Table of Contents
- What is Amazon Seller Central?
- Amazon Seller Central Benefits
- What is Amazon Vendor Central?
- Amazon Vendor Central Benefits
- The Differences Between Seller Central & Vendor Central
- Amazon Vendor Central Pros
- Amazon Vendor Central Cons
- Amazon Seller Central Pros
- Amazon Seller Central Cons
- FBA vs. SFP vs. MFN
- Bottom Line
Selling your products via Amazon comes with a multitude of Amazon fulfillment options, one of which is deciding between Vendor Central or Seller Central.
The most important difference between Amazon Vendor Central and Amazon 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 marketplace.
This article 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 company’s needs.
What is Amazon Seller Central?
Amazon Seller Central is the interface that is used by merchants to market and sell their products directly to customers within the Amazon marketplace. An Amazon Seller Central account is considered a marketplace or third-party Amazon seller (3P).The Amazon seller is responsible for setting up and maintaining their seller account.
Amazon offers both individual and professional seller accounts. While the professional seller accounts require a monthly subscription, most businesses will opt for the professional seller accounts as it offers analytics tools, preferential marketing treatment, and a slew of other features a professional Amazon seller will need to scale their business.
As a third-party Amazon seller there are two options for fulfilling orders that are received through the Amazon marketplace. You can handle all of the tasks of shipping, customer service, and returns for the orders yourself or through a third-party logistics provider (3PL) you choose. This program is called Amazon Fulfilled by Merchant (FBM). Alternatively, 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. The number of successful FBA sellers continues to grow and there is a growing demand to buy FBA businesses.
This article provides a detailed breakdown of the different Amazon fulfillment options.
Quick list of Amazon Seller Central Benefits:
- Open to anyone
- Control of the seller account
- 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 Amazon 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. Often times, sellers start with Seller Central and generate demand for their products to entice Amazon to buy their product in bulk through the Vendor Central program, like other ecommerce or brick and mortar retail channels (i.e. Walmart, Target, Bestbuy). If a company is selling through Vendor Central the phrase “ships from and sold by Amazon” appears on the order page.
Quick list of Amazon Vendor Central benefits:
- Invite only
- Sell to Amazon in bulk
- 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
Amazon 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 to Amazon, 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. Having a primary buyer in Amazon is far simpler than servicing hundreds, if not thousands, of individual buyers an Amazon seller may encounter with Seller Central.
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.
Amazon 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 which can eat into the Amazon sellers profits.
Lack of sales channel diversification
In many cases, Amazon is the largest single buyer for many brands/sellers. While this can be a for business, it’s also very risky for sellers to be reliant on a single buyer. Experienced sellers want to have multiple sales channels with the bulk of their buys coming from their own ecommerce storefront. In early 2019, Amazon abruptly stopped buying from a lot of sellers with no warning or explanation. This left a lot sellers scrambling to make up for the lost sales revenue.
Loss of brand control
Product or company branding can be a huge differentiator and advantage for sellers if leveraged and managed properly. However, Amazon sellers lose a lot of control of their brand messaging once they sell it to Amazon via the Vendor Central program. Sellers lose control of how their product is represented in the Amazon marketplace, products are shipped in a brown Amazon box, and the sellers ability to customize the buyer experience is limited.
Amazon 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.
If you’re a small to medium sized business, being able to adapt to your customers’ needs can make or break your business. This is especially true if you product a limited amount of product. Having physical control of your own inventory gives you the ability to adapt to market demands (consumer or vendor).
Amazon 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. You’ll need to have a strong understanding of the Amazon FBA costs and incorporate it into your decision making process.
Sales and marketing
While being responsible for your own sales and marketing is a must for a lot of Amazon sellers, some sellers may not have the resources or knowledge to do so. Like any standalone storefront in the Amazon marketplace, the Amazon seller will need to constantly manage the store by updating the product description, marketing their products through various avenues, and adjusting to the consumer behavior.
All products sold through the seller central program are subject to a referral fee paid to Amazon for each item sold. The referral fee is a percent of the products sales price, excluding taxes. These fees vary by product category and range from 5% to 20% of the product sales price. The fees can go as high as 30% to 45% but are typically tied to Amazon products or services, including Amazon device accessories. These fees can be substantial depending on the category and eat into the merchant’s profits.
Amazon Seller Central: Fulfilled by Amazon (FBA), Seller Fulfilled Prime (SFP), or Merchant Fulfilled Network (MFN)
As a third-party seller in the Amazon Seller Central program, you have a three options on how to fulfill your orders. Fulfilled by Amazon (FBA) is the service where Amazon stores and fulfills your orders from the Amazon warehouses. They process millions of orders per month through this service on behalf of third-party sellers. Seller Fulfilled Prime (SFP) and Merchant Fulfilled Network (MFN) is the program when the third party seller opts to store and fulfill Amazon orders themselves or through a third party logistics company (3PL) they hire and manage.
All three Amazon Seller Central programs have their pros and cons which we covered extensively in our article Selecting the Right Amazon Fulfillment. In addition, you might find The Amazon 3PL Trap and 6 Advantages to using Amazon Seller Fulfilled Prime insightful.
Tags: Online Marketplace