With nearly 2 million small and medium-sized businesses selling on Amazon, the Amazon marketplace tops the list of top ecommerce sites in the world.
Selling on Amazon provides global reach and is considered one of the best ways to grow and scale your business online.
To start selling on Amazon, you need to create your Amazon Seller Central account. But do you know this is not the only way to sell products on Amazon.com?
You can also make money on the Amazon marketplace by selling to Amazon via Amazon Vendor Central. What this means is that you sell your products directly to Amazon.
In this article, we will dive into both Amazon Seller Central and Amazon Vendor Central looking at their benefits, drawbacks and key differences.
Amazon Seller Central is a platform that merchants or third party sellers can use to market their products directly to customers on the Amazon marketplace.
The seller is responsible for setting up the seller account and maintaining it. On Amazon Seller Central, you have the option of choosing between two selling plans. You can choose to sell with the Individual Selling Plan which comes at a few $0.99 for every item sold or the Professional Selling Plan which comes with a monthly subscription of $39.99.
Many sellers prefer the Professional Selling plan, as it comes with an array of features including inventory management, analytical tools, and promotional tools that sellers need to grow and scale their business.
On Amazon Seller Central, sellers also have the luxury of choosing two options for fulfilling orders - Fulfillment by Merchant (FBM) and Fulfillment by Amazon(FBA).
With FBM, you can handle the task of packaging, shipping, returns and customer service yourself or through third-party logistics (3PLs).
Alternatively, you can save time while Amazon handles everything from storing your products at the Amazon fulfillment center to packaging, shipping and customer service using the Fulfillment by Amazon (FBA) program.
On the order page, customers will see “Sold by Brand Name” and “Fulfilled by Amazon”.
Related post: How to create an Amazon Seller Central Account in 2022
Amazon Vendor Central is a platform that manufacturers and distributors use to sell their products to Amazon. If you sell your products via Vendor Central, you are a first-party seller, acting as a supplier to Amazon. You sell your products to Amazon in bulk and Amazon resells them to consumers.
However, Amazon Vendor Central is not open to everyone. Registration is by invite-only.
Usually, sellers who use Vendor Central start as third-party sellers on Amazon Seller Central and generate enough demand to get invited by Amazon to register on the platform.
On the order page, customers will see “ships from Amazon” and “Sold by Amazon”.
Here are a few criteria Amazon considers before inviting a seller to register on Amazon Vendor Central:
The major difference between Amazon Vendor Central vs. Seller Central is who sells your product and whom your products are sold to.
With Amazon Vendor Central, you sell your products to Amazon and Amazon resells directly to consumers.
On the other hand, with Amazon Seller Central, you sell your products directly to consumers.
While Amazon Seller Central is unrestricted and accessible to all Amazon sellers, you will need an invitation from Amazon to register on Amazon Vendor Central. Also, while you have control over the pricing and profit margin of your product on Amazon Seller Central, Amazon gets total control of your pricing and profit margin with Vendor Central. Understanding these key differences will help you know which is best for your type of business.
Let's look at the pros and cons that come with selling via Amazon Seller Central and Amazon Vendor Central.
The Amazon Seller Central experience gives you the freedom to directly manipulate prices. Amazon sellers can adjust their prices to align with other selling channels.
You can change their pricing strategies and adjust prices to compete with top sellers on Amazon. This gives you the opportunity to compete and potentially win the Amazon Buy Box.
Just like with your pricing, you can have direct control over your inventory. You have control over the type of product you want to sell and can also introduce new products.
What's more, you can decide to fulfill orders on your own terms. You can use either Amazon FBA or Amazon FBM or even both depending on the type of product.
Analytical data is pivotal to making profitable business decisions. Thankfully, with Amazon Seller Central, you have access to free analytical data which can help you adjust your marketing strategy and make more informed business decisions.
Selling via Amazon Seller Central means paying Amazon fees including referral fees and subscription fees. For low-priced items, this could be challenging as these fees could eat into your profit margin.
Also, if you sell with fulfillment by Amazon (FBA), you will need to pay fulfillment fees depending on the weight and size of your product. Ultimately, this can affect the pricing and profit margin of your product, especially low-priced products.
Selling your products via Vendor Central means you are the first party seller and your products are sold by Amazon. When customers see a product sold by Amazon, it increases trust. With your products associated with Amazon, customers will develop a preference for your product.
Amazon Marketing Services (AMS) is an effective advertising tool that provides a number of features that can help drive demand and traffic to product pages.
While Amazon Marketing Services are available to both Amazon Seller Central users and Vendor Central users, Vendor Central provides access to premium features that aren't available on Seller Central.
Amazon Vendor Central gives you access to participate in promotional programs like Subscribe and Save and Amazon Vine.
With Amazon Vine, your product gets reviewed by top reviewers before they appear on your Amazon store. These reviews help to build trust, ultimately generating more sales for your business.
Amazon Vendor Central is an invite-only platform with its own criteria meaning that it isn't available to all interested sellers.
While Amazon Seller Central allows you to set your prices almost immediately without supervision, Vendor Central works differently. You can set your wholesale prices but Amazon determines the final prices. In other words, you are handing over your pricing control to Amazon.
As we have looked at, both platforms come with their pros and cons.
With Amazon Seller Central, you can have direct influence on the pricing of your product. You can manipulate prices to compete with top sellers and ultimately influence your profit margin. With no interference from a middleman, profit margin rates are also high.
However, with Amazon Vendor Central, you sell your products in bulk to Amazon who then resells your products to customers. While this reduces the workload that comes with relating with individual client's, it can also reduce your profit margin. Amazon has total control of the final price which may ultimately not be favorable.
When it comes to getting paid, you can get paid almost immediately (two weeks maximum) with Amazon Seller Central.
However, with Amazon Vendor Central, money made from sales is transferred to the manufacturer or distributor within two to three months.
Overall, Amazon Seller Central gives you greater flexibility and control over your business. While there is less work involved with Amazon Vendor Central, Amazon gains total control over the process.
Choosing which is better for your business depends on your capacity and type of business. You also want to consider your profit margin and workload. However, to gain access to Amazon Vendor Central, you will need to prove yourself to Amazon.