- Upload their manufacturing costs (COGS - Cost of Goods Sold) to Seller Central.
- Or, Amazon will estimate the manufacturing cost based on similar products.
Starting in March of 2025, the policy update will pose a hefty threat for sellers’ and brands’ ali ability to control their profitability. Additionally, Amazon's dual role as a retailer and platform operator raises questions about fair competition, especially with access to 3P sellers financial data.
To streamline the upload process of manufacturing costs, Amazon is partnering with Intuit, integrating QuickBooks directly into Seller Central. This enables Amazon to access detailed financial data from sellers, likely allowing Amazon to calculate COGS for 3P sellers more accurately.
Implications for Vendors (1P Sellers)
Vendors (1P sellers), don’t breathe too big a sigh of relief. You’re not completely exempt. Amazon’s visibility into 3P COGS could influence how Vendor Managers interact with 1P sellers. Code3 SEO Strategists are anticipating Vendors will soon enough feel increased pressure and negotiations from Vendor Managers to lower cost prices or offer margin concessions if 3P manufacturing costs appear lower.
Sellers must ensure they can explain and defend their pricing structures, potentially leveraging their own manufacturing cost data. Proactive communication with Vendor Managers and clear cost breakdowns may help mitigate pressure.
Recommendations for Sellers
Although this announcement was just made, it’s not too early to begin thinking about how to move forward. Code3 SEO Strategists recommend:
- Be Prepared to Justify Costs: Gather detailed data on your COGS to anticipate and counter cost-reduction pressures.
- 1P Sellers: Monitor Vendor Manager Requests: Document interactions and push back if demands seem excessive or unsupported.
- Leverage Relationships: Use established trust and performance metrics to negotiate on factors beyond COGS, like exclusivity or promotional support.
- Consider Advocacy: Engage with trade associations or legal counsel if you suspect unfair practices or antitrust violations.
This policy shift underscores Amazon's strategic focus on cost control and profitability, making it crucial for sellers to align their operations and strategies accordingly. We anticipate this conversation is only just getting started, and we’ll be hearing more about this update to come.