With over 300 million shoppers on Amazon.com, businesses can offer customers a range of experiences. Vendors and sellers have become a large part of Amazon’s behemoth business and the ecommerce shopping experience. According to Amazon’s published results, third-party sellers generated $31.8 billion dollars in revenue in 2017. As of the first quarter of 2018, more than 50% of paid units on Amazon were sold through third parties.
With so much on the table (or, rather, in the shopping cart), comes confusion and questions. Should businesses become a vendor or a seller on Amazon? Or, perhaps, do both? Unfortunately, there is not a simple answer, as it depends on the particulars of your business, including the product range, margins, inventory levels, logistics, and marketing capabilities and desires.
Defining the difference
Sellers and vendors on Amazon use a dashboard and toolkit provided by Amazon to sell their product. Vendors, using Vendor Central, sell product to Amazon’s retail side to be sold by Amazon to end consumers, taking on the role of wholesalers. Sellers, using Seller Central, sell product directly to consumers on Amazon under their own business name, taking on the role of retailers.
Sellers manage orders, inventory, customer service and set their own retail prices. There is the option to enroll in the Fulfillment by Amazon (FBA) program, which allows Amazon to handle order management for a business. With vendors, Amazon manages the orders, inventory, customer service and set the retail prices.
Pros of being an Amazon vendor
The most obvious perks of being a vendor versus a seller are the marketing and merchandising services available that vendors can utilize. Through Vendor Central, businesses can participate (for a sometimes hefty cost) in the Vine reviews program, marketing packages, build A+ detail pages, add videos, offer promotions with visibility on the Today’s Deals page, and enlist in marketing with Amazon Advertising, giving access to sponsored ads, product display ads, brand pages and more.
Since vendors sell their products to Amazon, the products are “sold by Amazon” on the website, instilling a sense of confidence on the consumer’s part. Vendor Central is invite-only, with longer (more traditional) payment terms and sales processes which may work better for certain businesses with established logistics or certain products and categories.
If you are interested in detailed and extensive reporting, Vendor Central also has a wealth of reports available in Amazon Retail Analytics Premium (ARAP), though it comes at a cost.
Pros of being an Amazon seller
The most obvious perk of being a seller on Amazon, is a greater degree of control and protection for their brand, as well as the potential for greater margins. Sellers can set their own prices and listing details. Seller Central also offers owners the opportunity to use the Brand Registry to influence and protect their intellectual property and brand. Registered brands’ content will take precedence over other content on a product’s detail page, making it a reliable way to ensure a good customer experience for your products. Enrolling in the Brand Registry also unlocks additional selling tools, such as Enhanced Brand Content (EBC) which is similar to A+ pages on the vendor side, Brand Stores and Sponsored Brands (ability to create Headline Search Ads).
If a business is hoping to sell internationally or in a multi-channel situation, they can do this under one unified seller account in Seller Central. Vendors, however, must establish a relationship with a vendor manager or vendor support team in each country.
Amazon offers sellers more flexible logistic options and quicker payment terms. Anyone can sign up to be an Amazon seller and use Seller Central.
A hybrid approach
Depending on your business needs and administrative capabilities, the choice to become a vendor when invited may be tempting but also worrisome. Perhaps your products are doing well under your seller account, but you are unsure whether you can manage the margins or the fulfilment obligations for all of your products. It is possible to take a hybrid approach, breaking down the product assortment (if you have a wide range) into categories that can support each platform and maximize your results. You can also transition product slowly and monitor results.
From this brief overview touching on the basics, there are clearly pros and cons to both Vendor Central and Seller Central. It is important for businesses to analyze specifics to their product ranges, business goals, and administrative capabilities (as both require a hands-on approach to be successful).
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