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 an Amazon vendor through Vendor Central, 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 Amazon 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!
What is Amazon Seller Central?
Seller Central (ASC) is the program used by third-party sellers. These are brands or merchants selling directly to consumers on Amazon Marketplace. Sellers have the option to become either an individual seller or a professional seller, based on their anticipated sales forecast.
Sellers have two fulfillment options. Once a purchase is made, they can either handle the fulfillment or distribution themselves or choose to use Fulfillment 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 most of the customer service of your products for you. Amazon FBA can also increase consumer confidence as the product is displayed as “Fulfilled by Amazon.” See example below:
Here’s what the Amazon Seller Central interface looks like:
What is Amazon Vendor Central?
On the other hand, there is Vendor Central. This is the portal leveraged by brands and manufacturers to sell wholesale to Amazon through purchase orders. These companies are referred to as first-party sellers or Amazon vendors.
Vendor Central is an invite-only portal where participating businesses can monitor their product inventory, add new products, receive and acknowledge purchase orders, and gain a general overview of their Amazon account health. In order to obtain an invite, you will need to capture the attention of an Amazon buyer.
Once a purchase order is placed to the distributor or vendor, the products will need to find their way to an Amazon warehouse or Fulfilment Center. Whether it is Amazon that picks the order up or the vendor who ships it is defined during the initial contract negotiations.
Going through Vendor Central (similar to was the now extinct Amazon Vendor Express) essentially means that Amazon is your retailer and they are buying your products in bulk, which they will then list on their marketplace. In this case, you are not directly transacting to the consumer or handling the customer service and you are able to be a bit more hands-off, while still making sales.
Here’s a look at the Amazon 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.
The pros and cons of Seller Central
- Pricing control
As a 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.
- Free access to analytics & seller support
Seller Central gives you free access to insights on customer data and detailed analytics directly in your seller account. These rich statistics can help you understand buying behavior, your target market, and help you to optimize your product information and approach. Moreover, support is always readily available within the interface, making it easy to get your questions answered right away.
- Messaging control
Having control over messaging is perhaps one of the biggest advantages of using Seller Central. For 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.
- Higher margins
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 directly from within their account.
- Complex & strict product feed requirements
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 solution provider to help you with your feed.
- Fulfillment costs
While Amazon FBA 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 additional storage fees to Amazon for storing your goods. Learn more about FBA here.
The pros and cons of Amazon Vendor Central
- Consumer confidence
A vendor can 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:
- Simplified business model
First-party Amazon sellers have much less logistical work to handle. Once the contract is signed and the purchase orders are fulfilled, Amazon takes care of the rest. From pricing and listing all the way to shipping and customer support.
- Access to A+ Content
A massive advantage to those using Amazon 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.
According to Amazon, well-constructed A+ content pages can increase conversion between 3-10%!
The pages can be made up of several individual modules and can be created directly from your Vendor Central account.
Note: Sellers may also be entitled to A+ content, but only if they are the manufacturer of their products sold and upon request.
- Increased revenue
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.
- Minimal pricing control
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. Retail pricing can, therefore, cause a lower profit margin.
- Wait longer for payment
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.
- Limited Support
Unlike on ASC, support is often not readily available for most vendors. Unless you are a world-recognized brand, they aren't likely to offer you personalized vendor support, which means you'll be left with the all too familiar "contact us" button. There are, however, services and programs set in place to offer assistance when you need it, depending on the size of your business. Here are two vendor support options: Strategic Vendor Services (SVS) and the Vendor Success Program (VSP).
Battle of the Centrals
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:
The Hybrid Approach
Some brands and manufacturers may find it beneficial to make use of both Amazon Vendor Central and Seller. In this case, they are both selling wholesale to Amazon, while also listing some of their own products directly on the marketplace. This can work to your advantage in many scenarios, including:
- When Amazon doesn’t purchase all of your stock
- For listing CRaP (Can’t Realize any Profit) ASINs (products that don’t generate enough profit for Amazon to sell on its retail channel)
- Products that are out of season
- When Amazon sells more than what they have in stock, so you can fulfill the order yourself
- For product types that Amazon doesn’t carry on its retail channel
Vendors adding Seller Central: Talk to your vendor manager to make sure it is okay with them that you start an SC account. If you don’t get the permission required, you may end up having your Seller Central account suspended.
Sellers adding Vendor Central: First, you need to receive an invitation to join from an Amazon Buyer. During your initial contract negotiations with vendor manager, let them know that you intend on keeping your SC account active.
Tip: Avoid getting into price wars with Amazon or fighting with them over the Buy Box. At the end of the day, they are selling your products and it would only be competing against yourself.
Which is right for you?
Perhaps the most important factor in choosing to become a vendor or a seller is what type of business you have. It’s actually quite difficult to compare the two centrals since they were initially built for different business models.
Amazon Seller Central is more geared towards brands and online merchants that want to get their products listed quickly, whereas Amazon Vendor Central is aimed at brands and manufacturers looking to sell wholesale - with a more hands-off approach.
Convinced Amazon Seller Central is right for you? Learn how to create the perfect product feed to optimize performance and reap the benefits!