The Future of Amazon Vendor Central: What Brands Need to Know in 2026

In November 2024, thousands of brands opened their email to find a 60-day termination notice from Amazon Vendor Central. No warning. No appeal process. Just a deadline to transition off wholesale or lose access to the platform entirely.

This wasn't the first time Amazon had cut vendors loose. A similar wave hit in 2019, when Amazon stopped sending purchase orders to smaller wholesale accounts. But the 2024 purge was different. It was surgical. Amazon didn't just freeze POs on a random Monday and leave brands guessing. They drew a line: if your vendor account did less than roughly $5 million in annual revenue, you were out.

The brands that got terminated scrambled to transition to Seller Central. The brands that didn't get cut started asking a harder question: should we wait for Amazon to decide for us, or should we take control now?

That's the question this guide answers. Vendor Central isn't going away, but it's not what it was in 2019, or even 2023. Amazon has tightened the criteria for who gets to stay, raised the cost of participation, and made profitability harder to maintain. If you're still on Vendor Central in 2026, you need to know what's changed, what's coming, and whether staying makes financial sense.

What Is Amazon Vendor Central (and How Has It Changed)?

Vendor Central is Amazon's first-party (1P) wholesale program. Instead of selling directly to customers on Amazon (like you would on Seller Central), you sell inventory to Amazon. Amazon buys your products, warehouses them, prices them, sells them, and handles customer service. You're the supplier. Amazon is the retailer.

For years, this model was the default for established brands. It meant less operational headache, access to programs like Subscribe & Save, and the credibility of "Ships from and sold by Amazon.com." But it also meant giving up pricing control, absorbing chargebacks for compliance errors, and accepting whatever terms Amazon handed you during annual vendor negotiations (AVN).

The Timeline of Major Vendor Central Shifts

Here's what happened between 2019 and today:

2019: Amazon froze purchase orders to thousands of smaller vendors with no advance notice. The move was widely interpreted as Amazon testing how many brands would tolerate being pushed off wholesale. Most transitioned to Seller Central because they had no other option.

2020–2022: Amazon raised the stakes. Annual vendor negotiations got more aggressive. Co-op allowances increased. Damage claims multiplied. Amazon introduced Supply Chain by Amazon (a logistics play to keep 3P sellers dependent on Amazon's infrastructure). FBA fees started climbing annually. Buy with Prime launched, signaling Amazon's intent to extend its logistics reach beyond its own marketplace.

2023–2024: Amazon restructured FBA fees to include low-inventory-level (LIL) fees, inbound placement fees, and return processing fees. Compliance enforcement tightened. In November 2024, the second major vendor purge hit. Hundreds of accounts terminated, most under the $5 million revenue threshold.

2025–2026: The annual vendor negotiation cycle (AVN) became the most aggressive on record. Amazon demanded 2–5% more in allowances year-over-year. Inbound compliance shifted to zero-tolerance: labeling errors, packaging mistakes, and missed appointment windows now trigger immediate chargebacks. FNSKU-level low-inventory-level fees (previously 3P-only) now apply to vendor shipments. Purchase orders became smaller and less predictable. Tariff pressure from U.S. trade policy changes compounded margin erosion for vendors importing goods.

By March 2026, the industry consensus is clear: Amazon wants fewer vendors, and the vendors who stay need to be strategically valuable and operationally airtight.

Is Amazon Phasing Out Vendor Central?

No. But they're shrinking it.

Amazon Retail (1P) still serves critical functions. Certain product categories need Amazon as the seller of record for compliance, regulatory, or consumer trust reasons. Large brands with high-velocity SKUs remain valuable to Amazon's retail P&L. Amazon isn't walking away from wholesale entirely.

But Amazon's long-term strategic direction is clear: they want to be a platform operator taking referral fees, not a retailer buying and reselling inventory. The number of brands Amazon wants on Vendor Central is shrinking, and the bar for staying is rising.

What the 2024 Vendor Terminations Actually Meant

The 2024 purge wasn't a glitch. It was strategy. Amazon looked at their vendor base, identified accounts that didn't meet their revenue threshold, and cut them. The brands below roughly $5 million in annual vendor revenue were no longer worth the operational overhead.

Here's what that signals:

If you're a mid-market brand doing $3–8 million on Vendor Central, you're in the zone where Amazon could decide you're not strategically important. Even if you haven't been terminated yet, your PO volume might be declining, your AVN terms might be getting worse, and Amazon might be slowly starving you out instead of cutting you cleanly.

If you're a large brand doing $20 million or more, you're probably safe from termination. But that doesn't mean you're safe from margin erosion. Amazon is squeezing profitability on both ends: higher allowances on the way in, lower sell-through support on the way out.

Why Amazon Still Needs Vendors (but Fewer of Them)

Amazon will always need some brands on Vendor Central. High-volume items that move fast and fit Amazon's retail pricing strategy are still valuable. Products that require Amazon to be the seller of record (for regulatory or consumer trust reasons) won't go away. And Amazon's retail division still generates real revenue.

But the cost-benefit math has shifted. Amazon makes more money taking a 15% referral fee on a third-party sale than they do buying inventory, warehousing it, pricing it, and managing returns. The brands Amazon keeps on Vendor Central are the ones where the wholesale model still makes sense for Amazon, not just for the brand.

Five Changes Vendors Must Prepare for in 2026

If you're still on Vendor Central, these are the operational realities you're dealing with right now.

1. Tighter Annual Vendor Negotiations (AVN)

AVN has always been a negotiation, but 2025 and 2026 marked a turning point. Amazon is demanding higher co-op contributions, increased allowances, and more aggressive damage claim markups. Brands report 2–5% year-over-year increases in what Amazon expects them to pay to stay on the platform.

If you don't track your true cost-to-serve, you won't realize you're losing money until it's too late. The brands that win AVN are the ones who know their ASIN-level margins cold and can draw a hard line on unprofitable terms.

2. Zero-Tolerance Inbound Compliance

Labeling errors used to get a warning. Packaging mistakes used to get flagged for next time. Missed appointment windows used to be negotiable.

Not anymore.

In 2026, inbound compliance is zero-tolerance. If your shipment arrives with the wrong label format, Amazon charges you immediately. If you miss your delivery appointment window, you eat the cost. If your packaging doesn't meet Amazon's latest standards, you get hit with a chargeback before you even know what went wrong.

This isn't theoretical. Brands across the vendor community are reporting immediate compliance chargebacks that weren't part of their cost model six months ago.

3. FNSKU-Level Low-Inventory Fees

Low-inventory-level (LIL) fees used to be a Seller Central problem. If you ran out of stock on FBA, Amazon charged you a fee to encourage consistent inventory levels.

Now, Amazon is applying the same logic to Vendor Central at the FNSKU level. If you don't maintain consistent stock on individual SKUs, you get penalized. This makes demand forecasting harder, because Amazon's purchase order cadence has become less predictable at the same time they're punishing you for running low.

4. PO Volatility and Forecasting Challenges

Vendors used to receive predictable purchase orders. You could forecast demand, plan production, and manage cash flow based on Amazon's buying patterns.

That's gone.

In 2026, purchase orders are smaller, more frequent, and less predictable. Amazon is optimizing their own inventory efficiency, which means vendors absorb more forecasting risk. If you're relying on Amazon's PO rhythm to plan your supply chain, you're going to get caught short.

5. Tariff and Sourcing Pressure on Margins

U.S. tariff policy changes in 2025 and 2026 added import cost pressure that Amazon does not absorb for vendors. If your cost of goods increases because of tariffs, Amazon expects you to eat it. They're not raising the price they pay you. They're not adjusting your terms. You're on your own.

For vendors importing goods, this compounds the margin erosion from AVN, compliance chargebacks, and LIL fees. Every new cost layer squeezes profitability further.

Vendor Central vs. Seller Central: The Hybrid Model

The default strategy for mid-to-large brands in 2026 is not "Vendor Central or Seller Central." It's both.

Running a hybrid model means keeping your high-velocity, strategically important SKUs on Vendor Central (especially Subscribe & Save items, pantry staples, or products where Amazon's retail credibility matters), while running long-tail, seasonal, or lower-margin SKUs through Seller Central (FBA).

This gives you the benefits of 1P (Amazon as the seller, access to certain programs, less operational headache on high-volume items) without locking your entire catalog into a wholesale model where Amazon controls pricing and you absorb every margin squeeze.

When 1P Still Makes Sense

Vendor Central is worth keeping if:

• You have high-volume SKUs that move fast and fit Amazon's retail pricing model
• You're enrolled in Subscribe & Save and that subscription revenue is material
• Amazon being the seller of record matters for regulatory, compliance, or consumer trust reasons
• You have a strong AVN negotiation position and your ASIN-level margins still make sense after allowances, chargebacks, and fees
• You don't want to manage FBA logistics, customer service, or pricing on your highest-volume items

When 3P Is the Better Play

Seller Central (FBA) is the right channel if:

• You want pricing control (Amazon can't reprice you arbitrarily on 3P the way they can on 1P)
• Your margins are too thin to absorb vendor chargebacks and allowances
• You're launching new products and want to test pricing without Amazon's automated repricing
• You sell seasonal or long-tail SKUs where Amazon's PO rhythm doesn't match demand
• You want to avoid the AVN negotiation cycle entirely

Running Both: What a Hybrid Strategy Looks Like

A hybrid model in practice:

70% of your revenue comes from Vendor Central (high-volume items, Subscribe & Save, core SKUs where Amazon's retail presence matters). 30% of your revenue comes from Seller Central (new launches, seasonal products, long-tail SKUs, and anything where you need pricing control).

If Amazon reduces PO volume on your 1P side, you have the 3P infrastructure already in place to absorb the shift. If a SKU becomes unprofitable on Vendor Central, you can migrate it to Seller Central without losing the listing entirely.

This is the default playbook for brands doing $10 million or more on Amazon. If you're not running hybrid yet, you're leaving margin on the table.

How to Protect Vendor Profitability in 2026

The brands that stay on Vendor Central and stay profitable are the ones who treat it like a margin management problem, not a channel default.

Know Your True Cost-to-Serve

Most vendors don't know their ASIN-level profitability. They know their overall vendor revenue, but they don't know which individual products are making money and which ones are losing money after allowances, chargebacks, and fees.

If you can't answer "Is this ASIN profitable after all vendor costs?" for every SKU, you don't have enough visibility to make smart decisions about what to keep on 1P vs. move to 3P.

ASIN-Level Margin Analysis

Run the math on every SKU:

• Selling price to Amazon (your invoice price)
• Minus: Co-op allowances, damage claims, compliance chargebacks, LIL fees, freight costs, tariffs
• Equals: True margin per ASIN

If the margin is below your threshold, that SKU doesn't belong on Vendor Central. Move it to Seller Central, negotiate better terms, or stop selling it on Amazon entirely. For brands that need help running this analysis across their full catalog, inventory management strategies at the ASIN level are the starting point.

Pricing Strategy to Prevent Erosion

On Vendor Central, Amazon controls the retail price. But you control the wholesale price you charge Amazon. If Amazon is compressing retail prices to win the Buy Box on your products, and you're not adjusting your wholesale price to protect margin, you're subsidizing Amazon's pricing strategy with your own profitability.

The brands that protect margin on 1P are the ones who know exactly where their floor is and hold the line during AVN.

What This Means for Your Amazon Strategy

Your playbook depends on where you sit in Amazon's vendor hierarchy.

Brands Under $5M in Revenue

If you're below the $5 million threshold and you're still on Vendor Central, you're in the termination zone. Amazon has already demonstrated they're willing to cut accounts at this level. You should be preparing your 3P transition now, not waiting for the termination email.

That doesn't mean you have to leave Vendor Central voluntarily. But it does mean you need a backup plan that's more than "hope Amazon keeps sending POs."

Brands Over $5M: Don't Get Comfortable

Being above the termination threshold doesn't mean you're safe from margin erosion. Amazon is squeezing profitability across the board. If your ASIN-level margins are declining year-over-year and you're not tracking cost-to-serve, you're losing money even if the revenue looks fine.

Run the profitability analysis. Know which SKUs should stay on 1P and which should move to 3P. Don't wait until AVN forces the decision.

How an Agency Partner Helps You Navigate the Shift

Transitioning from Vendor Central to Seller Central, running a hybrid model, or optimizing your 1P profitability is not a one-time project. It's ongoing margin management, compliance tracking, and strategic SKU placement.

SupplyKick works with brands on both sides of the 1P/3P divide. We buy inventory as a wholesale partner for brands that want to stay on Vendor Central with better margin protection. We manage FBA accounts for brands transitioning to 3P. And we run hybrid strategies for brands that need both channels working together.

FAQ: Amazon Vendor Central in 2026

Conclusion

Vendor Central isn't dead. But the brands that treat it as a guaranteed channel are the ones getting squeezed. Amazon raised the bar in 2024, tightened compliance in 2025, and made profitability harder to protect in 2026. The brands that survive are the ones who run the numbers, know their ASIN-level margins, and make strategic decisions about what belongs on 1P vs. 3P.

If you're still on Vendor Central, now is the time to evaluate whether staying makes sense. If you're below the $5 million threshold, you should be preparing your 3P transition. If you're above it, you should be running the profitability analysis and building your hybrid model.

SupplyKick helps brands navigate this shift, whether that means optimizing your 1P profitability, transitioning to 3P, or running both channels in parallel. Connect with our team and figure out what makes sense for your brand in 2026.