Seller Vs. Vendor Central
There are two different types of selling interfaces on Amazon: Seller Central and Vendor Central. Business owners who sell on Seller central sell their products directly to consumers on Amazon and are known as third party sellers. On the other hand, Vendor Central is for manufacturers and distributors who sell to Amazon; these sellers are known as first party sellers. So, which is a better option for your business? Here we’ll go over how each interface is used and the benefits and drawbacks of both Seller and Vendor Central.
There are different standards of eligibility for Seller vs. Vendor Central. For Seller Central, anyone can register and create an account on the platform. Signing up for Seller Central is simple and requires nothing more than a bank account and routing number, chargeable credit card, government issued national ID, tax information, and your phone number. For Vendor Central, you must be invited by Amazon to join the platform.
With Seller Central, business owners have two options regarding fulfillment of orders. The first option is for sellers to take care of the shipping and handling, including customer service, themselves for all orders. The second option is to use an Amazon service, like Fulfillment by Amazon, in which Amazon handles the shipping, packing and customer service for all orders. With Vendor Central, the options are more limited and Amazon automatically handles the shipping and fulfillment of orders. This is more restrictive because sellers will not have the option to run their own shipping operation independently.
One huge plus of Seller Central is that sellers have full control over their pricing. With Seller Central brands can set the prices of their products, as well as promotions and the number of units they want to sell. This can be great for sales as sellers often reap the most profit with promotions during big sale periods like Amazon Prime Day. In 2021, the most popular purchases on Amazon Prime Day were products included in exclusive Prime Day offers. Thus if business owners use Seller Central, they can take advantage of large sale periods like this and offer exclusive deals to customers. Whereas with Vendor Central, sellers lose this agency and Amazon is in charge of pricing your products. Vendors can provide Minimum Advertised Pricing (MAP) guidelines to Amazon. However, Amazon is notorious for not strictly adhering to these guidelines in order to stay competitive.
Sold by Amazon
One benefit of Vendor Central is that Amazon will display “sold by Amazon” on the product listings of vendors using the interface. This tagline is appealing to customers because it demonstrates that Amazon is involved in the sale and partnered with the vendor. This instills trust in the customer and can increase sales for a vendor.
A significant advantage of Seller Central is that there is more profit potential for sellers using the platform. With Seller Central, sellers can put products on the market for full retail price. They will have to pay Amazon’s commission, plus Fulfillment by Amazon fees (if they use this service), but even so, sellers can reap a large profit with Seller Central. Landing a good profit margin with Vendor Central on the other hand can get tricky. With the manufacturer platform, Amazon has very specific and strict guidelines regarding filling orders. If vendors do not have enough stock, are missing an important label for a product, or are unable to fulfill orders quickly, they can be hit by heavy Amazon chargebacks.
Additionally, the co-op fees that come with Vendor contracts can be hefty as well. Co-op fees include things like Market Development Funds, freight allowance, and damage allowance. These fees are given to Amazon to cover some of their operating costs but can get very pricey for vendors. Business owners using Vendor Central also must sell their products to Amazon at wholesale prices; this means your profit margins will only be around 50% for any given product.
When looking at Vendor and Seller Central, another factor to consider is control. Within the Seller Central platform, sellers have control over many different aspects of the selling process. For instance, many times third party sellers will sell a manufacturer’s products without consent. With a Seller Central account, sellers can control these unauthorized listings by signing up for the Amazon Brand Registry and registering as a restricted brand on Amazon. With Seller Central, business owners also have control over messaging with customers and returns (if not using FBA). This is helpful because sellers can maintain their brand image as they please. While with Vendor Central, messaging and returns are automatically controlled by Amazon. This means there is a not a direct connection between the actual manufacturer of the product and the customer buying it. Lastly, Seller Central also provides business owners with more flexibility when updating their product listings. This includes title, bullet points, and product descriptions.
With Seller Central, business owners gain access to robust analytics that can help them boost their sales. Some of the features include performance metrics and third-party software that provides automated pricing or imaging and account management. In 2019, Amazon spent $15 billion and launched 225 new tools and services for third party sellers. Seller Central also offers educational resources to teach sellers how to succeed on the platform. Basically, Seller Central comes with many tools, services, and features that help sellers organize their listings, monitor their performance, and scale their brand. Vendor Central does not offer analytics for vendors, and while there are some services and software available on Vendor Central, Seller Central offers a far more comprehensive list of services, tools, and software.
One last aspect to consider when deciding between Seller and Vendor Central is support. Seller Central offers decent support when something goes wrong within the selling process. Seller Central offers support when there are problems with things like payment, inventory, and listings. Vendor Central on the other hand offers no such support. With the supplier interface, vendors are pretty much on their own.
All in all, both Seller and Vendor Central offer distinct services and have specific uses for sellers. For the majority of sellers, Seller Central is an arguably simpler, and more beneficial platform to use. Vendor Central does have its advantages, but keep in mind that most sellers do not have access to this interface. And even if you do, Vendor Central comes with many restrictions, and less support from Amazon. With Seller Central, sellers not only have more control and support, but also have great profit potential, and the platform is open to anyone. Now you have everything you need to decide which selling platform best suits your business’s needs. Happy selling!