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Sellers on Amazon have a lot of choices to make, the relationship with Amazon being one of them. Many of the questions regarding the type of relationship you choose to have with Amazon can boil down to one word: control. How much control do you want to maintain over your pricing? How much control do you want to relinquish and share with Amazon? And what about your brand’s identity?
Vendor Central vs Seller Central on Amazon
You have two primary options when it comes to selling your brand or products on Amazon: as a Third Party Seller or as a "First Party" Vendor.
If you choose to sell via Vendor Central, you are considered a “First Party” seller, selling your products on a wholesale basis to Amazon. These are sellers whose products are listed as “Sold and Fulfilled by Amazon.” Amazon places Purchase Orders with your company, and your account is managed through the Vendor Central platform.
If you choose the “Third Party” route, you would be considered an independent Seller, where you sell to Amazon’s customers directly through the Seller Central system. You use Seller Central to manage your own inventory levels, add new products, and provide service to customers.
Note: you do need to get an ‘invite’ to join the Vendor Central program. An invitation is usually extended to Sellers with a high volume of sales. There is a newer, hybrid kind of program called Vendor Express which combines some elements of both programs, which we’ll address in a future article. Sign up to our mailing list the make sure you receive the article when it comes out!
Pros and Cons of each platform {infographic}
Which kind of a Seller are you?
Vendor Central makes sense for:
- Very large brands and manufacturers who don’t wish to maintain a direct consumer direct sales. Amazon essentially becomes another wholesale relationship.With a Vendor Central account, you manage your inventory and the rest of the management falls to Amazon.
- Brands selling heavy or large products that have high fulfillment costs, and conversely, products at very low price points which would be unprofitable if selling using FBA.
Primary concerns with selling on Vendor Central include:
- Margins. Depending on the dimensions and selling price of your product, selling as Vendor may offer you less of a profit margin.
- How Amazon prices your inventory after purchasing it. Amazon can be known to price match to excess, often violating MAP and potentially upsetting your other retail customers.
- Inventory control. Amazon decides the quantity of items purchased, which may not reflect demand from consumers. They also might decide that they over-stocked your inventory and chargeback the overstocked inventory.
FBA or Seller Central Sellers have the opportunity to take a larger cut of the profit margin than those in Vendor Central. Sellers have direct control over the pricing, inventory, branding, management and promotion of their products. With that comes more direct interaction with customers as well. Choosing to sell Fulfilled by Amazon (FBA), however, can lessen the level of customer service as Amazon will manage most inquiries around returns, exchanges, etc.
Deciding what’s right for your brand
As you can see, there are pros and cons for both Vendor Central and Seller Central. The weight each factor carries in considering the best platform can vary from seller to seller. For some, the payment schedule of Vendor Central alone might be enough to make the decision to choose Seller Central with its predictable plan and opportunity for consistent cash flow. For larger, more well-established brands, delegating the management of your brand and sales to Amazon can be very appealing. Balancing the vision you have for your brand with your goals as a seller, and the resources you have for managing your product, will help you identify the best platform for you.
Still wondering which one is right for your brand? Our white-glove Amazon Launch Program helps brands to launch their products on Amazon both on Seller Central and Vendor Central. Contact us to schedule a free 20-minute consultation with a member of our team.
Want to learn more about the Vendor program and how to use it effectively? Register for our free training course.
