The buzzword for Amazon sellers in 2016 is Vendor Central. If you’re an Amazon Seller Central user, but also an official distributor, a manufacturer, or selling private label, your Amazon buyer may have been dropping hints recently about becoming a Vendor. As eager as you may be to tap into Amazon Business clientele, there are a few things you should keep in mind.
To see what a Vendor account has to offer, go on reading.
To Be, or Not to Be a Vendor …
You may have read everything that’s on the Vendor Central web page, and you may have even signed up for it, hoping to turn into a first-party seller overnight. But how much do you know about being an Amazon vendor? Is the promise of greater cash flow from a brand new customer base real, or make-believe? That is the question.
To begin with, being a vendor means you’d have less competition, with so many customers willing to pay a premium price for the reassurance that the Amazon logo can offer, you can see how switching to Vendor Central could be a good choice for you.
Then, you wouldn’t need to monitor or change your prices, pay for an automated repricer or risk losing money in price wars. And last but not least, you can expect a considerable volume of sales for your Vendor Central products, assuming Amazon’s done its research on their popularity; with Seller Central, it’s more of a gamble and you have less certainty on what will sell well or fast.
These are all obvious, but let’s go in depth and compare the positives and the negatives for Seller Central, Vendor Central and Vendor Express.
- Disbursements can be made within days rather than weeks, which frees up cash for the business and helps you streamline buying and other processes.
- You have control over what you charge for your products, so you can maximize your profit by increasing your price slightly when sales pick up.
- You can leverage Amazon’s fulfilment capabilities, logistics, customer reach and visibility by opting for FBA.
- You have some access to customer data, complete control over your inventory, and you can carry out customer support services.
- Access to Amazon Pantry, Amazon Marketing Service and Amazon Display Advertising.
- Increased interest in your products from discerning customers, including business customers, with the resources to match their expectations.
- You have better marketing opportunities; you’re allowed to create A+ content (enhanced content page that showcases the product and its story, offers an interactive product tour, a video revealing its features, a comparison matrix, etc.).
- Landing pages can be customized more easily with bullet points and keywords added to the descriptions.
- For an extra fee, customers have access to the Amazon Vine product review network.
- Just as they do for FBA sellers, these orders qualify for Prime Shipping.
- It charges nothing for handling and storage.
- You can also opt for direct fulfilment (drop-ship).
- You will start receiving bulk orders as soon as an item sells.
|Perks||Seller Central||Vendor Central||Vendor Express|
|Access||Open to all||By invitation only||Open to all|
|Main Benefit||Higher margins||Good cash flow||Greater turnover|
|Disbursements||14 days||60-90 days||90 days|
|Inventory Control||Yours||Amazon's||Shared (Direct Fulfilment)|
|Shipment Control||Yours for MFN, Amazon’s for FBA||Amazon's||Shared (Dropship if needed)|
|Qualifies for Prime Shipping||Possibly||Always||Always|
|Listing Limit||None as Pro Merchant||None||85 items|
|Sponsored Product Ads||Yes||No||No|
|Advertising||Yes||AMS, AMG etc.||No|
|Sales Manager||You||Amazon Vendor Manager||Amazon|
- When there’s a lot of competition, price wars can bring your margins down, not to mention you may be competing against Amazon
- Your investment into FBA shipments and storage may never pay off for some products if they don’t sell.
- Higher overheads and greater resources involved in stock maintenance, shipping, customer support.\
- It says it works on net-60 terms, but disbursements are random, and paying you in under 30 days entitles them to a discount.
- Amazon chargebacks happen often, and the slightest oversight in shipping requirements will cost you.
- Reaching out to customer support is a bit more complicated as a vendor, so reversing a charge or investigating a chargeback can take much longer than it does for sellers.
- Buyer data is off limits to you, and you’re not allowed to make direct contact with the customer.
- Amazon can re-write your listings and consequently affect sales.
- Updating an image or a piece of text could take up to 48 hours before it goes live, once approved.
- You don’t have much of an input in what Amazon will charge for the products, but odds are their 50% markup won’t be to your liking.
- To sign up, you must send free samples of your merchandise, which may not be that easy if your inventory is expensive, fragile and/or very eclectic.
- Amazon buys in volume and pays you less than other retailers, so you can expect to sell more, but not necessarily make more profit.
- Negotiations are inflexible, but our research indicates that they would be willing to buy for up to $1 above what they initially offered you.
- You’d have absolutely no control over the sale or the customer’s experience.
This concludes our list of the positive and negative aspects of selling on Amazon. Keep in mind, though, that your choice over the type of relationship you have with Amazon will ultimately depend on the type of business you’re running, and what you’d like to achieve as a vendor or seller.
If you’re a large distributor or manufacturer with limited time for direct sales, Vendor Central could help sort out logistics for you. If your business is more customer-oriented, and if you have the time and resources to put into it, you’re probably better off as a seller. It all boils down to the type of business, your managerial experience, social skills, the resources you have at your disposal, and everything else that makes your company unique.
Melanie takes an active interest in all things Amazon. She keeps an eye on the latest developments, and keeps Amazon sellers up to speed.