For those of you who are already confident in your decision to become an Amazon Seller, we’ve outlined the rules, benefits, and steps to get started here. If you aren’t yet sure whether to become a direct seller or a vendor on Amazon, this article is for you.
Want to sell on Amazon? Great! Which method do you want to use? If you’re like many online sellers, this is where things can get a little foggy.
The thing is, there is more than one way to reap the benefits of Amazon sales, each with their own pros and cons. With the choice between Amazon Seller Central or Vendor Central, a better question to ask is: which “central” is right for you?
To help you find the best fitting option for your business, we’ll evaluate both options, compare them side-by-side, and discuss their pros and cons.
Ready to clear the fog? Let’s “dew” this!
Seller Central is the program used by third-party Amazon sellers. These are brands or merchants selling directly to consumers on Amazon.
Third-party Amazon sellers have two fulfillment options. Once a purchase is made, they can either handle the distribution themselves or choose to use Fulfilment by Amazon (FBA). The latter works by providing stock to an Amazon Warehouse before an order is even placed. From here, Amazon handles the shipping, handling, returns, and exchanges of your products for you. FBA can also increase consumer confidence as the product is displayed as “Fulfilled by Amazon.” See example below:
Here’s what the Seller Central interface looks like:
On the other side of the spectrum, there is Vendor Central. This is what brands and manufacturers use to sell on Amazon in bulk. Those selling through this method are referred to as first-party sellers.
Selling through Vendor Central essentially means that you are selling your products on Amazon and they will sell your products to their users. In this case, you are not directly selling to the consumer and you are able to be a bit more hands-off, while still making sales.
Here’s a look at the Vendor Central platform:
Now that we’ve introduced each interface, let’s take a look at the pros and cons of each. Keep in mind that the impact of each can also depend on your business and what you’re looking to get out of selling on Amazon.
As an Amazon seller, you have full control over the pricing of your products. Since customers are buying directly from you, and Amazon is essentially acting just as a storefront, you can set your pricing to whatever suits your business model.
Seller Central gives you free access to insights on customer data and detailed analytics. These rich statistics can help you understand buying behavior, your target market, and help you to optimize your product information and approach.
Having control over messaging is perhaps one of the biggest advantages of using Seller Central. For third-party sellers, it means they have complete control over what is being sold, how it is being sold, and what is being said about products. Amazon’s brand registry program limits and/or eliminates the possibility of any unauthorized product listings.
Sellers see increased margins compared to Vendors. This is mostly because they control their pricing and aren’t selling wholesale, which is known for being sold at a discounted rate. Amazon analytics also help Sellers to optimize their pricing strategy.
Third-party Amazon sellers have a lot of control over their product listings, but it also means they have a lot of responsibility. One of these is ensuring the product feed abides by Amazon’s notoriously strict feed requirements. Although, this actually isn’t much of a con when using the right third-party solution provider to help you with your feed.
While Fulfilment by Amazon is a great, efficient option for large retailers, it can cost a pretty penny. Not only do you need to pay the initial FBA fee for them to ship and handle your products, but if they aren’t selling fast enough, you’ll have to pay an additional fee to Amazon for storing your goods. Learn more about FBA here.
Vendors essentially get to ride on the back of Amazon’s phenomenal reputation. By selling wholesale directly to Amazon, manufacturers are giving the marketplace the right to sell their products for them. In the eyes of the consumer, they are purchasing directly from Amazon – a marketplace they trust and are loyal to. Moreover, each product will carry the Amazon stamp of approval being displayed with “Sold by Amazon.” See in the example below:
First-party Amazon sellers have much less logistical work to handle. Once the contract is signed and the bulk sale of a is made, Amazon takes care of the rest. From pricing and listing all the way to shipping and customer support.
A massive advantage to those using Vendor Central is the ability to use A+ Content. Essentially, this gives you the opportunity to create an information-rich product details page. This carries many advantages in itself including a more compelling and complete shopping experience, increased, sales and brand awareness. Learn more about A+ content here.
Note: Sellers may also be entitled to A+ content, but only if they are the manufacturer of their products sold and upon request.
As an Amazon vendor, you’ll get a standard price for your items – which means you’ll be selling each individual item for less than you would otherwise. However, because you are selling in bulk, you easily earn more since you’re guaranteed to sell more items. Therefore, vendors see an increased revenue at the end of the day.
Once you sell your products to Amazon, they control the price of the item. Therefore, first-party sellers aren’t able to strongly influence the cost of their items. Although you can set Minimum Advertised Pricing, Amazon doesn’t guarantee that it will adhere to your requests. This can cause a lower profit margin.
Due to the bulk nature of wholesale, processing products takes longer for Vendors than it does Sellers. The same goes for payment. If you’re a first-party seller, Amazon is technically your client. Therefore, your profit is dependent on your wholesale pricing and your initial contract agreement with Amazon.
Now that we’ve done an overview of the Centrals and provided the pros and cons of each, here’s how they compare side by side:
Perhaps the most important factor in choosing to become a Vendor or a Selling is what type of business you have. It’s actually quite difficult to compare the two Central’s since they were built for different users.
Seller Central is more geared towards brands and online merchants that want to get their products listed quickly, whereas Vendor Central is aimed at brands and manufacturers looking to sell wholesale – with a more hands-off approach.
It is possible, however, to have both accounts. This may occur if, for example, Amazon is not directly purchasing all of your products and you have more products that you’d like to list.
Convinced Seller Central is right for you? Learn how to create the perfect product feed to optimize performance and reap the benefits! Request a demo.
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