The standard pathway for brands to offer their products on Amazon is to start with a Seller Central account, and then, once they meet sales volume and other criteria, receive an invitation from Amazon to open a Vendor Central account. But, even after migrating to Vendor Central, many brands have maintained a presence on both Seller Central and Vendor Central (referred by Amazon marketers as a hybrid model), and some have opted to reverse the process and go back to selling primarily via Seller Central after they’ve tried going the Vendor route.
If you’re an Amazon Vendor, you may have considered this as well. In this article we’ll cover the reasons behind this decision and help you determine whether it’s the right approach for your brand.
Vendor Central vs. Seller Central – A Quick Overview
If you’ve found this article but you don’t yet have a Vendor Central account, here’s a short summary of the differences between Amazon Vendors and Amazon Sellers.
Vendors (also known as 1P) sell their products to Amazon at a wholesale price, much as they might also sell to distributors, or directly to brick and mortar stores. Amazon places orders for your products, adds their markup, and sets the list price. Amazon manages the relationship with the customer, including customer service and returns, and Vendors do not see customer data.
Sellers (also referred to as 3P) use the Amazon platform to sell their products directly to customers. As a Seller, you can be a brand owner, an exclusive distributor, or an authorized (or unauthorized) reseller. You can make use of Amazon’s fulfillment service (FBA), or manage your own fulfillment (FBM). Although Amazon automatically accepts return requests for many categories, as a Seller your relationship is directly with the customer, and you have a limited set of options for communicating with your customers.
Pain Points for Vendors
At first glance, operating as a Vendor appears to be the simpler choice – you just sell your products to Amazon, and let them manage all the logistics. But, this simplicity comes at a cost, and new Vendors often find that it’s not quite as straightforward as it first appears.
Some of The Challenges
Amazon sets the forecast, not you. While you can use the Amazon Born To Run (BTR) program to load in inventory for newly launched products, after that, you’re beholden to their forecasting system. It’s not perfect and is affected by factors not related to organic demand for your products (like Amazon warehouse capacity during peak sales periods like Prime Day and the winter holidays).
Under forecasting can interfere with your revenue forecasting and manufacturing, while receiving unexpected POs can result in additional charges if you can’t fulfill them on time.
Pricing can be a challenge. Amazon generally aims to be price competitive, but not a price leader. They use pricing data collected from other retail sites to set their pricing, and while you can set list prices (MSRPs) for your products, Amazon is liable to sell at higher than list price if they’re not making what they consider to be adequate margin. And in some categories, they may match competitive prices and charge price protection fees to recover a guaranteed minimum margin determined by your Vendor agreement.
In worst-case scenarios, an unauthorized seller liquidating your product on another marketplace like Walmart can cause you grief by expecting you to be able to support that same discount pricing on Amazon.
Amazon collects fees, even when they shouldn’t. Ask any Vendor that’s been working with Amazon for a while, and you’ll hear stories of the time and effort required to dispute incorrect shortage claims, which can occur quite often in some categories. Amazon often mistakenly claims co-op deductions for products not received, or processes price claims incorrectly.
Amazon’s fee collection be the most frustrating for Vendors, as Amazon is not proactive in addressing incorrect claims and chargebacks, and Vendors who sell significant volumes on Amazon find that they need to spend hours each month reviewing discounts, deductions, and chargebacks for accuracy and then going through the steps to recover those fees – time which could be better spent elsewhere. We can’t expect Amazon to address this any time soon, because these mistakes almost always work in their favor.
This is why we’ve created tools such as our BeAm.Fi software. Our service sheds light on discrepancies that arise between PO’s, invoices, payments, shipments and more while easing the process of disputing fees. Our customers typically report that this alone saves days of work per month. Recoverable deductions can eat away a significant part of your revenue, and the only way to catch these is to have someone stay on top of these and to chase manually (or to pay a high commission to a third party to do so). Our tools and team can manage all the work for you to ensure you get every penny of fee and deduction reimbursement that you are entitled to.
Should You Move from Vendor Central to Seller Central?
Switching your focus to operating as a 3P Seller of your own products may seem to address many of the issues we’ve covered above. But, it’s important to understand the main reasons that you might not want to transition from operating as a Vendor, to operating as a Seller.
You’ll be competing with your own resellers. Every brand’s relationship with their reseller channel is different. If you already have a reseller or distributor network of any size, they may not take kindly to you selling directly to consumers. One advantage of selling direct to consumers is your ability to set the selling price, which can cause friction if your resellers are selling above MSRP.
In practice, brands using Seller Central as a direct-to-consumer channel keep their pricing at MSRP to avoid conflicts with resellers. Promos and discounts are typically run only in coordination with authorized resellers.
You may not get the same level of support from Amazon. If you’re an established Vendor on Amazon that meets a particular sales threshold, you’ll have a Vendor Manager (we’ve been hearing lately that this resource may be becoming more and more scarce), who also works with other vendors in your category. The amount of attention you’ll get from your Vendor Manager can vary, but good Vendor Managers can help you in a lot of ways, like coordinating POs with your forecasting and manufacturing capacity, and coming to the rescue if you’re dealing with operational issues that the Amazon support team can’t solve.
Sellers have access to a similar service, called SAS Core, but it comes at a steep annual price, and the waiting list to even be accepted into the SAS Core program can be lengthy. If you move from Vendor to Seller, it may be months before you can get the same level of support.
Some Advantages of Being A Seller
Despite those major considerations, there are a few unique advantages to being a Seller: it can cost less, and the cost structure is easier to understand. You can replenish your FBA inventory at any time, and as covered above, you set your own end customer price. And, once you’ve gotten properly set up on Amazon Brand Registry, you have access to most of the same merchandising and promotional tools, like A+ content, an Amazon Store, Amazon Vine, and self-service Amazon Advertising management.
Vendor Central vs. Seller Central: A Feature by Feature Breakdown
Options and features can vary slightly between marketplaces and product categories, so this is a broad overview, and you may not have access to all the features covered here. If you have any questions, our friendly team is happy to help at email@example.com.
|Vendor Central||Seller Central|
|Access to customer data||No||Limited|
|Advanced Traffic and Conversion Rate Reporting||No||Yes|
|Third Party Fulfillment Options||No||Yes|
|Content A/B Testing||Yes||Limited|
|Stores and A+ Contents||Yes||Yes|
|Subscribe and Save||Yes||Yes|
|Self-Service Amazon Advertising||Yes||Yes|
|Amazon Analytics and Brand Referral Bonus||Yes||Yes|
|Direct Marketing to Customers with MYCE||Yes||Yes|
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