solely myself because I have cost savings or is it also Amazon? And the case of a direct fulfillment setup, for example, you're basically carving a whole supply chain step out of the joint value and supply chain with this online retailer, meaning they no longer have to store, handle or ship the goods out of their own fulfillment centers, which of course comes at significant cost savings for them. 

So while the exact amount for a cost increase or a trade terms reductions will differ by the actual cost savings that you realize and should be certainly leaned against that exact figure that you can calculate there with your logistics and finance team, it's certainly true that you must reduce your investment exposure if you're taking more cost centers onto your own shoulders away from Amazon keeping in mind that potentially you will not be able to shift a hundred percent of your selection towards the setup. Because effectively, as also Kara and Alexandra were saying, clearly, you want to have this primary legibility. And depending on where your warehouse sits, you may have to rely on Amazon for part of the volume that you sell to still leverage Amazon's fulfillment center network. 

Ryan Craver
I wonder, and I pose the question to the rest of the group. From your clients and or discussions, are you finding that some clients are now finding the combination of Seller Central plus AWD plus FBA being more compelling than that of a 1P with DF and just normal POs? 

Martin Heubel
I think it depends on what the context is from which you are starting, right? I mean, if you have a very low dependency on Amazon and you have a high leverage in your trade negotiations because you're a very strong national brand with a lot of legacy, there's no reason necessarily to lean on to complexifying your business yourself through a hybrid approach. And I would more lean towards what Kara was saying earlier, working with an external broker who can help you bridge the gap throughout more difficult becoming discussions when you're finding yourself in trade negotiations, and Amazon applies complex disincentives on your account to maintain the organic sales ranking to ensure that you actually do not give in to the leverage that Amazon is trying to build against you and your sales teams, right? 

But on the flip side, of course, I mean, as it's the little business one-on-one diversification is key with any business and with any retailer. I would, however, pose the question back and say, are we thinking too small if we are just looking at 1P and 3P? Do we not needing to start really a conversation going forward? How do we extrapolate this kind of leverage across retailers in the online space? And do we really accept Amazon to grow to such a size that it becomes our number one online customer or even the number one customer across all channels? And are we just leaning back and seeing that happening, growing our dependency through AWS retail, 3P selling services, Amazon transportation and freight and also advertising on one retailer only and one tech company? Or do we need to reinforce our efforts to potentially not only look at Amazon, even though it has one of the most massive online marketplaces in the world today, and potentially need to also reinforce the way we are working beyond this only one retailer? 

Alexandra Carmody
I'm also going to throw a wrench right in there. I think it's a good question though, Ryan. Where we see a lot of our brands that are either already in 1P considering some sort of hybrid setup or what's kind of motivating them behind it outside of just tough negotiations or Amazon really putting their foot down. The Introduction of TikTok shop and wanting to utilise things like multi-channel fulfillment and actually use Amazon inventory that's on hand to fulfill that channel has been very, very key in a lot of our brands within 1P. 

Or considering kind of a hybrid structure because they want some sort of control over the SKUs that are exclusive within TikTok shop, but making it available on Amazon without having to have structured POs within 1P and actually commit to particular units. So that's been an interesting thing we've started to see across a lot of our brands that sit in like larger conglomerate companies who really have this focus of we can't really figure out TikTok shop. It's been around for a little bit of time, really not going anywhere. And that's been also kind of a push that we've seen across a lot of brands in our portfolio of trying to figure out like really where does it make sense and how can we actually have like a better mix within our SKU assortment. 

Kara Babb
That's a really good point because Amazon does not work well with virality. Amazon, they're forecasting, they like consistent, they like the same. So we see a really positive, the brands that I've worked with that have spun up TikTok accounts, TikTok shops, see a really positive halo effect on Amazon, but Amazon can't figure it out. So you need that agility of sellers. 

And then back to your original question, most larger companies, at least, their financial operations, their fulfillment, nothing is set up for a 3P model because you're going fundamentally from a kind of PO wholesale model, which matches most other retailers, to a consignment model where you're having to do the fulfillment. The times I've seen it do well are ones who've kind of found a very kind of unique back channel to go use Amazon Global Logistics and source directly from their overseas factory. 

But most, most brands are not set up for the complexity that is 3P at least at the speed, right? Maybe after a few years working with, you know, an authorised seller, like from our group or someone else, you know, you can spin it up, but it's, it's so different. And brands don't really realize what they're getting into. It's like, Oh, I'm just going to, I'm going to get away from vendor negotiations, switch to 3P it's like, there's no silver bullets with Amazon period. Totally. 

So you have to make sure what fits your brand, whether it's, Hey, I've got really heavy, bulky items. And it actually makes sense to me if I look at the costs benefit analysis to spin up additional notes, because then I'm actually going to get better traction on Amazon, lower pricing, lower net PPM, you know, or I'm a light, a lightweight item, but I'm really big on TikTok. So you know, so it's very, there's no silver bullet, there's no quick answer, it just has to be really customised to your business. 

Ryan Craver
I hear you. 

Paul Sonneveld 
Right.

Ryan Craver
And I completely agree with that. I just think that what's what's interesting now is with AWD, MCF, buy with Prime, that three-headed monster and the tariff situation, the lack of price increases, the difficult negotiations, all these various things. It's the first time in which I've seen some major brands capitulate and be willing to use something like AWD because they then know that it also brings them Multi-channel fulfillment with Walmart, multi-channel fulfillment with TikTok shop. 

So it's more compelling than it's ever been. And Martin, I hear you loud and clear. They're selling us a drug, and we're all falling in love with it. And the problem is, is we're going to wake up in a couple of years' tim,e and we're going to have fifty different services that we're buying from them and unspinning that web even harder than what it was before. 

Paul Sonneveld
It's called the flywheel, right? 

{All laughs}

Ryan Craver
Yes, sir. I was trying not to use that term. I was trying. 

Kara Babb
Hold handcuffs.

Alexandra Carmody
Holding handcuffs is good. 

Paul Sonneveld
All right. I want to just go back to some of the questions that were voted on by our audience today. Some of them very granular, practical. Some of them more strategic. But let's just throw them in there. Let's bring up this one here. This issue of Amazon price matching,  maybe removing or suppressing your buy box because they found a listing somewhere else. Sometimes our owners price matching. I mean, what can you do as an Amazon Vendor? How can you escalate this and get some of this result, particularly when there's errors involved in the price-matching algorithm? Who would like to have a go? 

Kara Babb
I mean, I've had success where, I mean, if you say proven escalation path, there's more of like a hail Mary slash throw as many things out there as you can. Amazon's scraper runs several times a day. It's not always accurate. I've had issues where it's like, it's a single that's, or it's a multi-pack that's trying to be matched to a single. The biggest thing is if you have an AVS or a CSM, escalating it there, explaining why these are not the like-for-like matches, or going through your VM or going through Vendor Central. 

The most painful thing is if you have to just submit cases in Vendor Central. Being consistent and sometimes submitting a lot of cases so that it hopefully gets escalated. But it's very painful. And I don't know if anyone else in this panel has a proven path, because if you do, I'd love to know. But even when I was a VM, I had a hard time working with the competitive scraping team or in India to get them to re-scrape and get them to fix it. 

The worst thing is when Walmart wants to go just mess with Amazon. And the buyers at Walmart can actually change the prices. Amazon buyers cannot. It's all algorithmically driven. It's all scraping. So that's the worst thing is you've got these buyers going back and forth. But it's just manner of showing your data, showing the evidence. You're not just whining about the price match. You're saying, hey, this is this UPC, or this is a product that does not exist, or something like that. Typically, 1P shouldn't be matching 3P. But I know that's kind of category-dependent. 

Alexandra Carmody
Yeah, I think category dependency is a big one with this in particular. I mean, I've seen the bots starting to scrape like Poshmark and people reselling like sponges on Poshmark. And then it's cutting down the price on Amazon for a brand that we work with. And it's gotten more sophisticated, but also in the same note, I think it's such a widespread problem that it's the consistency of opening up cases. I think, unfortunately, that's kind of the nature of the beast. 

There are some tools that you can do some price matching with where you can actually load in like your floor price or pick a designation that's hey, I don't want my margin to go below X, and they'll price match to a certain point. Those sorts of tools can help for like a short-term perspective, especially leading up to like a tentpole event because you don't want to completely ruin all of the promotions that you already have planned with the thirty to sixty-day look back. 

But I do think one of the things brands and sellers tend to overlook is if you find where the price is lowered and you don't know who that distributor is or you don't know why they're selling and it's not just like someone rogue on Walmart, It's like an actual website or, you know, we run into this with health care practitioner supplements that we help to manage on Amazon often. If that's not in their distributor agreements that they can be cutting down the price, you have to figure out a way to have that conversation directly with those individuals to tell them either A, they're in breach or B, they need to right set the price. 

To your point, though, Kara, like it's going to take some time for that team to actually re-scrape again. And it does take some time. But that consistency of the cases can help to kind of push that through. At the end of the day, like the last stop effort is if you have an internal legal team, figuring out ways that you can kind of have that legal intervention outside of opening up cases and really having discussions with where that product ended up. Because that's been counterfeiting has been a big issue. You know, that's been kind of the world, and it's not great. 

Martin Heubel
I think on top of that, also keep in mind, if Amazon constantly asks you for net PPM compensation, those are exactly the products that you should ideally not include in cost support agreements, etc. Which is why let it bleed dry is usually the best advice possible, next to all of what the fellow panellists have already highlighted. So that Amazon internally also in its WBR reports is seeing, okay, there's something going wrong here, and we're bleeding margin, which typically is the best way to get a Vendor Manager to act on Amazon. 

Paul Sonneveld
Which, I mean, it sort of relates to a question which is more sort of about negotiation in nature here, which is around this. You know, Amazon dropping the prices and, you know, can you negotiate a net PPM floor or, you know, where they automatically, you know, waive the MDF requirement or, you know, equivalence? You know, what do you do in those instances where Amazon is constantly dropping the price for competitive or price-matching reasons, and it's just eroding your net PPM, and you've been asked to supplement all the time? I mean, what are some of the tactics and advice there? you know, building on sort of the conversation you or the point you started to make, Martin? 

Martin Heubel
I think, I mean, if you're dissecting the question, the net PPM floor, I'm not sure if that is a good idea to kind of negotiate in the first place from a compliance and legal standpoint as well. I mean, you're certainly landing in the or getting an expedited audit if the FTC or the European Commission is looking into that, and they see that you're going into this direction of trying to kind of only compensate Amazon when certain pricing rules are becoming true. 

So I personally would not encourage you or anyone to kind of really go down this direction. Of course, Amazon will ask for cost support and guaranteed margin support. This is at their prerogative, and you can freely kind of negotiate that if in your jurisdiction, this is fine, because this is a slightly different topic here. You do not intervene in their pricing position. You merely compensate them for a certain margin level that they have set as a target. 

On your question, Paul, I think it comes really down to, as many of us have said before, identifying the underlying root cause. Is it a leaky distribution? Is it a rogue reseller? And depending on if you're in the US or not, do we have map policies that you can try to enforce outside of Amazon? And are there any other kind of elements that could help you to kind of at least control your distribution going forward so that this doesn't happen. 

When it comes to cost support and margin agreements, I would always be very careful to restrict them in time restrict them by ASIN and also restrict them ideally by an absolute dollar amount so that you are not getting into a direction where you are really just compensating Amazon for whatever they're doing in the market. Because then you quickly include elements like pricing arrows overstock markdown activities that you're effectively funding to and which can really cost your business a lot of money without necessarily being able to anticipate or forecast that amount up front. 

Paul Sonneveld
anyone like to add to that? 

Kara Babb
I mean, so there's a few different reasons net PPM will become an issue. You know, one, to Martin's point, is around price matching and that Amazon will just say to you, hey, you need to get your channel hygiene in order. So you need to go and have an authorised, make sure you have an authorised reseller strategy, reseller agreements, especially if you're in a lot of legacy distribution channels or you have a maybe a professional team that's liquidating inventory. You need to have an author, like an enforcement mechanism, whether that's like an outside legal team or internal that can go and help enforce and take some of these kind of rogue resellers, whether taking them to court or dealing with it otherwise. 

But if Net PPM is a constant conversation, you need to dissect what's influencing it, whether it's logistics and operations. Is it price matching? Is it packaging? Is it returns? You know, what's driving that? Because net PPM is like the canary in the coal mine. It's calling out what there's a problem and need to dissect to make sure you're addressing underlying root cause kind of systemically. 

Paul Sonneveld
Thank you. Let's move on. We've spoken quite a bit about transition as part of today's session, mainly around transitioning from 3P to 1P, but in the context of closure protection, profitability, we have spoken about transitioning certain ASINs from 1P to 3P. I guess the question here is, you know when you're executing let's call it a hard pivot to 3P. So i need to make sure this doesn't keep disappearing on me here we go let's give that another go. 

When you're executing a hard transition to uh to 3P. I'm not talking about like the entire account from 1P to 3P. But let's say a couple of asins they're no longer profitable 1P doesn't make sense. You're transitioning to 3P. My two-part question really here is, one, can you actually recover the sales velocity and volume that you used to enjoy on the 1P side? 

And the follow-up question there is, how long does that typically take? How long is a piece of string? And probably for bonus points here, the third question is really about what are some of the watch-outs and things you need to get right as you do that? The caveat here is we could do another hour session just on this question alone. So it'd be great just to get some pointers and practical tips here. Do you want to go first, Alexandra? 

Alexandra Carmody
Sure. Yeah, I mean, man, it really depends, which I hate to say is like the start to my answer, but it really does depend on the particular SKU where it sits in your overall portfolio and how quickly you can kind of recover the sales. I think the biggest implication of what brings down the sales volume, at least initially, is that idea of, you know, can you transfer over your subscriptions? 

Let's say it's a hero SKU that you want to do this with for whatever reason. And you need to make sure that you have that retention strategy already built in as you move it over. That's a key call out. That's also been very tricky when you're going from 1P to 3P in terms of getting that kind of recognised revenue into the subscribe and save bucket. 

I also think, you know, it's, It's nice to say you can do everything in a really quick timeframe, but that build back up depending on if you, A, were managing your PPC and your ad campaigns previously and can actually put them into your 3P and then ramp them up that way. It's really going to come down to like a budgeting perspective. How much do you want to put into a single item or a couple of SKUs? to drum back up that demand. 

But I have seen brands do this. We actually have a lot of brands that have gone from 1P into 3P in totality for their business due to no other option that they had. And it wasn't as much sales volume that went down. It was more around additional placements and making sure that they had things like priority shipments and making sure that the goods were actually available. Processing times between 1P and 3P, Amazon will likely never admit, but they process 1P orders and so forth more quickly when it's coming into their warehouses. 

So as long as you can get like a really nice stronghold of building in buffer, whether it's inventory ramp up time of say anywhere between two to three weeks on top of a typical timeframe, that can be really key to the overall success. But I think one of the biggest things is going to be, do you have access to your ad campaigns? Can you replicate them pretty closely from your 1P account into your 3P account? And then how quickly can you ramp that back up? 

I mentioned it in my session earlier before too, brands get very creative with this. in terms of like leveraging an existing variation that they can just tack on to. So you have the reviews benefits already built in and there's less of like a total listing takeover. There's ways you can kind of play with it and game with it. But a lot of it is just, you know, it really is just gaming with the system at the end of the day. 

Paul Sonneveld
Thank you. Anyone like to add anything to that question? 

Ryan Craver
The only thing I'd probably say is if you forced us to choose six months, twelve months, or never, I'd say comp to comp, ASIN to ASIN, same media spend to same media spend, I'd probably say never. This is a rigged game. And keeping 1P typically drives more overall sales volumes in units. Now, if you're looking at moving to 3P not because you're forced to but because you would like to make more unit proceeds per item, and it's i don't think it's ever going to be comp to comp in total units and you got to figure out the net increase you're earning from 3P versus a 1P wholesale model. But if I had to choose, I'm saying comp to comp, ASIN to ASIN, never. 

Paul Sonneveld
I like your boldness and braveness. And I'm just going to ask you to, given that you're feeling bold, in percentage terms, what number would you put on it? Can you get to the seventy percent, fifty percent, forty percent? I mean, you're going all out here, so might as well ask the question. 

Ryan Craver
Martin just side-slacked me. He said, let me take this one. I'm just kidding. I'm just kidding. 

{All laughs}

Martin Heubel
I wouldn't be able to say, right? I'm not advising on that front. 

Ryan Craver
So, I mean, the placement statement is by far the biggest issue, right? So what we don't know today is how much of a favour 1P earns you in placement. What we do know is if you take a 1P item, two, 3P on a cold brand new account, it can take several years to get back to your BSR ranks that you've had of the past. Sorry. I thought I was brave. I started out, I was going to say a percent. Now I'm hiding. Going on. 

Alexandra Carmody
I would agree. 

Paul Sonneveld
You got some good reasons to do that. 

Alexandra Carmody
I would agree with Ryan in the never if you don't care about getting your prices back up to map. Cause I think ultimately at the end of the day, if you're trying to kind of make a hard pivot, most of the brands we talked to that are trying to do that really do want to get their pricing back up to map, which you just can't do with 1P just continuing to undercut. So if you think about it from that lens of there's going to be a time in which your volume overall will be down, but we will get your pricing back up. It's you got to kind of think of it from those angles as well. It might not be the same volume long-term, but if that volume was only coming because of discounts, because of promotions and because of price matching, that's not overall growth for the brand. That's just, you've kind of positioned yourself as a discount brand on Amazon. 

Paul Sonneveld
Sure. Good point. Really good point. Did you want to make a final contribution to answering this question, Kara? Or are you good? 

Kara Babb
I mean, maybe I'm optimistic, but Amazon's going to prefer the most profitable offer to them. So if they're making more money on the seller offer, like, I've seen seller SKUs like take off pretty quickly. If I was going to be a little bit more pessimistic, I would say like twelve months. But it all depends on can you keep the same ASIN? Are you going to maintain the same kind of rank of that ASIN? If it's a long-standing ASIN that's been around for a long time, like you have at least like a strong base to build from. 

I do think it actually can get up to the same volume because Amazon's algorithm rewards profitability, like period. It just depends on what it was like as Amazon may make more on that SKU selling a 3P than they did 1P, which is beneficial for the brand. And in terms of the pricing, that all depends on what external matching is happening. If you still have channel conflict, it's going to screw you on 3P just like it did on 1P. 

Paul Sonneveld
Yeah, that's a great perspective, Kara. Thank you for helping us close out that question. So we do need to wrap up this panel discussion today. We actually need to wrap up day one. So, as we wrap up, I thought maybe a nice way to close today would be just to go around each of the panellists here today and maybe just share practical advice as we head into 2026? In other words, you know, what are the things you're talking to your clients about right now in terms of what they should be thinking about, maybe things they should be trying differently? What can you leave with our audience that's going to be helpful to have a successful 2026 on the Amazon Vendor platform? Martin, would you like to kick off? 

Martin Heubel
Yeah, of course. Happy to. Look, I think one of the kind of key elements that I was hinting upon earlier is, first of all, make conscious decisions around your investments and the viability of them in the mid to long term. Because I think a lot of brands are heads over tails in a lot of decisions just to kind of unlock short-term growth. But they are not necessarily ready to deal with the consequences when next year negotiations come around again and they're actually having to kind of recoup a lot of those investments that were given to Amazon today. 

Think of any investments that you give to Amazon as a dollar that you spend not only once but multiple times and thereby also merge the conversations away from that PPM more towards, okay, how can you really drive a sustainable bottom line for yourself as well as for Amazon and that would mean CM. So bring those supply chain conversations bring those packaging conversations exclusive products pdp content that reduces customer return rates to the table. And then also be very bold about your ass from Amazon and why you're holding firm or not increasing your investments unless you see really a significant value exchange in return 

Paul Sonneveld
Fantastic. Thank you, Martin. Very solid advice. Appreciate that. Over to you, Kara. 

Kara Babb
I'm actually going to suggest something off Amazon, and I think Alexandra may sync with me here, but I've had really good success recently with my clients who are established brands spinning up their own TikTok channels. This is not just talking about you know influencers or whatever but investing to get content creators in place internally to develop your own organic TikTok presence if you can pair it with TikTok shop great. Right now, one of my clients their TikTok shop is growing forex but their Amazon is just, and it's not like a super cheap product it's just doing really really well. And then since implementing TikTok and spinning that up, they've actually seen a strong halo effect on Amazon. 

So the benefits of this is it starts to kind of diversify your risk a little bit, like Martin was talking about earlier. It also takes a little bit of the money out of Amazon's ad pocket because you can look at driving and diversifying your traffic and offsetting where you might have high CPC costs. But, you know, ads is so saturated that you need to go where customers are discovering product. And I think the last ad I saw is over seventy percent of customers discover products on social. And then for TikTok, at least the number one purchase destination is still Amazon. But TikTok shop is climbing up. So it's diversifying your risk, diversifying your traffic channels and looking to reach customers with that kind of features and benefits message outside of just a little ad. 

Paul Sonneveld
Really interesting. I saw Alexandra nodding. She's like, 

Kara Babb
Front Row does this really well. So that's why I was like, Alexandra, you're going to be mad at me because I take it. 

Paul Sonneveld
She was nodding. I saw her on the backstage. She was nodding violently and agreeing with you. 

Alexandra Carmody
I was. It was violent. I'll go next. Yeah, so I mean, I completely agree. I think knowing where your consumer is the most important thing in order to have growth on Amazon at this stage. The model in which you're selling on Amazon You have to think on the consumer side, which Amazon, a hundred percent is always the consumer first. You know, you have to be where they are. So what's interesting that I think people don't fully realise is whether it's TikTok shop or even just affiliate marketing off Amazon, how that's fueling the channel. It's giving you insight into who your consumer is and how they're researching your product if they've never purchased anything, your item or your brand before.

Understanding that can be a really key leveraging point if you're talking with say, your 1P manager as well to get certain activations from them or what it looks like because you can put the proof behind i'm spending this off channel i'm seeing you know eight x growth i'm not seeing that on Amazon and I'm spending triple the amount. So what's not really working here. And I do think Amazon tends to play the game of just spend more money on channel, and it's fine. That just simply doesn't work on the platform anymore due to the way the categories are saturated and just kind of how all brands are expanding within social. So, really understanding that and knowing you can kind of game around a little bit off platform, and it will impact Amazon almost directly. That's going to be a key way for brands and just anyone to grow on the channel in general, long-term, regardless of if you're 1P, 3P or some sort of hybrid setup. 

Paul Sonneveld
Thank you, Alexandra. That's great. And as I said before, Ryan, we'll save the best till last, words of advice, wisdom for our audience as we head into 2026. 

Ryan Craver
Wow. Thank you. Don't worry, I won't say TikTok, but I will give a little wrinkle on TikTok. I think what's interesting is when you incorporate AWD with Prime MCF, there is this trap, this value trap for many brands to extend into TikTok pretty considerably through those programs. We're also seeing a bunch of brands adopt Buy with Prime, the Steve Maddens of the world, the Adidas of the world. So there's definitely this push outside the walls to own the supply chain from Amazon's perspective. 

The other thing that I think that's really fascinating to watch right now is Amazon's takedown of Trade Desk, right? So media placement fees are much lower within Amazon, specifically on DSP versus Trade Desk. So we're seeing a lot of market share loss there. And you're also seeing a lot of coverage around the fact that they have access to the Roku audience, the Netflix audience, et cetera. And I think we're seeing a lot of interesting points. And then the last thing that I just leave you with that I think is fascinating to see, is how we're handling generative engines. And I'm not talking about Rufus. We all know about Rufus.

I'm not talking about Walmart Spark. We all know about Spark. I'm talking more so about the way that they're handling citations and references. So the ChatGPTs of the world, the Claudes, the Perplexities. Amazon's come out very clearly and said, we will block you. They've even sued Perplexity, whereas Target and Walmart have adopted them and let them scrape them endlessly. And you see it in a lot of the citation and the reference data. So I think it's just a fascinating place to watch and see how it evolves. So those are kind of what we're talking about and thinking about. 

Paul Sonneveld
Thank you, Ryan. Very thoughtful and provoking ideas there. So, no doubt, 2026 is going to be a fascinating and very interesting year. Hopefully, there's also some incremental profit to be gained for Amazon Vendors. That is always the challenge. But yeah, with that, I just want to thank each and every one of you so much for investing the time to speak today, to prepare the materials and also making yourselves available as part of this panel. Thank you so much and best wishes. I'm sure we'll reconnect again.

ALL
Thanks, everyone, for joining. Bye.

Paul Sonneveld
All right. Oh, I suddenly feel very, very lonely again today. But as I mentioned before, huge thank you to all of our guest speakers today. I'm really grateful for the work they've put in and bringing you very valuable content. But of course, also thank all of you for attending from all around the world. I know it's been a busy Q4, so I appreciate you guys making the time, contributing in the form of questions, showing up, leaning in. The energy and the excitement today has been really fantastic, which really is what makes an event like this work, right? Now, we didn't get to every single question I want to today. We had a lot of coming through the chats in the comments but you know don't worry this is actually a two-day event so we get to do this all again tomorrow but then with an entirely new set of topics and speakers. I will make sure that any themes or questions that weren't answered today will be answered again tomorrow across the sessions and at the panel at the end of day two. 

Now, just a really quick look of what you can expect tomorrow as part of day two. Day two is kicking off at nine a.m. GMT. So we're starting in the morning in Europe, on Wednesday the tenth. Day two is really designed to take everything we've covered today and push it into the levers that will protect and grow your profitability in 2026. We'll open with a bit of a quick reset for me, and then we'll go straight into negotiation and negotiation mindset strategy in winning without surrender with Asha. And then we're getting very practical on the money side with fixing profit leaks on Amazon Vendor Central. 

From there, as we head into the morning, we shift into performance enablements, how to maximise value from AVS. It's a topic that came up a little bit today, and how to build a better relationship with your Vendor Manager. And then we're even getting into models like merchant of record or 2P models and asking ourselves, you know, do they make sense? Are they good alternatives? You know, alongside some of the hybrid strategies that we discussed today. After that, we're going to lean into execution at scale, EU vendor logistics, and how to run Vendor Central profitably across Europe. 

And then lastly, we'll look at a vendor turnaround playbook for brands that needing to reset that trajectory fast. And we'll close out with a peak period readiness session so you're operationally set for the biggest trade events in Windows in 2026. And we'll close the day with another Amazon Vendor panel with experts. Completely new panel, but again, the same idea in terms of ask anything you want. So, please do join us again tomorrow at 9 a.m. GMT. It's going to be another very practical day. We'll make sure that we'll carry all of the open questions from today forward to tomorrow. All right. I've spoken enough for day one. Thanks again for being part of day one. Get some rest. I look forward to seeing you all on day two. Thank you, and goodbye for now. Take care.