Ultimate Guide to Amazon Selling – Seller Central and Vendor Central
When it comes to selling on Amazon, there are two options for listing your products: utilizing Amazon Vendor Central or Amazon Seller Central. This post maps out the pros and cons of each — with a third possibility of a hybrid approach. Let’s dive in.
What Is Amazon Vendor Central?
Amazon Vendor Central is a platform where Amazon directly purchases products in bulk from manufacturers and distributors. These first-party (1P) sellers are suppliers to Amazon. These relationships are quite similar to traditional brick-and-mortar partnerships, in that you are selling to the retailer rather than the end customer. Vendors must receive an invitation from Amazon to sell on Vendor Central.
Amazon Vendor Central is a platform where Amazon directly purchases products in bulk from manufacturers and distributors.
What Is Amazon Seller Central?
Amazon Seller Central is a marketplace consisting of third-party (3P) sellers whereby anyone (whether a brand, independent seller or re-seller of goods) has the ability to list items on Amazon and sell directly to consumers.
Amazon Seller Central is a marketplace consisting of third-party (3P) sellers.
Utilizing Amazon Vendor Central
“Shipped and Sold by Amazon.com” Tag: Not all consumers are comfortable buying from unknown or unproven sellers on third-party marketplaces. All items sold to Amazon through Vendor Central come with this label to give customers the confidence that they are buying legitimate items that will deliver quickly and on time.
Traditional Retail Business Model: For brands who are more familiar with traditional retail or first-party (1P) operations and financials, this can be a significant advantage over third-party (3P). From the operations and billing perspective, the brand is only responsible for purchase order fulfillment, invoicing and reconciling or disputing chargebacks. If EDI (electronic data interchange) integration capabilities are important to your business, Vendor Central stands alone in offering this capability for Amazon sales.
Simplified Customer Experience: Amazon handles all customer service inquiries, returns and exchanges because they own the products. Amazon takes pride in being an incredibly customer-centric marketplace and has best-in-class return and refund policies to ensure customer happiness (which can lead to strong on-platform product reviews).
Pricing: Amazon does not adhere to manufacturers’ Minimum Advertised Price (MAP) guidelines and has full control over setting the sales price to consumers.
“Traditional” Retail Payment Terms: Payment terms are typically net 30 to net 90, depending on your specific contractual agreement with Amazon. If quick access to payments is critical to your business, this will be a significant burden.
Invitation-only: Vendor Central is an invite-only platform and is not available to all brands and manufacturers.
Strict Purchase Order Fulfillment Timelines and Requirements: If your operation isn’t perfect, expect hefty chargebacks from Amazon for non-compliance, which can quickly chip away at your margins.
Less Efficient Product Launch Timelines: Your ability to begin selling a product not previously available on Amazon.com is dependent on Amazon’s willingness to issue purchase orders for that product and take the risk of buying a product without a sales history on their marketplace. This can make A/B testing quite difficult.
Unprofitable ASINs: For ASINs deemed unprofitable by Amazon, Amazon reserves the right to make your product ineligible for advertising campaigns, limiting your ability to make adjustments to drive sales, especially when you also do not control sales pricing.
Utilizing Amazon Seller Central
Pricing: Sellers have significantly more control over setting pricing. You as the seller determine the price at which to sell your products. As long as you are not pricing your goods higher than you are for marketplaces and retailers (in which case, Amazon may choose to remove the Buy Box from your offer, significantly limiting sales), you control the ability to update your pricing and run promotions.
〉FBA (Fulfillment by Amazon): As a seller, you or your 3PL partner are responsible for proper labeling, packaging, palletizing and shipping of products to meet Amazon’s receiving, storage and fulfillment requirements. You’ll pay Amazon fulfillment and storage fees for handling these services (these fees vary depending on product size and weight). Through this program, Amazon manages the fulfillment and fulfillment-related customer service for your sales directly to consumers.
〉Using FBA also automatically qualifies your items to be eligible for Prime delivery.
〉Products sold via FBA allow customers to utilize the “Subscribe & Save” program for automatic, recurring deliveries.
〉Sellers may also use this inventory for Multi-Channel Fulfillment (MCF), whereby inventory at Amazon fulfillment centers can be used to fulfill orders placed on your own non-Amazon ecommerce site.
〉FBM (Fulfillment by Merchant): As a seller, you are responsible for the storage, on-time fulfillment, on-time delivery and customer service related to your Amazon sales. FBM is best suited for products that are large or heat-sensitive, or as a backup when FBA inventory is likely to be unavailable (and you have product on-hand at your warehouse or with your 3PL). Items sold via FBM are not enrolled in Prime eligibility for customers.
〉SFP (Seller-Fulfilled Prime): This program, currently closed to new registrations and with a lengthy waitlist for if/when this closure ends, allows sellers to fulfill orders themselves under the Prime program requirements. Whitebox is an SFP-enabled seller on Amazon.
More Rapid Payments than Vendor Central: Those with professional seller accounts have access to their payouts from Amazon every two weeks.
Increased Access to Customer and Purchasing Data:This data can provide powerful insights for your brand to understand customer geographies, cross-sell opportunities, promotional opportunities, sales overlap with other online marketplaces and product bundling opportunities that aren’t available using Vendor Central’s reporting and tools.
Sellers have significantly more control over setting pricing.
Order Fulfillment Costs and Referral Fees: Low-cost products or products with narrow margins may not be well-suited for sale on Amazon via Seller Central. FBA fulfillment fees and the cost of shipping FBM/SFP orders can be high, and Amazon charges a commission/referral fee for each product sold on their marketplace. These referral fees can range anywhere from 5% to 20% of the product sales price, dependent on the product category. Here’s our breakdown of how to weigh fulfillment costs and pricing models.
High-Touch: You as the seller are solely responsible for managing inventory levels (and handling inventory reconciliation with FBA), handling customer service inquiries (with some exceptions where Amazon handles FBA fulfillment inquiries for customers), managing advertising campaigns, updating product listings and controlling costs.
Less Consumer Buying Confidence: Unless customers are already familiar with your brand or products, they are less likely to purchase from third-party sellers as opposed to buying directly from Amazon.
Low-cost products or products with narrow margins may not be well-suited for sale on Amazon via Seller Central.
Sell your product on Amazon
Open to anyone
Brand controls pricing
Amazon controls pricing
MAP policy adherence
Control of inventory levels
Access to Brand Registry
Net 30, 60, 90
Paid every 7-14 days, on goods sold
Amazon handles returns and customer complaints
Brand is responsible for returns and customer complaints
Regulatory & Tax Compliance
Utilizing Both Vendor Central and Seller Central
While less common, it is possible to utilize a hybrid approach to selling on Amazon with both Vendor Central and Seller Central. Consider the following pros and cons:
Allows for A/B testing and product launches on Seller Central to drive initial sales on Amazon. This can help jumpstart purchase order issuance by Amazon on Vendor Central.
Provides the ability to sell high-performing “core” items to Amazon directly via Vendor Central, and slower-moving “non-core” items via Seller Central. In essence, this can limit your “risk” for selling new products on Amazon, at least until you’ve perfected your logistics and sales strategies.
Amazon may not always allow for a hybrid approach by brands/manufacturers or ASIN and reserves the right to limit sales to Vendor Central only.
Whether you’re just getting started selling on Amazon, or you’re looking to streamline your brand’s fulfillment, Whitebox can help. Get started today with a free consultation.