Before starting to sell on Amazon’s platform, it is a good idea to get an in-depth understanding of the available business models so that, based on analysis, we can choose the options that are right for our business.
There are two main business models on Amazon:
Amazon Seller Central
Amazon Seller Central is an interface used by sellers to sell their products directly to customers on Amazon. As an external Amazon seller, there are two options for processing orders received through the platform – FBA and FBM.
Amazon Vendor Central
Amazon Vendor Central is most often used by direct manufacturers and distributors. In this model, you act as a supplier, selling your products wholesale directly to Amazon. One thing worth noting is that registration with Vendor Central is by invitation only. Often sellers start with Seller Central and generate demand for their products to encourage Amazon to buy their products in bulk through the Vendor Central program.
As an Amazon supplier, your role is limited to supplying products to Amazon. You have no involvement in the sales process itself.
What are the advantages of Amazon Vendor Central?
Advantages of Amazon Vendor Central
You gain the trust of consumers.
Selling products as a first-party seller through Vendor Central means that to buyers the product is “sold by Amazon.” Such a badge can greatly increase consumer confidence.
Expanded advertising opportunities.
You gain access to Amazon Marketing Services (AMS), which allows suppliers to increase demand with keyword-targeted advertising campaigns designed to drive traffic to Amazon product pages. For Vendor Central users, they have reliable options when it comes to running AMS ad campaigns.
Simplified business model.
Vendor Central’s business model is simpler than Seller Central’s. For a vendor, the main focus is on filling orders to Amazon, billing and avoiding chargebacks. In contrast, as a seller, especially using the FBA model, you are responsible for things like sales reconciliation, lost inventory, tax liabilities and many other costs you need to be aware of.
A+ content and other marketing tools.
In this business model, Amazon offers sellers the option to create enhanced content through Amazon A+ detail pages. You can also participate in promotional programs such as Subscribe & Save and Amazon Vine, in which your product is sent to top reviewers.
Like any model, it also has its disadvantages, there are far fewer of them, but we think it’s worth knowing them to decide if this model will work for us.
Disadvantages of Amazon Vendor Central:
Price control.
Amazon does not strictly adhere to minimum advertised price (MAP) guidelines from manufacturers. Amazon can and will adjust retail prices at any time to remain competitive based on internal data.
Logistics requirements.
Amazon has very specific and rigid order fulfillment guidelines. Suppliers who struggle to maintain inventory and/or fulfill orders quickly face significant chargebacks.
How do you get into Amazon Vendor Central?
Becoming an Amazon vendor is not as simple as setting up an account with Seller Central. As we mentioned earlier, we can only join Vendor Central by invitation.
In order to verify who is suitable for Amazon Vendor Central, there is a global team of recruiters who evaluate sellers according to the following categories:
High sales on the Seller Central platform.
Access to popular items on Amazon’s marketplace.
High conversion rate and low rejection rate.
Sellers must have interesting products displayed at trade shows or exhibitions.
If Amazon is interested in what you’re selling, you’ll receive an email inviting you to join Vendor Central, and you’ll get a packet of information on how the process and business terms of this model work.
Once you accept the terms and conditions, you gain access to your Vendor Central account and can start delivering products directly to Amazon.
Which model should you choose – Amazon Seller Central or Amazon Vendor Central?
You should first consider how you want to do business, as well as look at the benefits each model can offer you.
If you’re a manufacturer or distributor who doesn’t want to sell directly to consumers, Vendor Central is the ideal solution for you. On the other hand, if you run a different type of business or a smaller brand then Seller Central should fit into your company’s strategy.
Still have many doubts?
Contact us and we’ll help you maximize profits from your sales on Amazon based on a multi-step analysis.
