Third-party logistics (3PL) providers can be an effective strategy to more efficiently manage order fulfillment and supply chain logistics .…
Selling on Amazon: How to Choose Seller Central or Vendor Central
Selling your products via Amazon comes with a multitude of options, one of which is deciding between Vendor Central or Seller Central.
The most important difference between Vendor Central and Seller Central is the point of contact who actually sells your products. Choosing Vendor Central means Amazon buys your products from you, then resells them to their customers. With Seller Central you are selling your products directly to customers, through the Amazon platform.
This post is intended to explain the full scope, benefits and drawbacks of each so that you can make an informed decision on which option best suits your companies needs.
What is Seller Central?
Amazon Seller Central is the interface that is used by merchants to market and sell their products directly to customers via Amazon. An Amazon Seller Central account is considered a marketplace or third-party seller.
As a third-party seller there are two options for fulfilling orders that are received through Amazon. You can handle all of the tasks of shipping, customer service, and returns for the orders yourself. Or you can choose to allow Amazon to handle this process by enrolling in the Fulfilled by Amazon (FBA) program. If you use FBA, your company name can be added to the order page; your customers will see “sold by BRAND X and Fulfilled by Amazon” when they buy your products.
Quick list of Seller Central benefits:
- Open to anyone
- Sell directly to Amazon’s customers
- Flexible logistical options
- Quick payment terms
- Brand controls retail pricing
- Limited advertising options
- Complex sales process
- Enhanced Brand Content
What is Vendor Central?
Amazon Vendor Central is most often used by direct manufacturers and distributors. If you sell through Vendor Central you are considered a first-party seller. You are acting as the supplier, selling your products directly to Amazon in bulk. Registration on Vendor Central is strictly by invitation only. If a company is selling through Vendor Central the phrase “ships from and sold by Amazon” appears on the order page.
Quick list of Vendor Central benefits:
- Invite only
- Sell to Amazon
- Fixed logistical options
- Traditional payment terms
- Amazon controls retail pricing
- Multiple advertising options
- Traditional sales process
- A+ content
The Differences Between Seller Central & Vendor Central
Vendor Central Pros
Selling your products through Vendor Central as a first-party seller ensures customer confidence by way of the Amazon name recognition. Customers will likely feel assured and confident placing an order through the Amazon platform, rather than a third-party site with less name recognition.
Expanded advertising opportunities
Amazon Marketing Services (AMS) can provide companies with a powerful tool that contains multiple options for getting products in front of shoppers. It allows vendors to drive demand through keyword-targeted ad campaigns that are designed to increase traffic to specific product pages on Amazon. Both sellers and vendors have access to AMS, however Vendor Central provides more powerful options for running ad campaigns with AMS.
Managing advertising campaigns and strategically typing keywords into your product page is crucial for success.
Simplified business model
The process of working with Amazon is simpler through Vendor Central than through Seller Central. For a vendor, the main focus is on filling orders, billing, and avoiding chargebacks. As a seller, especially when utilizing FBA, you are responsible for such things as sales reconciliation, lost inventory, tax liabilities, and many other costs.
Enhanced content and marketing tools
If you are selling via Vendor Central, Amazon offers the option to participate in promotional programs like Subscribe & Save (Amazon based subscription service) and Amazon Vine, which sends your products to top reviewers before they actually appear on the Amazon storefront. With an increased emphasis on the value of consumer feedback as it relates to the quality of a product, user generated content can play an important role in boosting brand trust and generating more sales.
Vendor Central Cons
Amazon does not strictly adhere to the Minimum Advertised Pricing (MAP) guidelines from manufacturers. What this means is that Amazon can and will adjust their retail prices at any time based on their internal algorithms. This could wind up costing a seller additional revenue if it lowers their margins.
Amazon has very specific and rigid guidelines for filling their purchase orders. Vendors that have problems maintaining their stock or quickly fulfilling orders can experience significant chargebacks.
Seller Central Pros
Seller Central provides significant amounts of consumer data at no charge to the seller. You are allowed access to Amazon customer data that can better inform consumer and product trends like who is buying products and where they are located. This can be invaluable when determining a third-party logistic (3PL) provider; figuring out where it’s best to ship from, and if splitting inventory across multiple fulfillment centers could help save money and reduce transit time.
As the seller, you have the ability to control the price you set, so if you are using other retail channels besides Amazon you can maintain uniformity. Additionally, if you need to change your price to match a competitor that can automatically be enabled.
Occasionally sellers discover that their retail partners or unauthorized 3rd party sellers list older versions of their products without their consent. These listings usually include limited content and images. The only way to control and stop these unauthorized listings is through a Seller Central account that is enrolled in Amazon’s brand registry program.
Seller Central Cons
Sometimes the fulfillment and/or shipping costs can limit the ability to sell lower priced items via Amazon. The minimum charge for non-media FBA items that are one pound or less is currently $2.41, which does not include the commission that Amazon charges on top of that. These can quickly add up depending on the size and weight of the products that you are selling.
Bottom Line: Why Your Decision Matters
Amazon has increasingly become the first website that consumers visit when they are making their buying decisions. If a company has not created a strategy to reach these customers they can be missing out an a major piece of the online marketplace.
It can be critical to create a marketing strategy that is specific to Amazon to make sure that you are getting the most out of your ecommerce business.
At DCL we have years of experience supporting both Vendor Central and Seller Central for selling on Amazon. If you are seeking logistics support we’d love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.