Navigating the world of Amazon fulfilment options can be a complex task, especially when it comes to choosing between Vendor Central and Seller Central. The key distinction between these two lies in who is selling your products. Opting for Vendor Central implies that Amazon purchases your products and resells them to their customers. On the other hand, choosing Seller Central means you are selling your products directly to customers via the Amazon marketplace.
This article aims to provide a comprehensive understanding of each option, outlining their respective advantages and disadvantages. Our goal is to equip you with the necessary knowledge to make an informed decision that aligns with your company’s objectives.
Amazon Seller Central serves as a platform for merchants to market and sell their products directly to Amazon’s vast customer base. As a third-party Amazon seller (3P), you are responsible for setting up and maintaining your seller account.
Amazon provides two types of seller accounts: individual and professional. While professional seller accounts require a monthly subscription, they offer a range of features such as analytics tools and preferential marketing treatment, making them the preferred choice for most businesses looking to scale.
As a third-party Amazon seller, you have two options for fulfilling orders received through the Amazon marketplace. You can either handle shipping, customer service, and returns yourself or through a third-party logistics provider (3PL) of your choice, a program known as Amazon Fulfilled by Merchant (FBM). Alternatively, you can let Amazon handle this process by enrolling in the Fulfilled by Amazon (FBA) program. If you choose FBA, your company name will be added to the order page, and customers will see “sold by [Your Brand] and Fulfilled by Amazon” when they purchase your products. The popularity of FBA sellers continues to grow, leading to an increasing demand to buy FBA businesses.
Amazon Seller Central offers various services, including:
Amazon Vendor Central is a platform primarily used by direct manufacturers and distributors. As a first-party seller on Vendor Central, you act as a supplier, selling your products in bulk directly to Amazon. It’s important to note that registration on Vendor Central is by invitation only. Often, sellers start with Seller Central and generate demand for their products, enticing Amazon to buy their product in bulk through the Vendor Central program, similar to other e-commerce or brick-and-mortar retail channels (i.e., Walmart, Target, Best Buy). When a company sells through Vendor Central, the phrase “ships from and sold by Amazon” appears on the order page.
Here are some key benefits of Amazon Vendor Central:
Amazon Vendor Central offers several benefits that can enhance your business operations and customer experience.
Boosted Consumer Confidence
As a first-party seller on Vendor Central, your products carry the Amazon name, instilling confidence in customers. The Amazon brand recognition can assure customers about the quality and reliability of your products.
Enhanced Advertising Opportunities
Vendor Central provides access to Amazon Marketing Services (AMS), a powerful tool that offers multiple options for showcasing your products to shoppers. AMS allows vendors to create keyword-targeted ad campaigns designed to increase traffic to specific product pages on Amazon. While both sellers and vendors can use AMS, Vendor Central offers more robust options for running ad campaigns.
Streamlined Business Operations
Working with Amazon through Vendor Central simplifies your business operations. As a vendor, your primary focus is on fulfilling orders for Amazon, billing, and avoiding chargebacks. This is simpler than managing sales reconciliation, lost inventory, tax liabilities, and other costs associated with Seller Central.
Access to Advanced Content and Marketing Tools
Vendor Central offers participation in promotional programs like Subscribe & Save and Amazon Vine. These programs can boost brand trust and generate more sales by sending your products to top reviewers before they appear on the Amazon storefront.
By understanding these benefits, you can make an informed decision about whether Vendor Central is the right choice for your business.
While Amazon Vendor Central offers numerous benefits, it’s important to be aware of its potential downsides.
Limited Price Control
Amazon does not strictly follow the Minimum Advertised Pricing (MAP) guidelines set by manufacturers. This means that Amazon can adjust their retail prices based on their internal algorithms, potentially affecting your profit margins.
Strict Logistical Requirements
Amazon has stringent guidelines for fulfilling their purchase orders. Vendors who struggle with stock maintenance or quick order fulfillment may face significant chargebacks, which can reduce profits.
Risk of Over-Reliance on a Single Sales Channel
For many brands/sellers, Amazon is the largest single buyer. While this can be beneficial, it also poses a risk as sellers become reliant on a single buyer. Experienced sellers often prefer to have multiple sales channels, with the majority of their sales coming from their own e-commerce storefront.
Loss of Brand Control
Brand differentiation can be a significant advantage for sellers if managed properly. However, sellers lose a lot of control over their brand messaging once they sell to Amazon via Vendor Central. This includes how their product is represented in the Amazon marketplace, the packaging of their product, and the ability to customize the buyer experience.
Amazon Seller Central offers a range of benefits for sellers:
Access to Analytical Data
Seller Central provides a wealth of consumer data at no cost to the seller. This data, which includes information on who is buying products and where they are located, can be invaluable for understanding consumer and product trends.
Control Over Pricing
As the seller, you have the ability to control the price you set. This allows you to maintain uniformity across different retail channels.
Control Over Messaging
Seller Central allows you to control unauthorized listings of older versions of your products. This control is possible through a Seller Central account enrolled in Amazon’s brand registry program.
Control Over Inventory
Having physical control of your own inventory allows you to adapt to market demands.
However, Amazon Seller Central also has its drawbacks:
Fulfillment Costs
The costs of fulfillment and/or shipping can limit the ability to sell lower-priced items via Amazon. These costs can quickly add up depending on the size and weight of the products that you are selling.
Sales and Marketing Responsibilities
While being responsible for your own sales and marketing is a must for a lot of Amazon sellers, some sellers may not have the resources or knowledge to do so.
Referral Fees
All products sold through the Seller Central program are subject to a referral fee paid to Amazon for each item sold. These fees can be substantial depending on the category and eat into the merchant’s profits.
Fulfillment Options
As a third-party seller in the Amazon Seller Central program, you have three options on how to fulfill your orders: Fulfilled by Amazon (FBA), Seller Fulfilled Prime (SFP), or Merchant Fulfilled Network (MFN).
In conclusion, both Amazon Seller Central and Amazon Vendor Central offer unique advantages and challenges. Seller Central provides more control over pricing, messaging, and inventory, along with access to valuable analytical data. However, it also comes with fulfilment costs, sales and marketing responsibilities, and referral fees.
On the other hand, Vendor Central boosts consumer confidence and offers expanded advertising opportunities, a simplified business model, and enhanced content and marketing tools. But it also presents challenges such as limited price control, strict logistical requirements, the risk of over-reliance on a single sales channel, and loss of brand control.
Ultimately, the choice between Seller Central and Vendor Central depends on your business needs and resources. It’s important to carefully consider the pros and cons of each platform before making a decision. Whether you choose Seller Central or Vendor Central, both platforms offer opportunities to reach a vast customer base and grow your business on Amazon.
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