Amazon News: Chinese Sellers Retreat, AI Checkout, and Vendor Exodus

Amazon News: Chinese Sellers Retreat, AI Checkout, and Vendor Exodus Unknown Speaker: Welcome, fellow entrepreneurs, to the Amazon Sellers School podcast, where we talk about Amazon and how you can use it to build an e-commerce empire, a side hustle and anything in between. And now your host, Todd Welch. Speaker 1: Hey, everybody. Welcome to another episode of Amazon Seller News Live. Got a lot of good news today, some tariff talk. We're going to be diving into some Vendor Central struggles that people are having and some very interesting AI news that seems very surprising at first glance, but we're going to be diving into that, so stick around. But I appreciate Robyn, Vanessa, and Danan for joining me today. We've got a full house, which is awesome. And gonna have a lot of great conversations here about some very interesting, somewhat controversial topics as well. So if you're out there watching, go ahead and throw your comments in the chat and we'd be happy to talk about them on the show as well. So without further ado, let's go ahead and dive into the first news story here. So Chinese Amazon sellers to hike prices or exit U.S. market as tariffs surge. Chinese sellers on Amazon are bracing for major disruption after President Trump raised tariffs on Chinese imports up to 125%, triggering concerns about viability in the US market. Sellers are either increasing prices, some by as much as 50%, or shifting focus to markets like Europe, Mexico, and Canada. China accounts for roughly half of Amazon's global sellers, meaning these changes could lead to price hikes, inventory shifts, and supply chain reconfigurations across the platform. For U.S.-based Amazon sellers, this may reduce direct price competition from Chinese brands, but could also strain sourcing options and raise overall market costs. So, definitely big. He essentially eliminated, well, didn't eliminate, but reduced all the tariffs down to 10% for all countries, except for China, which is at 125%. So, who wants to lead off with that big one? Speaker 2: Are we just talking about Chinese sellers or are we talking about what American sellers are doing too? Speaker 1: Both, I guess, you know, because obviously a lot of American sellers source from China, so it hits both sides for sure. Speaker 2: Well, I can tell you what we've been talking about with our brands over the last two weeks, if that's interesting to you, like what we've been telling them to do as an agency. Absolutely. Speaker 3: It's definitely interesting. You don't even have to ask that question. Everyone is scrambling for advice on this, I think. Speaker 2: Okay. Speaker 1: For sure. Speaker 2: Well, so what we've been talking about with our brands is, first of all, if they were going to have a shipment, then maybe postpone it until things were happening. Or until we know a little bit clearer what the final resolve will be. The larger the brand, the more options they have. You saw what Apple did with iPhone. They immediately shipped a bunch of phones to have them manufactured and sent through India. Larger brands will be able to find ways around this. In fact, the last time these tariffs happened, a lot of production moved to Vietnam, Taiwan, those places. So larger companies, there might be a disruption in inventory, but for the most part, you know, they have a longer cycle, they have more cash. And so they're a little bit more robust. With smaller businesses, We're recommending that they kind of postpone their shipments and consider reducing or stopping discounts. So you might see fewer sales, especially Prime Day, and fewer sales inside Brick and Mortar as well, because Walmart canceled a bunch of orders as well. We're also going through with all of them and tightening their advertising KPIs and reallocating budget to higher margin items and items with higher levels of stock. So we're kind of focusing on maintaining current rankings while making sure that we're really fine tuning the KPIs and profitability on ads. And then we're also looking at increasing prices. At a very small level, because you can't just pop up 100, I mean, if we were to pay the tariff 100% and raise the prices, the buy box would instantly get suppressed. So we're starting to do incremental increases in the cost, but then bringing down with coupons, and coupons are more expensive for a lot of companies now, or they will be. So we're testing, we're doing kind of our normal AB price elasticity testing, knowing we'll have to circle back again. And then looking at cutting expenses, if there's software that they're not using, or if there's other things that we can do to reduce expenses. And for some brands, they're looking at not carrying certain SKUs anymore. Because they're trying to maintain cash flow. I anticipate that there'll be some brands that will not be able to afford the tariffs. So they will abandon that inventory. Between that and the orders that were canceled, Walmart delayed their commitments for Q4 for their retail buyers. So between that and the abandoned shipments and people holding shipments, Even when things go back to normal, hopefully soon, then you're going to see a delay of the port. You're going to see backups. And there's just not a lot of clarity, which is causing people to be very, very concerned about the future. I don't know if that was helpful at all. Speaker 3: I think so. I think so. Speaker 2: Yeah. Speaker 1: Yeah. Very good. I like the strategy in there about shifting your ad spend. To products that you have higher stock on and maybe higher profit margins and such to ride this out because who knows how long the tariffs are going to be on. It could change tomorrow for all we know. Speaker 4: I'd like to... Speaker 2: Oh, go ahead then. Go ahead. Speaker 3: Vanessa, yeah, go ahead. Speaker 4: Yeah, that is the part to me that... So the first thing that comes to mind with the tariff is noticing how we have in our businesses, we have single point of failures, right? So I like to look at businesses and my business in general is like, What if this fails or prices are skyrocketing or somebody leaves or a software is not there anymore? What does my business look like? So this is kind of, I don't know if it's This is not a pessimistic exercise, but it kind of is because I want to see where it's a single point of failure. And I think I don't think tariff is necessarily a single point. It's not one thing. It's several things. But the fact that, OK, now I think people will seriously, Thinking about diversifying from China, because up to now, it was kind of like the nice, cool, like hack, right? It's like, oh, yeah, I do things in Mexico or in Vietnam or in Jordan, like things like that. But it was like fun. And the people that were doing it, it's like, oh, yeah, they're cutting edge. They're taking the risk right now is pretty much a need. Right. And the other part is I think this also feels like a game a little bit because, you know, we started a week where every country had the tariff and now no country has the tariff or it has like 10%. So it's just like a negotiation where, honestly, Maybe if you can delay a decision on bringing inventory or putting up PO or something like that for two, three weeks more, I think that'll be the best decision rather than completely rearranging the whole Amazon strategy or for that sake, any strategy in the business to change to adapt to this tariff because I'm pretty certain that The ultimate tariff or number won't be 125%. That is just ridiculous, right? So yeah, in that sense, it's kind of like, and also that I've been, with all of this happening, I've been like deeply thinking about everything. And it's just how trained we are in our industry. And I wrote about it yesterday. We are very attuned or accustomed to react right away. Amazon changes something, oh my God, we need to react, we need to change, we need to move forward. Speaker 3: Yeah, it's always like an immediate doomsday. Speaker 4: Yeah, and same thing with all of this stuff. And also, I feel that I'm part of that. I Part of me feels guilty because I'm also part of that circus of news, Amazon updates and things. It's like, this is a game-changing thing, this is a game-changing thing, this is a game-changing thing. And honestly, up to today, to the tariff, nothing previously was a game-changing thing. Tariff will be, if they stay as they are, will really be the game-changing. So yeah, I like what Robyn was saying on like, okay, thinking, planning and seeing what that point of failure would lead you if you keep surviving. But will I recommend somebody to change the whole thing today? Probably not. What I do like is that small price increases. And for that, I think Chad Rubin has a great software for it, like Prophecy. You can like slowly increment, you know, the buy books. Just the elasticity and things like that. And it also gives you room for the big jump, right? Like you don't go from 25 to 35. You go from 25 to 26.30 and then to 27. And it's slow, right? Because if not, we're going to lose the buy books again. And honestly, back to the The news, it's like, imagine if sellers, if Chinese sellers, who most of them are manufacturers directly, are thinking about leaving the platform. This to me is just like, OK, we're in big trouble, like because, you know, China is the manufacturer of the world. So yeah, I mean, all their mechanisms, but it's just that was the headline. It's just kind of scary. I don't know. I mean, yeah, it is an opportunity for US brands that don't manufacture in China. But if you manufacture in China, it is the exact same thing. Speaker 3: I have two things. Yeah. You wanna go, Robyn? Speaker 2: Oh, well, I mean, either way. Why don't you go first, and then I'll, I have some things to build on, Vanessa, as long as we can circle back. Speaker 3: Okay, okay. Yeah, yeah, yeah, of course. Yeah, I think mine are a little shorter. So, two things. Number one is, I think what we're gonna see, if these brands do exit, I think what we're gonna see is an opportunity. We're gonna have a sudden significant, in certain areas, a sudden significant decrease in the number of people bidding on PPC to get sales, right? So you might see a dramatic upswing in your placement and conversions and traffic and stuff like that. So that's number one. Number two is, I actually think, so Vanessa, you said two, three weeks. I think it's gonna be two or three months. Now, granted, the The Trump drop on the hammer has gone extraordinarily fast, but I think that lifting and changing things is going to go a lot slower because I believe he's using this as a negotiation point because obviously it's not sustainable. But I believe it's a negotiation point and I think things are going to change more slowly. I would wager that some brands can't afford to wait that long and will need an interim decision, but it's certainly not going to be something that they should jump on right now and go buy something for double the cost out of Sri Lanka or something like that or wherever they can get it made. Those are just the two points I wanted to make. So on one side, a potential huge opportunity to have a higher conversion rate and placement for ads at a lower cost because there's not as many people bidding and then a longer wait time. But yeah, Robyn, go ahead. Yours is probably more insightful than mine. Speaker 2: I was going to say some of the same things. Your IQ actually drops when you're really upset, when you're really angry. We don't make the best decisions when we're upset. We want to make sure that we're making decisions. I had a friend that was very teary call and I was talking to him about what his options are and I was like, we don't want to make knee-jerk reactions. So we want to look at, you know, making decisions now that if tariffs get removed tomorrow, you're still not going to, it's nothing that we can, it's not a one way door. That it's a decision that we can adjust that is going to help you get your business the way that you want. And then we want to try to limit liability. You know, so for him, you know, one thing that he's checking into is bonded warehouses because he had inventory that was on the water. This was several days ago and I feel like things have changed so much since then. There's those kinds of things as well. With the pricing, we don't want to be the first one to pop up really high on that pricing because then you'll lose your ranking because your competitors at a lower price. What you're trying to do is you're trying to balance making sure you have inventory for a longer period of time. We're actually looking at maybe slowing down velocity. We're trying to conserve profitability, focusing on bottom line in case we have to pay more for our next inventory, and preparing for if we do need to raise prices, making sure that we have a lever with Amazon to do that. So those are kind of the things all together that you want to be looking at. And if you're a reseller, you might want to consider that because of that strategy for many brands where they're going to be looking at conserving, you might see fewer discounts. You might see a shallower reset if you are somebody that shops the resets. So you need to be starting to prepare for that cash wise as well and inventory flow wise and starting to think about, okay, so if there isn't as much inventory for me to purchase or And it could go the other way too. It could be the inventory that you purchase right now because price increases, it increases your margins, but you just want to remember that there's going to be a crash after that wave. So where either prices are going to be higher or there'll be a glut of inventory. So you just need to be really thinking for best and worst case scenario, plan for both, and then kind of keep an eye on things. Speaker 3: To take a little bit more on that, Robyn, on Vanessa's side, she says that you need to incrementally increase prices. I think that's a known factor for quite some time, right? On your side, you're saying don't, but what about if you started now slowly incrementing prices? Would you suggest that? Speaker 2: So me and Vanessa are aligned on that, yeah. So I think slowly doing price increments and then using discounts to... So we had a folding sunglasses company and they were trying to be kind of like imitations of Ray-Bans. So they had their price at a really low price. And what we did is we started... Our concern was is that because they're trying to kind of be a competitor to a luxury brand, their price was too low, was devaluing their brand. So we raised the price and then we saw, you know, did sales look, did sales lower? Then we lowered the price to make sure that that wasn't a false detail. And then we raised it to where we saw the conversion start to drop. You would take that same A-B philosophy for your price elasticity, but you're going to be doing it at a much smaller increment because we're just trying to stay ahead. It's not like the tariffs happen and the prices go up because one of our bigger companies is like, well, we have eight months worth of stock. So for them, they just need to slowly at a very small, we're just inching up the prices at a very small part, not even to the point where it would even trigger a buy box. Because it's not gonna be an issue for them until they start to need that inventory restocked. So it's gonna depend, the strategy depends on their margins, it depends on their inventory depth, and it depends on, of course, where they're sourcing. Speaker 1: Mm hmm. Speaker 3: Fair enough. Speaker 1: Yeah. It's, um, you know, something we, we have to keep in mind too with, uh, with Trump is that he's very much a shock and awe kind of person. And what he does in the beginning rarely is what it looks like in the end. And we've already seen that a lot. And so how, I think, who said two to three weeks? Vanessa was saying about how long the tariffs might hold up. You're thinking two to three months. Speaker 3: I think that brands should prepare for at least two to three months because if it's two to three weeks, great news, but if it isn't and you only prepare for two to three weeks. Speaker 1: Yeah. So here's the thing is, you know, Trump changed course because the bond markets started collapsing, which means other countries are selling the bonds, the debt bonds that we sell to them to maintain our debt. And so that was an indicator that the economy was about to collapse if he didn't change course. And so he changed course. But now they're mainly just on China, the big ones, right? And We can't make everything here in the United States, but we can make everything outside of China. It's going to hurt in the beginning and there's going to be a lot of pain, but everything that can be made in China can be made in other countries. Speaker 3: Oh, I see what you're saying. Yeah, exactly what I was thinking. Speaker 2: If this was part of a, even a two or three year plan, I would say we could probably, but you know, we don't have There are some things that are only made in China and I will tell you my made in America companies are just as stressed out as my made in China companies because my made in America companies, where do they get their supplies? Even if you have a food product that's made here, the packaging, the machines to do the packaging, all of that comes from China too. Speaker 3: Raw materials, yeah. Speaker 2: Yeah, so it's not... Yeah, so if it was part of a longer term strategy, I think that that is, and you know, I don't love that everything is made in China either, but you know, we have to make, if it happens two to three months, this industry will be fundamentally changed forever. The faces that we'll see in conferences will be completely different. Speaker 1: That's what the goal is, right? So my point of that is that Trump could leave on the tariffs on China and not have it collapse the bond market and tank the economy as much as putting the tariffs on the entire world like he did in the beginning. Obviously, there's going to be a lot of companies that have a lot of pain because of that. But what the goal is, I believe, is a reorientation And we're going to be talking about tariffs and how to get away from China as much as possible is what the end goal of these tariffs are, especially having them so high on China. And just the fact that they're there, whether it's two to three weeks or two to three months, there's going to be a lot of companies that are going to move away from and diversify their supply chain, for everyone, but it's going to be a lot of pain. Speaker 3: In the short term. Yeah, exactly. Speaker 2: Well, and that'll be true for larger businesses. SMBs don't have the money to invest to diversify their supply chain. They were already on the edge. And so you'll see a lot of kids that are not going to get dance classes. A lot of parents are going to be unemployed because businesses, a lot of people that we would consider friends in this industry will not make it. Speaker 1: It's going to be painful. I sell a lot of other people's products, but I do have one private label product that I sell. And I moved it out of China to Vietnam four years ago now, I believe, three or four years ago. So when I first seen the tariffs on Vietnam, I'm like, what's going on here? You're killing me. But I'm very happy I moved it to Vietnam. The customer service with the factory that I have there is by far better than the factory I was dealing with. We're in China, so I'm happy I did that. I tried to move it to South America or India, but there was no suppliers that we could find in South America, and the suppliers in India had extremely bad customer service, so we ended up in Vietnam. But what's gonna happen, a lot of my suppliers for products that I resell, they make their products in the United States, Assuming that they're not getting their materials from China, the opportunity for those brands is going to go through the roof if it does happen that a lot of these Chinese sellers pull out of the US market or hike their prices quite significantly. Hey, Amazon sellers. Tired of losing money on storage and shipping fees? Well, Amazon Storage Pros is here to take the headache out of logistics. We manage everything from inventory and creating efficient shipping plans to working with 3PLs and Amazon's AWD so that you can focus on growing your business. Start with a free storage cost audit and discover exactly where you're overspending and how to fix it. Don't let logistics eat into your profits. Visit AmazonStoragePros.com. That's AmazonStoragePros.com to get your free storage cost audit and start saving today. And now back to the show. But no doubt, but definitely not disputing that there's going to be a lot of pain to go around. Speaker 2: The pause on tariffs for Vietnam are only a 90-day pause. Those could go back on in 90 days. Speaker 1: Yes. Well, I'm hoping that the end goal is zero tariffs with a lot of these countries. Vietnam is one of them that has already talked about it. Japan as well, Europe, I was in talks as well. So the 90-day pause, they're gonna be negotiating. So I'm hoping we'll start seeing a lot of news here very soon that this country went to zero, this country's zero, this country's zero. And if that happens, you're gonna see the stock market start going back up because that's what people are afraid of in the stock market right now is the uncertainty. They don't know if the goal is zero tariffs or is the goal to keep tariffs on and replace the income tax with tariffs. And so depending on which one of those is the outcome, If tariffs is the goal to replace the income tax, that's going to hurt a lot of companies a lot more than if the goal is to get the zero tariffs in all of these countries, including China, if they're able to negotiate. Speaker 2: It doesn't seem like they're super interested in negotiating. They just raised it to 125. So, I mean, Xi doesn't have to worry about reelection. So, I mean, we'll see. I mean, it really could go any way. I mean, you know. Speaker 4: That's why he's doing it. He doesn't need to worry about reelection. Speaker 1: He doesn't have to worry about reelection. But the only way he stays in power is if he keeps his citizens happy and relatively wealthy, keep the money flowing. And if 25% of their income goes bye bye, that unrest could potentially happen very quickly. So right now it's a lot of posturing. I don't think we should take anything from what's happening right now. I think what China is doing is going to happen because they have to try to save face and project strength and power. That's how We'll have to just wait and see. Right now there's going to be a lot of political posturing and what the end result is going to look like. We'll have to see what happens. I would lean towards it happening faster rather than slower as well, Vanessa, because I don't think China can play the game very long and I don't think Trump wants to play the game very long. Because if the prices start going up and inflation starts going back up, that's not going to be a good look. Yeah. Speaker 4: The other thing that I saw Was he was telling the tariff situation with the tick tock negotiation. So so he tweeted something about that where it's like oh we're still negotiating we're extending at seventy five days. And then China replied, like, we're not going to negotiate if you put the tariff. So then he went more aggressive on that. I think that's when he put, like, instead of 54, it was like 125. And today, and I don't know, like, honestly, I don't know what's real anymore. The 125 was on top. of the 54. So it's like, they corrected some things like no, we like, a little like, it's a trade embargo. Speaker 2: It's not even really a tariff. Now. It's a trade. Speaker 3: I know. Yeah. Yeah. It's like, how much to do business with you? $50? No, thanks. Not at that price. $150 then $150 to do business with me. Okay, okay, I guess I'll do 50 bucks. Speaker 1: Yeah. Speaker 3: Yeah. Coming up next on, after these commercials, we're going to go back into e-commerce drives all political agendas. Speaker 1: Right. It is pretty interesting. I mean, trade is, e-commerce is just trade, right? So, and that's one of the, that's what the world runs on essentially. So. Speaker 3: That's just the new age version of it. Speaker 1: I'm hoping it's shorter than longer and we're able to make a deal. I've seen a very funny meme. Well, maybe funny, maybe not funny, but it was a photo of Trump reading The Art of War and Qi reading The Art of the Deal, both trying to figure each other out. That's essentially what's going on. We're just going to have to wait and see what happens. In the long run, I think this could be beneficial, but in the short run, it definitely could be painful. Yep. Speaker 3: I think that's probably the takeaway from all of this right now is all the commotions happening, but it's going to hurt and maybe it'll be better and hopefully it'll be better later. Speaker 1: Yes. Speaker 4: I mean, ultimately everything gets better at the end of the day, you know, like just give enough time for that to be better. Speaker 1: Yeah. The question is, do we have enough time? That's the question. Or can we take enough time to get to the better point? Let's hope not because if the economy crashes or something, then we're all in trouble. Speaker 2: Hyperinflation is a, I mean, we saw that in Venezuela and a lot of other places too. Hyperinflation can be very harmful to people as well. So there's that to consider as well. Speaker 1: For sure. Speaker 3: I had friends that were I had friends that had farms out there and they would go and purchase black market US dollars because the inflation was so crazy that that's the only way they could hold their currency because one day they could buy rice for $1,000 or it could be $15,000. For sure. Speaker 1: Very crazy. All right, let's go ahead and move on to the next story here. So why Amazon vendors are fleeing to 3P or agencies and what you can do about it. So Scott Needham explains how Amazon vendor managers are often responsible for up to 3,000 accounts. Yes, I read that right, 3,000 accounts. Forcing small vendors under 10 million into automated negotiation systems known as the ICE machine. This system leaves vendors feeling neglected and leads many to seek help from agencies or migrate to three-piece selling, third-party selling. Large vendors, however, are often blocked from going 3P, even when Amazon won't buy their products, highlighting the need for hybrid models or expert support. Needham points out to voices like Cara Babb, Martin Hubel, and Jed Lawson for guidance and emphasizes that vendors shouldn't navigate this landscape alone. This was rather interesting. Caught my attention. You know, 3,000 accounts for one vendor manager potentially. Speaker 3: That's insane. Speaker 1: And then I think the bigger bombshell is down in here a little ways. What I'm hearing is that Amazon will actually block vendors from going to 3P even if they're not buying their products any longer, which is rather interesting. They'll threaten to shut down their accounts. Speaker 3: I've never heard of that before, Robyn. Speaker 2: It's rare, but it does happen. It's not a majority of things. It's usually if they're an Apex brand or there can be different considerations. And then that's when working with a resale partner really makes more sense. I mean, a good number of our clients are people that are coming from 1P moving to 3P. And there are definitely some table stake rules to keep yourself out of trouble. There's always plan B and plan C, but a lot of them are feeling that neglect. We have a couple though that they can't leave Vendor Central because they're big bulky items and the Amazon fees just make it not possible to sell their products. If they can't sell 1P, they can't sell it all. No reseller would take them. Speaker 3: Yeah. Speaker 1: Yeah. It just boggles my mind though that one vendor manager could be managing up to 3,000 accounts and somehow they think that will work out. Speaker 2: It's been that way for a while. I mean, they don't get any support. Everything's automated. Speaker 3: Yeah, I was going to say it is mind-boggling, but is it really that mind-boggling? We are talking about Amazon here. This falls right in line with standard customer service protocol. Speaker 2: Yeah. Unknown Speaker: That's definitely true. Speaker 1: Would it be any better even if there was more vendor central support? Maybe not necessarily if seller support is any judge or any gauge of that. Speaker 4: Yeah, but at the end of the day, the support is not the one that negotiates, right? Like seller support is not negotiating like FBA fees, right? Same way a vendor, manager. Speaker 3: Sorry, go ahead. Speaker 4: Yeah, no, like a vendor manager is not really there to support the brand more than to negotiate on behalf of Amazon. And if you see it that way, it's just like this is a person that's coming on behalf of Amazon to negotiate a price. And I also heard like the amount of money that they get paid, like vendor managers make multiple seven-figure salaries. And it's just like, oh my God, that's crazy. That is crazy. Because at the end of the day, they make Amazon a lot of money. So honestly, you have to see it for what it is. It's just a negotiator on Amazon sites that will make things. And at the end of the day, they have the biggest lever. Because they control the platform so it's not I I have heard of things like oh, yeah, we cannot go to 3p directly because they will suspend our accounts So that if that's the case then. Speaker 3: One could assume that perhaps those people that are negotiating the prices on this are maybe making a commission based on the savings they make for Amazon or something along those lines. Could that be? Speaker 2: They definitely have KPIs. I don't think it would be based off savings. It doesn't align with Amazon's overall goals of being the A to Z thing for everything. I mean, if you think if you go to the things that they value as having a low price, having the best product selection, I think that it's gonna be more along those lines, but I don't have enough know-how to really know what those KPIs are for them. Speaker 3: Perhaps not directly that KPI, but what Vanessa said is they're making multiple seven figures in some cases. At the end of the day, that's a commission-based job. Amazon's not just going to give you a salary of $1.2 million. Unknown Speaker: Well, actually, they do. Speaker 3: They do? This is a salary? Speaker 2: I think at that grade, they're all salary. Speaker 3: I will go to work at Amazon then. Speaker 2: Well, that position is, you know, I had a friend that worked at Amazon and they said Amazon, and everybody's experience is different, but her experience was Amazon is where overachievers go to feel bad about themselves. I mean, I know people who work at Amazon and even the ones that are very happy, you know, they work very hard. You know, they're very result oriented. It's a very, you know, like there's, there's brilliant people at Amazon, but it is not a cakewalk to work and be promoted there. And things move very slowly. So if you've been used to working on your own business, it's going to feel like you're moving in summit shoes. Speaker 1: Yeah. I asked Grok if Amazon vendor managers make commissions and says no, they do not. They have a base pay and then they get bonuses and or stock incentives which are tied to their performance metrics. Speaker 3: Yeah. Also, no direction in a different way. Speaker 1: Essentially. Yeah. Speaker 3: Yeah. Yeah. Speaker 4: Yeah. Speaker 3: Okay. Speaker 1: Anyhow, they're going to set those metrics like, hey, get this many breaks on prices from the vendors. Basically, commissioned. Speaker 3: Basically, commissioned, yeah. I mean, I'd be surprised. Don't get me wrong. When I said I don't think they're going to give a $1.2 million salary, I'm talking specifically about people that just negotiate price. Well, I don't know for sure. It would surprise me. Speaker 2: Well, that's not what the vendor managers do. The vendor managers, I mean, they're not just doing, the contracts are, like, you know, this says that they're either pretty much automated too. The contracts are just a small piece of a vendor relationship. You know, like Born to Run, all of those things are a much bigger piece. You know, getting new Apex brands in. You know, there's a lot more to it than just the price. Speaker 1: Fair enough. Speaker 4: Yeah. Speaker 1: Now, Robyn, you said you've worked with brands that got threatened by Amazon to have their accounts shut down if they went to 3P? Speaker 2: We've had one or two where they were told that it depends on what their original vendor contract was. So we always tell them to check their original vendor contract. To go through and see. It has happened, I think I had one and then I know of a couple of others that have happened. It's pretty rare though. Most of the clients that we take over 1P to 3P, as long as you're not selling on the same offer, you're not doing anything that would compete with that offer. You're basically taking, is it gonna sound like a cuss word? It's not a cuss word. The crap products can't realize a profit. So if your product on Amazon, Vendor Central is not selling through, they designated a crap product, can't realize a profit. And so they won't stop purchasing those. So if you start with those products first and make sure you're not doing anything to interfere. We also work with a lot of people who are looking to move off Vendor Central completely. It usually, you know, it depends on the product mix of the brand. But there are definitely some cashflow implications in moving from 1P to 3P, a lot of technical and process pieces. So we kind of handle all of that for them. Speaker 1: Yeah. Yeah. To me, I mean, the only brands that should be on 1P, to be honest, are the ones that you mentioned, Robyn, that have products that are oversized or just don't work with the fee structure that Amazon has, or if they're really cheap products, you know, again, because they don't really work with the fee structure that Amazon sets up. But everybody else in between, I think it would be so much better to either hire someone internally to run your 3P account, hire someone externally, go with an agency, something like that. You're just going to be better off running them 3P. Speaker 2: And it also depends on your brick and mortar makeup too. If you're in a lot of brick and mortar for a lot of your SKUs, Amazon doesn't share those buy boxes and you're not going to have to worry about pricing alert and losing the buy box. And so for those brands, there is an incentive for at least their SKUs that are in brick and mortar to also be on 1P. Speaker 1: Oh, yeah, because brick and mortar may be a lot cheaper, right? Speaker 2: Yeah, so Walmart lowers the price, you get a buy box suppression, you know, we have a home and garden one, Lowe's is the worst. They lower prices all the time. Walmart can do the same thing. And then, you know, even with resellers too, you know, if you have a product in brick and mortar and then they sell it on walmart.com, like it's picked up and it can just, it can be a hassle and a lot of whack-a-mole. So it can, for stability and ease, sometimes Vendor Central, and Vendor Central is what they know. And they don't have to deal with placements and IPI and, you know, all of those things that we deal with Seller Central. Speaker 1: Big time. Yeah, I had a product that we sell. It's a it's a soap and We were selling it for, I believe, $6.99, but in store, it sells for $2.99. Obviously, they don't have to pay all the Amazon fees and stuff. There's no way we could sell it for $2.99, but Amazon suppressed the buy box because I believe it was Bass Pro Shops put it up at $2.99 on their website. There's nothing we could do about it. We just had to sell with a suppressed buy box and that was it. A product like that may be better to go vendor central, but at the same time, the profit you're going to make on something like that is so minuscule, it may not be worth it anyways. Speaker 2: We're working with a large brand. We have a large OTC brand that we work with. And they are in a lot of brick and mortar stores. Like you could go to a lot of stores within a mile of you and find this product. And so what we did is we developed Amazon only SKUs. Not pizza. But so we developed like an Amazon only SKU. So basically this medication is at a different size and value so that they can focus on trying to grow revenue on Amazon without having to worry about buy box suppressions. Speaker 1: Yeah, it's definitely something. If you're selling on Vendor Central, you want to look into these things and see what makes sense. If it makes sense to go on 3P for your product, look at it. And if not, you've got one of those products that it doesn't make sense, then stick with 1P. Again, in my opinion, 3P is kind of where it's at, but like you said, Robyn, it's a lot harder, a lot harder. You have to hire someone either internally or externally to handle it for you if you don't know the Amazon ecosystem. Speaker 2: And we have a lot of brands that we help them manage their 1P, but then they use resellers for their 3P too. So getting a great reseller like Todd can really make a big difference. Speaker 3: Yep. Speaker 1: Alright, well let's go ahead and jump on to the next news story here and then we'll wrap it up at the top of the hour. This one I thought was very interesting. So Amazon's new Buy for Me AI feature may change how sellers compete. Amazon is testing a new Buy for Me button powered by a Gentic AI that allows users to purchase products from third-party websites directly within the Amazon app. This feature fills in payment and shipping details on the brand's site using Amazon's Zenova AI, enabling a seamless checkout experience without ever leaving Amazon's ecosystem. While Amazon won't take a cut of these purchases, sellers should note that Amazon is expanding its influence beyond its own platform, potentially reshaping how shoppers interact with non-Amazon listings. This could impact external traffic strategies and competition, especially for brands not selling on Amazon, but now visible to Amazon's user base. Now, before we got started, Daynan, I know you mentioned that you played with this a little bit. So what are your thoughts? Speaker 3: Tiny bit, yeah. So, okay, a couple of things for the brands. Number one is Amazon, if they are bringing traffic to the website, They are encrypting that email and your website does not see any, you can't track any of the results of that traffic. So obviously if you order through the website, they have to have a name and address. So at least you'll get that, but you're going to get an encrypted email just like we do with buyer seller messages today, right? Speaker 1: Okay. Speaker 3: So that's number one. Yep. And so here's here's what I think is Amazon wants to control every facet of every. purchase that happens on the interwebs. That's what they're going for. They want as much market share as they can. So they came out with a program called Buy With Prime. Like, hey, cool, we got a program. And I actually like Buy With Prime. And there's apparently studies that if you use Buy With Prime on your website, you get better conversions on your listings as well. Speaker 1: Every percent higher, it goes up from what I read. Speaker 3: Yes. And so now this is just another effort to control and maintain the customer. So you were saying before we got started, this is a great way to keep them in the Amazon atmosphere. And that's totally true. If they start displaying this stuff and they never leave the Amazon portal, you don't actually go to that website. They're simply grabbing the data from that website and showing it to you in the Amazon app and that's why your website doesn't track everything like it normally would. You're not getting a heat map on where are they clicking, how far are they going down the page, etc. The other thing is that right now it doesn't cost you anything. It's not costing these brands anything for this. So this is in beta right now. But I guarantee you that eventually this is going to be a pay-to-play model. It has to be. They're just vetting it right now. Speaker 1: Something like you pay so much to have your catalog included. Speaker 3: Yeah, well, I think that initially they're going to go just pay us this much of the purchase price. Then it's going to be, cool, you want to be enrolled in this. Okay, that's $50 a month, right? It's just going to be probably going to be the same as what it costs us. And then it's going to be, oh, and then it's 15%. It'll be like, oh yeah, just 3% of the sale. And then what this is eventually going to do, I'm talking much longer down the line here, it's going to drive the prices up on websites because they have to accommodate for Amazon's fees. And because Amazon owns all the traffic, they'll start, then you're going to start paying for sponsored ads to have your stuff placed inside of Amazon search results and so it'll go. And then fees will raise and fees will raise and that's just, you know, this is the wheel of Amazon. Speaker 1: Yeah, I could totally see that for sure. Speaker 3: The flywheel of Amazon, that's right. Speaker 1: Yeah. Speaker 4: I think the part of it, probably the biggest play here is not necessarily the control on everything that happens in e-commerce. I think it's more, this is an extra outlet for the ads to show up. So now they can go to Brands that are mainly omnichannel and say like, hey, do you know that you can keep your stuff, keep your independence on your website, but you can tap the market on Amazon, right? Like, I think that to me is what might be leading this. Obviously, the secondary order consequences of that change will be, okay, Amazon will be in more, more ingrained into the whole, I guess, And we're going to be talking about the process of selling and especially discovering products because at the end of the day, that's what this will help, right? Like imagine having an agent. And to me, I feel that this is one tiny piece of the big thing that's coming in the future, I'm an ultimately personalized assistant that will do a bunch of things for you. I feel that with something like this, I could be, and I don't know how long from today or how far it is, but let's say maybe in a year, I will be able to tell my Amazon agent, like, hey, can you buy tickets to see Maroon 5 in Miami? I don't know, next August, right? And it will go and purchase things for me, right? So it's training the system to get users to get used to being a shopping agent. And that was one of the predictions that I had for 2025. This is the only way that Amazon will, I guess, I don't want to say survive, but ride the wave of the AI. It's becoming an AI, I guess, agent in a way. I guess perplexity and ChatGPT and all of those, they already have their, I guess, content and they're known because they give you the answers for things. The space for Amazon in the AI world will be the AI that will shop for you everything. Now it's brands. Now you can buy shoes and purses and equipment on all their websites. That's cool. In the future, it will be like Todd, what you said. It's like, hey, buy me a ticket to go to Japan and then buy me tickets for concerts or groceries for me, which I guess Amazon already kind of does that with Fresh and Whole Foods, but that is where I believe this is a tiny piece of what the big agent, I don't know, in a year from now will look like. So we'll have the components that Rufus has for Discovery within Amazon. We'll have Buy for Me. It will have other things that we don't know yet, but it's a whole ecosystem and eventually they will name it something. It will be just one program. Speaker 1: Yeah. Definitely. Speaker 2: Yeah. Speaker 3: I like that prediction. Speaker 1: A lot of great insights there for sure. I could totally see it. You know how for the longest time Google kind of became like the gateway to the internet, right? When you wanted to find something, you go to Google. Amazon adding all these things in and with AI, We're very rapidly replacing search engines for any kind of questions that you have. If Amazon can get Rufus to answer all your questions, generate graphics, shop for you, do all of this, now Amazon becomes your gateway to everything on the internet. Speaker 3: Todd, are you saying that we're going to start telling people to Amazon it? Speaker 1: Yeah, definitely. I can tell you for sure. Speaker 3: Nobody's going to say Google it. It's going to be Amazon it. Speaker 4: Yeah. Another cue to that prediction, I saw it when Alexa 2.0 got released. Now Alexa can do these things. So yeah, they are going into that direction, I believe. And ultimately, it opens up a massive, massive, massive, massive opportunity for their advertising arm, which is ultimately the way where they make the most amount of money in the marketplace, right? Speaker 3: I wonder what voice advertising is going to be like. Like, hey, Alexa, I need a bicycle. Oh, cool. Well, this bicycle is blah, blah, blah, blah, blah, blah, sponsored by blah, blah, blah. Like, oh, yeah, that sounds good. I'll do that. Like, awesome. Speaker 1: Yeah. Yeah. Voice advertising and stuff like that is going to be difficult. That's going to be one area that's going to be hard to do it, unless with products. You know, if you're a sponsored product, You're going to show up higher in the results, but at the same time, with the FCC rules, they have to disclose that it's an advertisement in some way, right? Speaker 3: Right, because the same question applies to Rufus. If you're asking Rufus for suggestions on a product and it's a sponsored product, technically, Rufus doesn't have to disclose anything. It tells you in there if this is a sponsored result? I think it has to. Speaker 1: The rules say that you have to specify if it's an ad. Speaker 3: Yes, but let's take into account that there's also a non-sponsored listing of that product. So then that means that the response is based not necessarily on what you're asking for, but based on who's paying for it to talk about your product. Speaker 1: Sounds like a lawsuit to me. Speaker 3: Yeah. Speaker 4: I don't think it works like that. Speaker 2: One thing that's interesting, I know you said that a lot of search is happening in AI. I was in SMX Munich. Brianne Fishkin, who's lovely and amazing, he did a great keynote about SEO and the changes that have been happening in SEO. And people are like, oh, well, so many searches are going through ChatGPT. And I just wanted to make sure I had the picture of it, and I do. Google gets about 14 billion searches a day, where ChatGPT right now is 37.5 million. So it's actually a smaller percentage of what Bing and Yahoo, even DuckDuckGo get significantly more searches than ChatGPT does. So, you know, right. What his point was is that you can't just, that there's still a lot of wiggle room left in where searches are going to actually end up happening. Speaker 3: But it is changing. Speaker 4: Yeah, well, I mean, think about it. ChatGPT didn't exist or it wasn't massively adopted. Maybe two years ago? Like, who knew two years ago what ChatGPT was? Nobody. And now we have 300 million. And also, that is just one company. What about Perplexity? What about Claude? What about Gemini? What about Grog? Like, they're so deep, deep sick. There are so many different models and queries are going through those models. So I believe it is gonna replace it at one point. And you know, this is to me, And I'm also in this deep thinking process. It's like, we are so used to go to the surface level of, is it Google search or is it AI search? And the reality is that those things live together. The same way when we had, you know, like desktop computers and the laptop came out, right? There's people still that have desktop computers and we have laptops. Like, what's the biggest market? Well, I think the laptop market is bigger. Same thing with the phone, right? Like, now we have, it was a desktop, then the laptop, now the pocket in the phone. Will the phone replace completely the laptop? No, not really. Replace part of it? Yes. So, you know, those things are like, it will become, I only think it will only become bigger They I and I don't believe necessarily that that traditional search will become bigger. May stay where it is at, may decline. I don't know if that is the growth. So what Google have seen historically of hyper growth every year and like amount of users, amount of search, amount of things, I don't think that will happen unless they push Gemini or something out. So that is the thing. Those things coexist and the point And the thing is, normally, the younger generations are the ones that adopt those new technologies faster. And eventually, those younger generations will have the money to buy stuff. So you want to be where your market is at. That's what I think. Speaker 1: Regardless, AI is definitely the future. And I'll just wrap it up and say, you know, when I'm I find myself increasingly, even if I'm searching on Google or some other search engine, if the AI summary thing doesn't show up at the top, then I'm jumping over to Grok or ChatGPT and typing it in there so I don't have to scroll through the results to try to find what I'm looking for. Speaker 2: Yeah. Speaker 3: Just speaking about Gemini, I think that Google is rolling their stuff out a little bit slower, but unquestionably, they have the greatest We've got a long history of data to train an AI on, on search and what the behavior is and where people found their answers. So out of anybody, out of any corporation on this planet, they've got the greatest amount of data to pull from and it's already stored. I guarantee you they have that all. So I think that Gemini is going to make leaps and bounds. Speaker 2: You want to see something interesting on data from Google and Chrome and how it might be aggregating your, using your computer to help build that database. Cindy Crum from Mobile Moxie has a great thing. She was doing it last year about Google using Chrome to index and basically using your computer and your rendering. So it was really, really interesting. Speaker 3: Maybe that's why Chrome takes so many damn resources on my computer. Speaker 1: Lots of memory. It's crazy. All right, well, we're over the top of the hour, so let's go ahead and wrap it up there and we can all get back to work here. But Robyn, Dayna, and Vanessa, I appreciate you guys joining me on the show. And everybody out there watching, every Friday we do this, 1 p.m. Eastern, so join us next week and I appreciate you being here. So until next time, happy selling, everybody. Speaker 3: Bye everyone. Speaker 1: Have an awesome one. Unknown Speaker: This has been another episode of the Amazon Seller School podcast. Thanks for listening fellow Amazon seller and always remember success is yours if you take it. Speaker 1: Hey, if you made it this far in the show, I really hope you enjoyed it and I'd like to ask you a favor. Could you head on over to Apple or Spotify or wherever you're listening to this and leave us a review? It would be greatly appreciated and would help us continue to grow the show and offer more episodes for you. Thank you. God bless and have an awesome day.