Elaine Kwon: 5 reasons to switch from Amazon's wholesale to marketplace

Switching from Amazon’s vendor central platform to its seller central platform may be a wise choice for brands that want more control over how their product is priced and sold.

Kwontified, an e-commerce management and SaaS firm, helps beauty, fashion and lifestyle clients to launch their online storefronts on Amazon and to refine the efforts of those already selling on the  marketplace. Elaine Kwon is Kwontified’s founder and partner, who prior to starting the company was a vendor manager for luxury brands at Amazon Fashion. With Kwon's intimate knowledge of Amazon’s platforms, she has been able to help numerous clients at her firm improve sales on the e-commerce site.

Elaine Kwon
Elaine Kwon

One of the tips Elaine gives big brands is to make the switch from Amazon’s vendor central (wholesale) platform to its seller central (marketplace) platform. This change alone gives brands more access to the key metrics and analytics that help track their performance on Amazon, according to Kwon. 

FierceRetail spoke with Kwon to get tips for retailers on choosing the best Amazon platform and how to go about switching from wholesale to the marketplace. 

FierceRetail: Please explain the difference between selling on Amazon's wholesale versus the marketplace.

Elaine Kwon: Wholesale is similar to a "traditional" retail buying relationship, where the brand offers product at a wholesale cost to Amazon and Amazon can choose to purchase the product. Amazon then has independent authority to price the product, whereas in traditional brick-and-mortar relationships, retailers typically adhere to the brand’s pricing suggestions. Ultimately, Amazon has both pricing and inventory autonomy.

Marketplace is where a brand can sell their products directly to the consumer. The brand owns the relationship with the consumer. With that, the brand can access data to understand who the customers are, where their products are being shipped, product popularity and sales velocity, and product page traffic. All of the aforementioned data is unavailable to brands on the wholesale platform. On marketplace, the brand has the pricing and inventory autonomy.

FR: What are some of the positives to selling on wholesale? And positives to the marketplace?

EK: Wholesale: As a wholesale brand, features are available for merchandising products on the Amazon website. However, these are not guaranteed. Additionally, brands can be considered to participate in the largest form of promotions on Amazon, the Deal of the Day, depending on the time of year, product category, and selection. However, this is also not guaranteed.

Marketplace: Having autonomy over pricing and inventory is the biggest benefit. There are also new features being added to marketplace including the ability to create a storefront and unique URLs that link to the brand’s store. Lastly, the seller has control over how their brand’s product pages are displayed and what content is featured, including copy, images, and access to tools like Enhanced Brand Content to show the brand’s editorial and lifestyle images.

Features available on both platforms are access to cost-per-click ad campaign creation and management, and unique promotional deals (i.e., lightning deals).

FR: What are the possible negatives to selling on wholesale? Negatives to marketplace?

EK: Wholesale: One of the main setbacks is the lack of autonomy over pricing and inventory. Additionally, the brand has very limited access to customer and product sales data that would help inform their Amazon retail strategy.

Marketplace: Of the two, marketplace is the better platform for brands.

FR: Should some retailers be on both? Why or why not?

EK: There may be some precedent to be on both wholesale and marketplace, but we would not recommend wholesale for the reasons listed above. Ultimately, brands have more autonomy on marketplace. Amazon is a unique retailer in that brands must commit to a platform, as straddling both platforms won’t necessarily help their business grow faster. Though there are always exceptions, we nearly always recommend our clients choose marketplace for the reasons previously stated.

FR:  What type of retailers would you encourage to transition from wholesale to marketplace?

EK: Most contemporary brands, as well as many luxury brands have the opportunity to create an amazing branded experience on marketplace. This exposes them to millions of customers while protecting their brand and allows them to utilize their own unique editorial and lifestyle imagery. This is an area that contemporary and luxury brands underutilize, and a key area that could drive their success on the platform.  

I also think retailers (e.g., J.Crew, Banana Republic, Gap) could have incredible success on Amazon marketplace. The data the platform provides helps target customers and extend a brand’s customer lifetime value.

FR: What tips do you have to make the transition easier?

EK: 1.    Be mindful of your inventory on both platforms. Just because Amazon has your inventory from your wholesale relationship does not mean you can use that inventory on marketplace. 

2.    Consider selection segmentation so that during the transition you don't compete with yourself. For example, if you have a special offer on a product through wholesale, reconsider immediately listing a second offer on marketplace.

3.    Look at the rest of your supply chain. No brand will truly succeed on Amazon if you have an active gray market or a large population of unauthorized sellers. Without controlling and minimizing this presence, both your wholesale and/or marketplace relationships will be detrimentally affected, impacting your overall brand equity and potentially your sales margin.

FR: What else can you tell us about selling on wholesale versus marketplace?

EK: Choosing a platform is not a decision to take lightly. With the ever-changing retail landscape, we encourage retail leaders and executives to think beyond what is comfortable and known.