A major challenge for many Amazon Vendors is the Out of Stock (OOS) situation caused by orders not being triggered by Amazon.
Unlike Sellers (FBA), Vendors have limited influence on the inventory situation at Amazon.
To be able to sell products on Amazon, orders in the Vendor Program must be initiated by Amazon itself. Amazon's ordering algorithm looks at the forecast for the coming weeks as the biggest factor in deciding on orders. This is based on historical sales data.
This becomes problematic for product launches, where Amazon has no historical data to rely on. Here, the product launch on Amazon can be delayed if Amazon does not pre-order the new products. To avoid this and other problems related to orders, Amazon has launched the Born to Run program in Vendor Central.
The Most Important Things About the B2R Program at a Glance:
Launching a product and improving its position in Amazon's ranking system is a challenge for many vendors. When historical sales are still low, Amazon must first be convinced to purchase more inventory.
There is a risk that Amazon will not order the product, or only in very small quantities, meaning the product is not sufficiently in stock. This can result in vendors of new products not getting the Buy Box, preventing them from launching initial campaigns and marketing strategies.
Already established products continuously drop in Amazon's ranking and thus appear in fewer and fewer search queries. As a result, no sales can be generated to trigger a new order from Amazon.
To break this vicious cycle, Amazon gives Vendors the opportunity to trigger a B2R order to independently submit a proposal for an order to Amazon. With a maximum budget of $50,000, Amazon purchases inventory of a product.
Amazon's B2R program requires suppliers in return to invest 10 percent of the purchase value in advertising on AMS, so that the products are sold as quickly as possible.
Requirements for Vendors:
The following requirements and options must be observed when handling B2R orders:
Units that do not sell within 10 weeks are subject to return or retention fees.
This 70-day "Sell-Through period" begins 20 days after the submission date of your Born-To-Run order to account for shipping lead time. You can then choose from two options:
- Amazon returns the unsold units to you plus standard shipping and handling fees and refunds 100% of the product costs.
or:
- Amazon retains unsold units, and you pay a "Retention Fee" of 25% of the purchase price of the unsold products.
Please note that Amazon's standard terms for returning defective or damaged goods continue to apply.
It is also important to note that unsold inventory after the 10-week sell-through period is processed based on the preference you selected when registering for the Born to Run program. This means it is not possible to accelerate sales of unsold inventory through deals.
Ideally, new orders will be triggered by Amazon's automated ordering system before the sell-through period expires. The Born-To-Run program therefore primarily serves as a launch aid for products.
Access to the Born to Run Program:
Amazon's B2R program is an invitation-based program and places certain operational and economic requirements on the vendor. This allows Amazon to ensure optimal vendor experience and results.
During the registration process, you only need to indicate your preference regarding the return of unsold goods. Your existing contract with Amazon will then be supplemented with your information. This only affects the ASINs registered for B2R and only at the Purchase Order (PO) level.
If you have opted for the 25% retention fee, a separate "Straight Payment" Agreement will be attached, which you must confirm. The retention fee of 25% of the cost of all unsold goods will be offset in the subsequent payment to you.
Setting Up a B2R Order:
The order can be submitted in the Vendor Central account under > Orders > Vendor Initiated Orders > Born to Run. Amazon will then review the order and can accept or reject it.
Primarily, Amazon checks the profitability of the specified order, but other factors also fall into the decision. Among other things, the Amazon Advertising account should have been actively used for at least 90 days and the product must not be restricted or hazardous goods.
Conclusion:
Amazon's Born-to-Run program is perfect for product launches or for products where manufacturers and brands are confident they will sell particularly well and exceed Amazon's forecast quantities. For example, with highly seasonal products or increased marketing activities.
This guarantees a fast and secure product launch and can lead to increased sales for existing products. If initiating orders actually results in more sales on Amazon, the algorithm becomes active and subsequently triggers more orders – outside of the Born to Run program. The program can help ensure that high-selling products are always in stock and optimize your Out of Stock (OOS) rates.