Choosing the right platform can make a difference if you plan to sell on Amazon. There are mainly two types of platforms; Amazon Vendor Central and Amazon Seller Central. Each offers unique features and is made for different business models and goals. However, both platforms come with certain challenges.
In this article, we will compare Amazon Vendor Central and Seller Central so that you can make informed decisions for your business. Choose the right platform for your business and start your journey towards success today!
What Is Amazon Vendor Central?
Amazon Vendor Central is a program designed for those who want to sell their products directly to Amazon. It is an invite-only model where Amazon will purchase products from vendors in bulk at a cost price and resell them on its platforms at a competitive price. Amazon is currently offering 3 programs under Vendor Central.
Dropship
Amazon will use the vendor’s warehouse and send client orders to the vendor for pick up and packing. Amazon will also take care of shipping.
Direct Import
From the port of delivery, Amazon will pick up the item. Amazon will take care of international transportation, customs, and duties.
In Network
In this type of program, Amazon will send purchase orders to the vendor weekly and the vendor will transfer those orders to Amazon Facility centers. Amazon will then be responsible for shipping those orders to the end customer.
What Is Amazon Seller Central?
Amazon Seller Central is also known as the third-party model. It is the program where you work as a retailer and Amazon will provide you with its marketplace platform. Retailers can set the product price and Amazon will only charge the transaction fee to facilitate the sales. However, if you are using the FBA program, additional charges will be applied for storage, picking, packing, and shipping from Amazon’s fulfillment centers.
Amazon provides two options under this model:
Fulfilled by Merchant (FBM)
In this program, the seller is responsible for shipping products directly to the end customers. They look after the entire process including packing, shipping, return, refunds, and other customer support.
Fulfilled by Amazon (FBA)
In FBA, the seller sends products to Amazon and they are responsible for the entire fulfillment process. One of the major advantages of FBA is that the products contain Amazon Prime Tag and most customers look for items endorsed by Amazon Prime.
As a global freight service provider, Foresmart’s FBA shipping service can help you deliver cross-border goods directly to Amazon warehouses.
Seller Central vs Vendor Central: Pros and Cons
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Seller Central Pros |
Seller Central Cons |
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Being a seller, you can have full control over stock and prices. You can operate on your own pricing terms. |
Your products must be competitively priced. If it is not the best deal available, Amazon will make it harder for customers to find your listing. |
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By opting for Amazon’s FBA program, you can benefit from Amazon’s strong logistics network and ensure that your project is delivered promptly, which will eventually result in higher customer satisfaction. |
To stay visible on Amazon, you need to spend on Amazon Marketing Services, increasing your overall budget. |
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If you are going for the FBA program, Amazon will handle the entire process from shipping to customer support. Also, your products will be tagged as prime, increasing their visibility to prime members. Usually, prime members spend more than non-prime members. |
There is a $0.99 fee per item sold for individual seller accounts and a monthly subscription fee of $39.99/month for professional seller accounts. |
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Allows you to handle customers directly, which boosts your communication skills and offers insights into client’s preferences and behavior. |
If your seller account is suspended and you’re unable to work with Amazon (for example: resolve issues, provide necessary information, or follow their processes for reinstatement), the process of getting your account back could take a long time. |
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Vendor Central Pros |
Vendor Central Cons |
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Amazon buys products from vendors in bulk and manages everything from shipping to customer service. |
Product prices are determined by Amazon. You can not change your retail prices. |
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The products get a “sold by Amazon” tag which can boost customers’ trust and give your products a credibility edge over other third-party sellers. |
With Vendor Central, you have lesser control over your brand representation, customer relationships, promotions, and sales. |
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No upfront enrollment fee for Vendor Central. |
Amazon usually offers extended payments ranging from 30 to 90 days. |
Key Differences Between Vendor Central and Seller Central
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Amazon Vendor Central |
Amazon Seller Central |
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Retail price is determined by Amazon which means vendors have no control over pricing strategies, discounts, or sales. |
Sellers have the autonomy to set and change retail prices of products. |
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In Vendor Central, Amazon is responsible for the whole fulfillment process. Vendors may have options like dropshipping or direct import but are limited in inventory management. |
With Seller Central, you can manage your own inventory. |
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It is an invite-only model. Amazon invites manufacturers or larger wholesalers that have established product lines. |
Seller Central is open to anyone. |
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Advertising options are limited. |
There are more advertising options in Vendor Central. |
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With Vendor Central, you have access to more advanced tools like category insights and sales volume and forecasting. |
You have access to less advanced tools than Vendor Central regarding brand analytics. |
Amazon Vendor Central vs Seller Central: Which One Is Best?
Choosing between Vendor Central and Seller Central depends upon your business goals, growth strategy, and resources. Here is how you can choose which one is better for you:
Choosing Seller Central
Seller Central might be the better choice for startups. It allows for flexibility in branding and pricing. With Seller Central, you can set prices that represent your expenses and targeted earnings.
If building a brand identity and customer relationship is important to you, the control offered by Seller Central might appeal to you.
Choosing Vendor Central
Vendor central might be a feasible option for businesses with consistent production capacity and can align with Amazon’s requirements. It can provide stable revenue from guaranteed orders.
Amazon Vendor Central is best for you if you don’t want to bear the operational burdens associated with managing customer services and order fulfillment.
If you are aiming for credibility associated with Amazon and believe that it will enhance your brand’s credibility, Vendor Central might be a good option for your brand.
Hybrid Selling
Hybrid selling is a model that combines both seller-central and vendor-central. This offers flexibility to businesses to reach their certain target while benefiting from both platforms.
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Use Vendor Central for high volume, lower profit margin products and Seller Central for high margin products. You can manage profit margins more effectively, if certain agreements of Vendor Central reduce profitability, businesses can shift products to Seller Central.
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Amazon has a selective ordering process which makes it challenging to launch new products on Vendor Central. These risks can be mitigated by maintaining a presence on both platforms.
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Vendors in Vendor Central often face situations where Amazon claims inventory shortages, even though the vendor may have shipped the correct amount. This can lead to disputes and the need for reconciliation. Seller Central, especially with FBA, tends to have fewer inventory issues and a more direct path for resolution, as the seller handles their own inventory.
By combining both platforms, you can operate your business seamlessly.
Conclusion
Choosing between Amazon Vendor Central and Seller Central hinges on your business strategies, goals, and operational strengths. Both platforms offer their unique set of benefits and in some cases combining both may maximize your operational efficiency.
Frequently Asked Questions (FAQs)
What is the difference between vendor and seller?
A vendor is a supplier who sells products to another seller or retailer. A vendor has no control over the final price of the product and that is determined by the retailer. The seller sells the products directly to the end customers and is free to set the final price.
Who uses Vendor Central?
Amazon Vendor Central is usually used by manufacturers or distributors for selling their products to Amazon in bulk and Amazon is responsible for selling these products to end customers.
What is the difference between Vendor and Seller Central?
In Vendor Central, Amazon purchases products from vendors in bulk. It is the responsibility of Amazon to manage and ship those products. Returns, refunds, and customer support are also handled by Amazon.
On the other hand, Seller Central allows third-party sellers to list their products on Amazon and manage their inventory, pricing, shipping, and after-shipping processes.
