Amazon Launchpad vs. Amazon AcceleratorMay 20, 2021 in Blog
As with all things Amazon, these two programs designed to help startups and private label brands grow on the biggest ecommerce marketplace are not exactly borne out of Amazon’s kindness to third-party sellers.
This article will show you what these two programs are all about, their perks and drawbacks, and why Amazon probably gets more out of them than you.
Related Listening: E344: 7 Hacks for New and Experienced Amazon Sellers
- What is Amazon Launchpad?
- Who can sign up for Amazon Launchpad?
- What are the pros and cons of Amazon Launchpad?
- What is Amazon Accelerator?
- Who can sign up for Amazon Accelerator?
- What are the pros and cons of Amazon Accelerator?
- Should I enroll in Amazon Launchpad or Accelerator?
- Final Thoughts
Bird’s Eye View: Amazon Launchpad vs. Amazon Accelerator
Before we dive into each of these programs, here’s a high-level comparison of Amazon Launchpad and Amazon Accelerator:
|Amazon Launchpad||Amazon Accelerator|
|Intended for||Startups with innovative and marketable products||Private label brands and manufacturers willing to sell exclusively on Amazon|
|Additional exposure||Launchpad has its own dedicated marketplace within Amazon||No dedicated page, but Amazon may display your products prominently on the Our Brands section|
|Cost to sellers||5% premium added to referral fees (can be reduced to 3% if you exceed $1M in sales in your first 12 months)||7% premium on the Referral Fees described on the Selling on Amazon Fee Schedule|
|Control||You retain brand control. Your products will be under your brand name, but you will lose all benefits once you opt out.||Amazon practically takes over supply chain and operation, almost to the point that you are a nameless franchisee|
|Brand gating||Yes. Amazon will prevent unauthorized sellers from selling the same products||No|
What is Amazon Launchpad?
Launchpad is a supplemental program aimed at startups or brands selling innovative, giftable, and even obscure products that have great market potential. It has been merged with Amazon Exclusives, which you might also recognize as Amazon Brand Incubator.
On paper, it promises growth on the marketplace through an Amazon-tailored marketing package and brand protection benefits. For a lot of existing sellers, however, especially large and established ones, it’s preferential treatment by Amazon of the competition.
Another example of how it gives brands a leg up on competitors are the waived lightning deal fees and ‘relaxed’ criteria. Third-party sellers usually need at least 5 seller feedback per month, which is nigh impossible for new products. This criteria is relaxed for brands enrolled under the program.
Who May Enroll for Amazon Launchpad?
Since it’s tailored to startups, the basic eligibility criteria include:
- Brand must be in operation for less than 4 years
- Must have sold less than 5M in the past year
- Average a 3.5 stars
- At least 5 reviews
- Enrolled in FBA with Prime Badging
Something Amazon does not really tell you is that it has its biases with who it lets into the program. According to most sellers, Amazon prefers brands who are already working with crowdfunding sites or venture capitals that already have a working relationship with Amazon—Kickstarter and Indiegogo spring to mind.
What are the Pros and Cons of Amazon Launchpad?
Launchpad is all about product and brand exposure, but it will cost you. Check out its advantages and disadvantages below:
Amazon Launchpad Pros
- Marketplace within a marketplace. You get additional placements on Amazon and on the dedicated Launchpad page. This separates your products from knock-offs or low-quality competition.
- Premium A+ Content. A+ Content or EBC on your Launchpad listing is much larger than basic A+ Content (51% larger, according to Amazon). It also has more space to write, insert a video, and play around with the comparisons section.
- Brand gating. Amazon restricts unauthorized sellers from selling the same product and bad actors won’t be able to jump on your listings and drive your ratings down. (There is no brand gating for Amazon Accelerator)
- Free lightning deal weekly. Amazon will waive the regular fees and criteria for lightning deals once every week.
- Marketing, onboarding, and support package. Your products will be promoted by Amazon through social media and email campaigns and you will have access to an Amazon account manager.
- Customer reviews. Both Launchpad and Accelerator provide you free access to Amazon Vine to boost your product rankings with early customer reviews.
Amazon Launchpad Cons
- 5% premium. The 5% premium is on top of all standard fees and it applies to ALL Amazon sales made under your account.
- 12-month minimum commitment. You will be locked into the program for a minimum of 12 months. That’s 12 months paying 5% premium on all sales, whether it works out for you or not. Amazon will let you opt out of the program following a 30-day notice after the minimum period is up.
- Amazon’s preferences. Even if you do meet the eligibility requirements. Amazon will prefer brands who are working with venture capitals or crowdfunding sites that already have relationships with Amazon.
- Initial shipment to Amazon. According to some sellers, Amazon will require an initial product shipment at your expense so they can evaluate your product. If they find out it’s not very marketable, you’ll take a loss on that initial shipment.
- No support for manufacturing and production. Something most startups need is infrastructure to actually produce their products. Amazon is silent on any production side benefit under Launchpad.
As shown above, the biggest perks to launchpad include its Premium A+ content, additional placement, and support from Amazon, which includes access to an Amazon account manager.
The biggest thing you want to take into consideration is the 5% premium that applies to ALL sales on Amazon under your account (Amazon will lower this to 3% if you break $1M in sales in your first year).
Also make sure that the 1-year lock-in period and works with your own goals before you sign up to Amazon Launchpad.
What is Amazon Accelerator?
Moving on to the other (and possibly the worse one, if I may add) Amazon program in this article.
We know all too well that Amazon is both a marketplace AND a seller.
Amazon itself sells products off hundreds of its own private label brands, and it looks like it wants to expand with more brands and into more categories.
Think of Amazon Accelerator as Amazon’s way of bypassing the research and development phase of an ecommerce business. Instead, it props up potentially profitable private label brands, has them sell exclusively on Amazon, and eventually acquires the ‘best-of-the-best’ brands.
As with Launchpad, the Accelerator program gives some kind of unfair advantage to those who take part over other existing sellers. And since Amazon could end up owning the brands anyway, it sounds like a way for the e-tail giant to squeeze a lot of independent sellers off the platform (Are you as unsurprised as I am?).
Who can sign up for Amazon Accelerator?
Unlike Launchpad, which is tailored to startups, Accelerator is best for established brands that could look good as part of Amazon’s growing portfolio.
Some of the things Amazon will look at:
- If Amazon projects that you can hit $1M in annual sales
- That you commit 5% of revenue to paid advertising on Amazon
- Maintain healthy inventory levels
- Adopt FBA, although Amazon allows you to use merchant-fulfilled models when inventory runs dry
What are the Pros and Cons of Amazon Accelerator?
Short-term benefits, long-term drawbacks. That’s the Accelerator program in a nutshell. Here are its main benefits and the pitfalls you should watch out for:
Amazon Accelerator Pros
- You get displayed more prominently. Accelerator does not have the curated marketplace that Launchpad has, but it does feature enrolled brands on Amazon’s Our Brands page.
- Reduced risk and more room to experiment. Since Amazon practically manages your business for you, you have more leeway to experiment with product variations and listings without driving your business into the ground.
- Marketing and support package. Similar to the marketing package under Launchpad. You get access to tools, analytics, and Amazon’s support team.
- Fewer logistical headaches. Amazon will take over management of your supply chain (which is a con, if you think about it), so you have less worries when it comes to shipments and inventory management.
- Customer reviews. Both Launchpad and Accelerator provide you free access to Amazon Vine to give your brand a leg up in terms of customer feedback.
- Office space. Amazon will apparently give you free access to their office spaces in Seattle.
Amazon Accelerator Cons
- You can kiss control over your brand goodbye. Accelerator functions more like a franchise to sell exclusively on and for Amazon rather than, well, an accelerator. Amazon will take control over your brand operations. Enrolled brands are given strict production timelines and will have to cede control over things like packaging to Amazon.
- No brand gating. Unlike with Launchpad, Amazon will not gate your product under Accelerator. Combine that with Amazon setting their own prices and always trying to win the Buy Box, you might as well kiss control over pricing goodbye, too.
- Selling on Amazon exclusively. In exchange for all the tools and support from Amazon, you will be limited to selling your products on Amazon ONLY. Forget about expanding to places like Walmart or eBay or even setting up your own ecommerce store (unless you’re selling a totally different product under a different brand). This also makes it hard to diversify your revenue, since you cannot work with distributors and retailers not named Amazon.
- The dreaded purchase clause. According to some sellers, your contract with Amazon will contain a purchase clause that gives them the right to purchase the brand, interest, and goodwill, usually for a measly amount. This is a deal-breaker for most people.
- No access to customer data. Sellers also report that Amazon won’t actually give you the customer data in case you part ways with your brand and start anew on a different platform with different products. The customers are Amazon’s, not yours.
- You’re at the mercy of Amazon. Amazon has the right to kick you out of the program if it’s not working out for them. And if it does work out, they have the right to buy you out. So it’s a win-win—for Amazon.
From above, the biggest pro is the ability to experiment with various products and listing compositions without the risks that usually come with them. Also, since Amazon is very hands-on when you do sign up, you’ll benefit from the juggernaut’s fast shipping and streamlined inventory management.
Other benefits include the marketing package, support system, and additional placements, which makes it far easier to grow a customer base on Amazon.
As for the downsides, you’re basically making products for Amazon in exchange for whatever short-term incentives you get. For a lot of sellers who were part of the program or at least looked into it at one point, it makes little sense to grow a brand only to give it up to Amazon for an unfair price. Keep this in mind when signing up to Accelerator.
Would you sell your business for $10,000?
In a 2019 report, The Wall Street Journal revealed the biggest ‘gotcha’ to Amazon Accelerator. Contracts between qualified merchants and Amazon apparently contain a clause that gives Amazon the right to purchase the right, title, and interest in your entire business at any time with a 60-day notice. The price? “Usually $10,000.” A measly ten thousand dollars. Yikes.
Also under the contract, you actually remain Amazon’s exclusive supplier for 2 years, after which Amazon can source products elsewhere. In other words, you can at least keep the patents, tweak the product, and sell new versions outside of Amazon, but they must not be under the same brand you enrolled in Accelerator.
Sounds like a total Faustian bargain, except you don’t get nearly as much as you would expect.
Should I Join Amazon Launchpad or Amazon Accelerator?
The two programs cater to different kinds of brands.
If you’re in the heat of product development or are looking to jumpstart your innovative product, Amazon Launchpad makes sense. But you’ll have to consider your long-term goals, what with the 5% premium and the 1-year commitment.
If you’re a private label brand or manufacturer (perhaps from China) whose focus is on production, Amazon Accelerator sounds like a nice way to partner up with Amazon. It also helps a lot if you’re already a best seller or at least have a good sales record in your category.
On the flip side, if you’re trying to grow a brand and establish a customer base on Amazon, the value exchange here tilts heavily to Amazon, and you might end up signing over your brand for much less than it’s worth.
Both the Launchpad and Accelerator programs provide short-term benefits to third-party sellers, but both have downsides in the long run that could materially change your business.
You can easily take advantage of all the benefits under these programs, but trust that Amazon will not be there when the chips are down. If you can grind it out yourself until you hit that coveted flywheel, while maintaining control over your business until you actually decide to sell on your terms, that’s a great way to go, too.
What do you think of Amazon’s Launchpad and Accelerator programs? Leave a comment below.
Justeen has years of experience in writing about technology and consumer electronics. When he’s not helping you navigate the intricate world of e-commerce, he’s busy geeking out over Tolkien’s legendarium.