SFBSitAS Policy Reveals Amazon's Vendor Singularity Program
Amazon’s SFBSitAS Policy is the sole written source Amazon has published about Vendor Singularity often described as Vendor Sourcing Singularity.
The Product Availability Policy (MOA Policy) originally stated that Amazon Retail (1P) expects the option to source products from a brand at competitive terms. On October 1, 2018 the policy URL started reflecting as the Standards for Brands Selling in the Amazon Store or (SFBSitAS Policy). Besides the policy being a mouthful and tongue twister, the policy completely changes the game for how brands have to play with Amazon and clearly shows the direction Amazon is taking with their Vendor Sourcing Singularity. Below are some key callouts and changes that the SFBSitAS Policy bring:
Brands no longer have a say in their choice of being 1P or 3P!
Amazon is going to select certain brands to be 1P only.
“We may choose to source products from some Brands for sale by Amazon only.”
Amazon is going to select certain brands to be 3P only.
“Other Brands can operate as sellers in the Amazon store if they can consistently maintain our standards for customer experience.”
The recent Bloomberg Article states that brands who do not qualify for a tier 1 status, brands under $10M in retail sales on Amazon, are potentially at risk of losing their 1P account with Amazon. Although Amazon denied that they are planning to purge vendors at a large scale, brands who do not qualify for 1P are able to set up a 3P account. Amazon will require each brand to maintain their "Standards for Customer Experience" to keep an active listing or account. In Amazon’s SFBSitAS Policy, Customer Experience is called out to be measured by:
- High in-stock rates
- Delivery experience
- Price competitiveness
- Selection coverage
Amazon Seller Central has been updated with several new features over the last few months including Brand Health & Price Competitiveness Reports which show what products are not priced competitively across other marketplaces.
Amazon also added a model of reducing commission fees below the expected 15% to incentivize sellers to price competitively in certain categories such as grocery.
These updates along with Amazons ability to suppress buyboxes when products are not price competitive may allow Amazon to maintain it’s perception of lowest priced goods in the market without the requirement of holding inventory.
Hybrid accounts are banned by policy!
Hybrid accounts are expressly stated to not be allowed by Amazon in the new policy.
“If any of the Brand’s products are sold by Amazon, the Brand may not also sell those products as a seller in the Amazon store.”
Any brand selling 1P may not also have a seller 3P account. While this policy is not being fully enforced in all categories at this current time, we have seen brands medium and large who have had their hybrid account shut down over the last 8 months.
Policy can extend to 3P partners and agencies of a brand!
Amazon extends this policy to not only brands and manufacturers but also agents of the brand.
“This policy applies to Brands and manufacturers, as well as their agents, licensees, and other representatives selling on their behalf in the Amazon store.”
A 3P selling on behalf of a brand can have this policy enforced upon them and may lose their privileges of being able to sell the brand in their seller account.
Mass distribution does not apply!
One thing Amazon has not implemented or enforced any policies on is Mass Distribution. Several Brands looking to maintain MAP pricing have turned to a model of using mass distribution to their advantage. Brands leverage authorized sellers as a network to sell their goods with certain required criteria such as MAP adherence or certain mandated quality controls.
If you are interested in learning more about other options, Pattern has a distribution partner that we can refer you to learn more about 3P Networks.