Spoiler alert: YES if you want to launch new products and enter new markets, while controlling your Amazon marketing. NO if you have minimal resource or don’t really understand Amazon marketing, you’re not planning new market entry or you are only selling a small number of products.
WHAT IS VENDOR CENTRAL…?
Vendor Central is like a wholesale relationship. You have to get invited by Amazon to sell on Vendor. An Amazon buyer places an order with your company. You negotiate the commercial agreement. You don’t control the retail price. Amazon sells at a price which may change weekly.
WHAT IS SELLER CENTRAL…?
With Seller Central it’s more like an e-commerce website. You sell to the consumer. Super easy to set up in a couple of clicks. But then you have to manage the sales, marketing, logistics and customer service yourself.
REVENUE: You negotiate the price with Amazon
LOGISTICS: Purchase order (you send to Amazon warehouse) or direct fulfilment (you ship)
What we love about Vendor Central: BIG ORDERS
- Big companies can’t escape the fact that Amazon buys in bulk. This could represent a significant chunk of revenue. So, Vendor really works if you have bestselling products whose market is growing. It also might work for you if you have only one or two key products that you would be shipping in bulk to consumers.
- Amazon always promotes products it sells – you are more likely to get the buy box and your ads will be ranked better. You can get access to more ad placements, and you can be part of Subscribe & Save programs and Vine Reviews
Disadvantages of Vendor Central: NOT FLEXIBLE
- Amazon make it hard to get data about the end consumer who is buying your product. This makes it more tricky to figure out how to increase sales to the end consumer. You have to pay to get reports on conversions, purchase behaviour and cross-selling opportunities with Amazon Retail Analytics Premium
- Your wholesale customers won’t be happy competing against Amazon if you are also selling your products to third parties (not Amazon) who have Seller Central accounts. This needs a clear strategy.
- You pay for funded promotions that you can’t control in detail.
- You may have no relationship with the Amazon buyer. Your Amazon buyer may not reply to your emails. They may actually hinder you. Your buyer may just be a bot doing automatic re-orders (we’ve heard all the stories).
- If your products sell, Amazon buy more. If your products don’t sell, Amazon may de-list you. So Vendor does not suit product launches or new market entry.
- You lose control of how your brand and your product is represented on Amazon. Products are shipped in a brown Amazon box, and your ability to customise the buyer experience is limited.
- You can end up paying A LOT for Chargebacks. These are charge disputes, aka fees for not meeting Amazon requirements – for example having a watertight logistics process for shipping to Amazon. Chargebacks can be hefty – Larger Amazon Vendors may employ someone full time to manage these
REVENUE: You pay Amazon fees
LOGISTICS : either send to Amazon (FBA) or Seller-Fulfilled (FBM)
What we love about Seller Central: CONTROL
- You control the price you sell at and you control all the promotions and vouchers. So you can launch a new product at a low price, get sales history and reviews, and then gradually increase the price. You sell what you want, not just what Amazon is prepared to buy.
- You know who is buying your product (you even see their address).
- You handle shipping, customer service, and returns for orders – or you can choose a third-party logistics provider (3PL) or Fulfilled by Amazon (FBA). If you use FBA, your company name is added to the order page. Customers will see “sold by [Your Brand] and Fulfilled by Amazon” when they buy your products, increasing consumer trust.
Inventory management and cashflow: Having physical control of your own inventory gives you the ability to adapt to market demands. You also get paid every 2 weeks from Amazon if you’re on Seller Central.
- Consumer data: you can easily access detailed buyer metrics like conversion rates and impressions for free (the trick is doing something with all the data ….)
You have more control over your listings and you can easily optimise them based on your consumer data.
Disadvantages of Seller Central: TIME
- Seller Central could be a major time suck for companies used to Vendor Central. Do you have time and resources to learn about marketing and logistics? Or do you have budget to outsource marketing and ad spend to an agency?
- The take-home: Companies already on Vendor Central looking to “Double Dip” should consider the following:
Do the numbers stack up if you use Seller Central? Will your products still be profitable once Amazon fees, advertising and shipping are taken into account?
- Do you really have resources and budget to take care of marketing on Seller Central? This is in addition to managing the logistics and customer service side. Your products will die a slow death and never be seen …. or you will throw a lot of money at advertising for nothing … if you have not considered this.
- Do you have a plan for new product launch and new market entry? For example, avoid attempting to run launches and advertising on ALL of Amazon’s foreign markets at once…
At Sell Beyond we see A LOT of companies on Seller Central bite off more than they can chew because there is so much choice about pricing, marketing and consumer engagement.
If you don’t plan properly, either you or your employees could spend a lot of time fighting fires and wasting time on Seller Central.