Amazon Vendor vs. Seller Central
Imagine this scenario. You’ve been active on Amazon for a while, and your sales show no signs of slowing down. One day, you get an invite from the company to become a vendor. This may look like an opportunity to join an exclusive club, but that doesn’t necessarily mean it’s the right move for your business. So, should you take the leap, or stick to the good old Seller Central? Let’s find out.
Vendors vs Sellers
The key difference between Amazon vendors and sellers comes down to who’s actually selling the items.
• With Vendor Central, you’ll sell your products to Amazon-employed buyers who’ll then resell them to Amazon users (they’ll also create the listings).
• With Seller Central, you’re in charge of everything from listing your products to selling them in the Amazon marketplace.
Pros and Cons of Using Amazon Seller Central
Pros:
• Control over products
Seller Central allows you to control the marketing of your brand while maintaining autonomy over your pricing. This means you can set a specific retail price when the demand is high or match your competitors to improve your chances of generating more revenue.
• Access to customer analytics
Seller Central also contains a wealth of data and insights into how your stock is performing. This data helps you to refine your offerings. While Amazon forbids sellers from using the data to “remarket” to Amazon users, it’ll still help you understand people’s preferences and refresh your stock with products that align accordingly.
• Better management of inventory
If you’re a small business, being able to match your customers’ needs can have a major impact on your business. This is especially true if you have a limited range of items. Seller Central keeps things straightforward by giving you physical control over your inventory. If you don’t have a large range to sell, you won’t be pressured to expand your inventory until you decide to do so.
Cons:
• Marketing can be time-consuming
Although being in charge of your own marketing is a must for some sellers, many merchants don’t have the knowledge or resources to run their own campaigns. Unless you regularly update your descriptions and promote your items via sponsored ads and other avenues, you may not be able to stand out from the increasingly tight Amazon competition and build a sustainable business.
• Fulfillment costs
Often, the shipping and/or fulfillment cost to list lower-priced items on the Amazon marketplace can eat significantly into profit margins. The minimum that Amazon charges for non-media FBA products weighing 10 ounces or less is around $2.50, which does not include the additional storage fees that Amazon charges. These expenses can quickly add up based on the weight and size of the products you’re selling. You’ll have to develop a good understanding of FBA costs and integrate it into your Amazon business model.
Pros and Cons of Using Amazon Vendor Central
Pros:
• Enhanced marketing and content features
If you agree to join Vendor Central, you’ll get the opportunity to take part in promotional programs like Amazon Vine, which sends your items to top reviewers (we call them Amazon influencers) before they show up on the marketplace. User-generated content plays a crucial role in increasing sales and enhancing brand trust.
• Simplified costs
Vendor Central costs $39.99 per month, and there are no restrictions on the number of items you can sell. The charges for gift wrapping and delivery are also included in this price. This means you won’t need to spend much time calculating the costs of doing business. Essentially, Vendor Central allows merchants to focus on selling the best products to Amazon buyers rather than worrying about other concerns.
• Amazon’s seal of approval
Vendor Central merchants get a tagline for their items saying Sold by and Ships from Amazon. This is placed on every product page managed by Amazon vendors. All of that makes you a ‘first-party seller’ who’s trusted by Amazon, which means your prospective customers will feel more confident and assured when placing an order for your products.
• More advertising opportunities
AMS or Amazon Marketing Services offers a powerful tool that contains various options for getting your products in front of customers. It enables vendors to promote items via keyword-targeted ad campaigns that help drive traffic to certain product pages. However, only those who qualify as vendors of hardlines, softlines, books, media, or consumables (fresh/non-pantry) can take advantage of display advertising.
Cons:
• Affects margins
Because prices are fully controlled by Amazon, you may not get the profit margin you were hoping for on specific items. Because there’s no minimum price policy, you could, technically, even lose upfront if the retail price gets too low. What this implies is that Amazon can (and will) adjust its retail prices at any moment based on its marketplace algorithms.
• Logistical challenges
Amazon has very rigid guidelines for Vendor Central members when it comes to filing its purchase orders. You have to ensure that your inventory is always stacked as Amazon often has bulk demands and offers a very limited timeframe for order fulfillment. Those who have issues maintaining their inventory may experience chargebacks which can eat into their margins.
• Can’t introduce new products
Because Amazon provides Shipped by Amazon and Sold by Amazon tags to Vendor Central users, the company is usually unwilling to take any chances. New items are unpredictable in the sense that their demand can’t be determined beforehand. As a result, Amazon has restrictions in place for selling new items to Amazon buyers, making it challenging for vendors to launch a new range.
The takeaway
Because Vendor Central is an “invite-only” program, it’s perfectly fine to start with Seller Central. You’ll have better control over your pricing, and you can keep as much or as little inventory as you like. If you get an invite to become an Amazon vendor in the future, make sure to weigh the pros and cons before you accept or decline the invitation. For instance, it can be a good idea to become a vendor if you have a large stock of in-demand items. The fee is only $39.99, and FBA is also included.
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