Seller Central vs. Vendor Central
Amazon’s model provides various fulfillment options to sellers. Among them are Seller central and vendor central. Seller Central and Vendor Central differ in terms of the fulfillment method i.e., who sells the products to the consumers. In Amazon Seller Central, Amazon sellers are the point of contact meaning that they sell the goods to consumers. This is a more direct method where the sellers directly interact with the customers. Another fulfillment method is Amazon Vendor Central, whereby sellers sell to Amazon and then Amazon resells them to customers. So it is obvious that Seller Central is a single step while Vendor Central is a two-step process.
Amazon Seller Central
In order to sell and market their goods directly to customers in the marketplace, retailers most commonly use an interface called Amazon Seller Central. This entails the Third-Party or Amazon’s 3P framework. A third-party Amazon seller is someone with an Amazon Seller Central account (3P). In 3P, Amazon sellers are responsible for setup and to maintain the seller account.
Amazon Seller Central offers professional and individual accounts. The professional seller account requires a subscription that is paid monthly, however, businesses are most likely to opt for this option. This is mainly because the professional seller account entails business analytics tools along with preferential marketing treatment and certain other features as well that help sellers to scale the business.
As a third party (3P), sellers can choose either Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). There are two alternatives available to third-party Amazon sellers for completing orders placed through the Amazon marketplace. Order shipment, customer service, and refund management can all be handled in-house or by a third-party logistics provider (3PL) of your choice. The name of this program is Amazon Fulfilled by Merchant (FBM).
As an alternative, you can sign up for the Fulfilled by Amazon (FBA) service and let Amazon manage this procedure. If you use FBA, your business name can be added to the order page. When buyers purchase your products, they will see Fulfilled by Amazon along with your brand name. There is a rising demand for FBA businesses for sale as well as an increasing number of profitable FBA sellers.
Features of Amazon Seller Central
- Open access
- Full control of the account
- Direct sales
- Flexible logistics
- Easy payment terms
- Controlled retail pricing
- Limited advertising
- Complex process
- Enhanced Brand Content
Amazon Vendor Central
Direct distributors and manufacturers most frequently use Vendor central by hiring Amazon vendor central management services. One is categorized as a first-party seller if they sell via Vendor Central. Selling your goods in bulk straight to Amazon in your capacity as the supplier. Only those who have been invited may sign up for Vendor Central.
As with other e-commerce or physical retail channels, merchants frequently begin with Seller Central and build demand for their goods to persuade Amazon to purchase them in quantity through the Amazon Vendor central program (i.e. Target, Walmart, and Bestbuy). In the case of Vendor Central, the order page clearly mentions that the items are shipped and sold by Amazon.
Features of Amazon Vendor Central
- Invite only
- Bulk shipping
- Fixed logistical options
- Traditional payment
- Amazon controlled retail pricing
- Several Advertising options
- Traditional sales
- A+ content
Seller Central vs Vendor Central
Pros of Amazon Seller Central
- Enhanced Data – Seller central provides detailed data to sellers without any extra costs. Sellers can access Amazon customer data to get a better assessment of the changing customer trends and product liking. The data shows information such as where the buyers are located. Such information is crucial for sellers while choosing 3PL service providers, figuring out the best shipping locations, and deciding whether or not to split inventory across multiple fulfillment centers.
- Pricing Control – As an Amazon seller, you get to set the retail prices for your inventory. Seller central also helps maintain uniformity when you are using other retail channels besides Amazon.
- Brand Registry Program – Amazon Seller Central allows sellers to control their listings to stop unauthorized third-party sellers or retail partners to list older versions of the products without prior consent. The Amazon Brand Registry Program helps in this regard.
- Inventory Control – Being able to adapt to your customer’s needs is important especially if you are a small to medium-sized business. Seller central allows sellers to have physical control of their inventory and they can also easily adjust to market demands.
Cons of Amazon Seller Central
- Costs – Sellers need to bear certain fulfillment and shipping costs that make it harder for them to sell items at lower prices.
- Marketing and Sales – Although sellers need to be responsible for their marketing and selling, not everyone has the right knowledge or the right resources to do this properly. Amazon sellers need to continuously monitor, edit and update their storefronts.
- Referral Fees – Sellers need to pay referral fees to Amazon for every item sold. The referral fees range from 5% to 20% of the sales price excluding tax. Depending on the product category, the referral fee may even exceed 30% of the sales prices.
Pros of Amazon Vendor Central
- Shopper Confidence – Selling as a first-party seller not only ensures customer confidence but also helps boost your sales. This is a better option instead of third-party sellers that have less recognition.
- Advertising Opportunities – Amazon Marketing Services (AMS) allows sellers to use multiple options for marketing their products. Vendors and sellers can use AMS to derive a higher demand for their products. Vendor Central, however, provides more powerful options for running ads.
- Simple Business Model – Vendor Central is simpler than Seller Central since Vendor Central’s main focus is only to fulfilling Amazon billings and avoid any chargebacks. This means the vendors are responsible for lost inventory, sales reconciliation, taxes, and other such costs. Since Amazon is the prime buyer, selling is fairly simple.
- Enhanced Tools – Amazon provides the chance to take part in promotional programs which deliver your products to prominent reviewers. If you sell through Amazon vendor central, user-generated content may be very helpful in promoting brand trust and increasing sales, especially in light of the growing importance of customer feedback concerning the caliber of a product.
Cons of Vendor Central
- Price Control – Since Amazon sets the retail price, it is not strictly necessary that it adheres to the minimum prices (Minimum Advertised Pricing Guidelines) by the manufacturers. Amazon has the authority to set prices based on its algorithms.
- Logistic Requirements – Sellers have to abide by very rigid and specific guidelines for order fulfillment. Vendors working for Amazon vendor central management services who fail to comply with these guidelines may face severe chargebacks that can even cost them their Amazon profits.
- Lack of Sale Channel Diversification – Since vendors only sell to Amazon, it is their single buyer. Relying on a single seller might not prove to be a very efficient business strategy. An incident occurred in 2019 when Amazon stopped buying from many of its vendors.
- Brand Control – Brand image can develop loyalty in customers. With Vendor Central, vendors lose control of their brand and brand messaging which they would have otherwise used to attract several customers.
Summary
After the discussion, it can be seen that both fulfillment options have their benefits as well as their drawbacks. This means that both methods are workable and the sellers need to decide which one suits them best as per their needs. There is an opportunity cost for either of the decisions so it is better to take an informed decision.
Frequently Asked Questions
What is the difference between Seller Central and Vendor Central?
The most significant difference between Seller Central (selling to customers) and Vendor Central (selling to Amazon) is who sells the products.
Is Seller Central similar to Vendor Central?
Seller Central allows sellers to sell directly to customers, whereas Vendor Central allows sellers to sell to Amazon and then Amazon resells the products to their customers.
What is the difference between seller and vendor?
Amazon sellers are named Sellers when they sell directly to customers while they are termed vendors when they sell to Amazon.
Is Amazon shutting down vendor central?
As per some 2019 reports, Amazon plans to discontinue vendor central.
Feel free to consult XpertVA’s professionals for efficient and experienced Amazon Seller Central and Vendor Central Management Services. Book a consultation with our skilled professionals and grow your business.
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