If you are an Online Seller, you’ve probably heard of Amazon Vendor Central and Amazon Seller Central.
These are two different platforms that give sellers the ability to collaborate with Amazon in different ways.
Which are the differences between Amazon Seller and Amazon Vendor? And which are the advantages and disadvantages of Amazon Vendor over Amazon Seller?
In this article, we’ll give you a general overview of Amazon Vendor Central and we will provide you with some insight into vendor management with any issues to address.
What is Amazon Vendor Central?
Amazon Vendor Central is an invitation-based interface that Amazon uses to buy and sell goods directly from suppliers. In this model, the supplier becomes a business partner, selling its products wholesale to Amazon, which will then deal with retail, marketing, shipping and customer service.
How does Amazon Vendor Central works?
After the initial setup and account login, you can upload the products you want to sell within the Amazon Vendor Central digital catalog. The launch of new products takes place either by receiving PO (automatic purchase orders) from Amazon, or by managing a “Born to Run”, a plant order proposed directly by the supplier to Amazon. Once the order is received, the products are shipped to Amazon’s Fulfillment Centers. At this point the products, marked “Sold and Shipped by Amazon”, will appear on the Marketplace and will be available for purchase by users.
What is the difference between Amazon Seller and Amazon Vendor?
The main distinction between Seller Central and Vendor Central lies in the Business model:
Amazon Seller Central: Seller maintains direct control over sales and inventory, selling products to customers through Amazon’s platform (B2C model).
Amazon Vendor Central: Seller, now supplier, sells products in bulk directly to Amazon, which in turn resells to users of the platform (B2B2C model).
The difference between Amazon Seller and Amazon Vendor is in the relationship established with Amazon.
An Amazon Seller is an independent vendor that uses the Amazon platform to directly reach end customers. A seller can choose between two plans:
–The Basic Plan, which provides for a fixed fee for each product sold.
–The Professional Plan, which provides for a monthly fee and a variable fee depending on the product category.
In this way, the seller can decide whether to independently manage the shipment of products or rely on the FBA service (Fulfillment by Amazon), which is responsible for storing, packaging and shipping products on behalf of the seller.
An Amazon Vendor, on the other hand, is a supplier of Amazon that sells its products directly to Amazon or wholesale. An Amazon Vendor has no control over the final price of products, shipping times, customer service, and reviews.
In fact, Vendors have to follow certain conditions imposed by Amazon, such as: the price of sale to end users, delivery times, return policies and penalties for any delays or errors in the delivery of goods to Amazon Fulfilment Centers.
What are the advantages and disadvantages of Amazon Vendor over Amazon Seller?
Amazon Vendor offers some advantages over Amazon Seller, including:
-Brand Prestige: Being an Amazon supplier can increase the prestige of a brand, as Amazon invites potencial Brands for selling products on the marketplace, giving them the opportunity to create a Brand Store within the account: a real shop dedicated to the brand, which in many cases becomes a very effective tool of Brand Awareness.
-Visibility and Reputation: Products sold through Amazon Vendor are marked as “Sold and Shipped by Amazon”, which communicate greater trust and authority to customers. In addition, products can benefit from programs such as Prime, Subscribe & Save, Pantry and Business, which increase the chances of sales.
–Operational Simplicity and Logistics (and therefore less Direct Management): Sellers do not have to worry about shipment management, customer service and reviews, since everything is borne by Amazon. In addition, sellers receive regular payments from Amazon without having to manage transactions with customers.
– Access to Tools and Resources: Sellers can access exclusive tools such as A+ Content, which allows you to create richer and more detailed content for your products, or Vine, which allows you to get verified reviews from selected customers from Amazon. In addition, sellers can receive support from dedicated Account Managers from Amazon.
However, Amazon Vendor also has some disadvantages compared to Amazon Seller, such as:
–Less Control and Flexibility: Vendors do not have control over the final price of products, customer service and reviews. In addition, Sellers must accept payment terms set by Amazon, which may be longer than those of Amazon Seller.
–Increased Competition and Risk: Vendors must compete with other vendors and with Amazon itself, which may decide to launch similar or better products at lower prices. In addition, sellers face the risk of losing the relationship with Amazon, which may decide to discontinue orders, not to renew the contract, or to vary the proposed terms and conditions annually.
-Greater Bureaucratic Complexity: Vendors must manage issues such as invoices, credit notes, returns requests, penalties and disputes with Amazon.
Above all, they will have to adapt to Amazon’s logistical requirements, such as delivery times, minimum order quantities, labels, barcode compliance.
Vendor management also requires good planning and organization by the Seller, which must take into account several factors, such as:
–Supply and Demand: Amazon uses algorithms for sales forecasts that may not always correspond to reality. The Seller must therefore constantly monitor customer demand and Amazon’s supply, in order to avoid over-occurrences or, conversely, stock exhaustion. Another fundamental aspect is the prediction of seasonal variations or promotions that can greatly affect supply and demand.
–Pricing: The Seller must accept the wholesale price proposed by Amazon, which in some cases may be lower than the desired price, in order to ensure that orders are received. And it will also have to consider the profit margin it can get from selling to Amazon compared to selling directly to customers.
–Customer Service and Reviews: The Seller must rely on Amazon’s customer service and reviews. In fact, it has no possibility of response or direct contact with customers, even in the case of reviews not positive or not entirely satisfactory.
–The Seasonality of Products and Promotional Peaks: It is very important for the seller to carefully evaluate the seasons of products, participate in promotional events proposed by Amazon (e.g. Prime Day, Black Friday), and invest a budget in ADV Sponsored Campaigns to increase user traffic that lands on product cards, and as a result, boost sales.
Another of the problems that can arise in the management of the Vendor is the possibility of receiving returns or complaints. Amazon may in specific cases decide to return damaged, defective, non-compliant or over-stored products to the seller, resulting in an economic loss. You can however prevent the return of any products involved through the conclusion of a contract of “Damage Allowance”; a contract that usually falls within the commercial conditions proposed by Amazon to Vendor and that would allow sellers to avoid returns in the situations mentioned above.
Which of the two models is preferable to choose?
Each Seller has different possibilities and conditions. You can not therefore recommend a priori a sales model to be preferred over another. It is preferable, however, to evaluate fundamental parameters, such as: the potential of the product, the logistical possibilities of the supplier, the need to have control over the selling price to users, autonomy in the management of Customer Service, any bureaucratic/administrative difficulties. It is not excluded that the two models can be used simultaneously with a different product selection. In this way, sellers could make the most of all the advantages offered by Amazon, making the most of these two complementary sides of the same coin/ platform! The advice is to contact (in any case) an agency experienced in the management of Amazon and Marketplaces in order to opt for the most appropriate way (especially for newcomers).
In conclusion, be a Vendor or a Seller, from today’s e-commerce giant is able to offer new challenges and opportunities that could be a tool of enormous value both to enhance the knowledge/awareness of Brands and to expand their online business.
Contact our experts to receive a free consultation and start selling on Amazon Vendor Central!
Edited by Elvira Carbone
Account Manager, BrandOn Group