Amazon Vendor versus Amazon Seller:
What’s the difference?
Have you considered scaling your business through Amazon, but are confused about whether Amazon Vendor Central or Amazon Seller Central is the best fit?
In this blog, we will dive into the differences between the two, discuss how to become an Amazon Vendor or Seller, as well as share tips for success on either platform.
Let’s get started and explore which option is right for you…
What is Amazon Vendor Central?
Amazon Vendor Central is a platform that enables retailers, manufacturers and distributors to sell their products directly to Amazon. As well as granting access to Amazon’s expansive customer base, it offers additional services such as marketing tools and analytics.
Fundamentally, becoming an Amazon Vendor enables businesses to sell their products in large quantities, with Amazon purchasing the products to sell on Amazon.com.
What is Amazon Seller Central?
In contrast, Amazon Seller Central is a platform where individuals and businesses can sell their products directly on Amazon.com. They have the option to utilize fulfilment services such as fulfilled by Amazon (FBA) or fulfilled by merchant (FBM) to meet customer demands. Unlike Amazon Vendors, Sellers can list and sell their own products, giving them more control over listings and pricing.
Pros and cons of selling on Amazon as a vendor
Advantages of selling on Amazon as a vendor
The obvious advantage of becoming an Amazon Vendor is that Amazon purchases products directly from you and sells them on the Amazon platform on your behalf, providing access to a large and loyal customer base and providing you with comfort around sales volumes and subsequent income. You also gain access to Amazon’s internal algorithms, enhancing your product’s visibility in search results and can create keyword-targeted ad campaigns to drive traffic directly to your products. Additional features such as Amazon Vine also enable you to generate product reviews, boosting your credibility – all tools designed to further enhance your sales.
Lastly, by utilising Amazon’s renowned logistics infrastructure and fulfilment centers, you ensure efficient order processing and delivery – a particular benefit for retailers or manufacturers who may not have the same capabilities in house.
Disadvantages of selling on Amazon as a Vendor
While selling into Amazon can significantly increase your brand’s reach and therefore your sales, maintaining complete control over brand image can be a challenge once a third party is involved.
Similarly, you may have to give up some control over pricing, as Amazon implements a Minimum Advertised Pricing (MAP) policy, as well as taking control of inventory management. For some businesses this might be seen as another positive, as it takes the responsibility off their shoulders, but for those who like to stay in the driving seat, they should be aware that they will sacrifice some of this control when working with a large retailer.
There can also be broader challenges related to an Amazon Vendor Central business model. The nature of selling into a large retailer such as Amazon means they will likely implement large minimum purchase orders and while this can be superb for your sales volumes, if you are heavily reliant on Amazon as your largest single buyer, that comes with its own risks. It can also make raising additional working capital tricky, as many lenders set limits on customer concentration, although there are specialist lenders such as Growth Lending that are experienced at working with Amazon Vendors and will be able to structure facilities around these risks.
Pros and cons of selling on Amazon as a Seller
Advantages of selling on Amazon as a Seller
Working with Amazon as a Seller has its advantages and disadvantages too.
Similarly to Amazon Vendors, the obvious benefit of becoming an Amazon Seller is access to the extensive Amazon customer base and the ability to use Amazon advertising to promote products, increase marketplace reach and enhance sales. You can also utilize promotional programs such as Subscribe & Save to attract and retain customers.
Another benefit to operating as an Amazon Seller rather than a Vendor, is that you keep complete control over your pricing strategies and inventory management, enabling you to grow your business exactly as you would like, including expanding your business beyond Amazon by diversifying to other e-commerce marketplaces.
Disadvantages of selling on Amazon as a Seller
Selling on Amazon does come with its fair share of challenges too.
One major disadvantage lies in the scale of Amazon – while you get access to a broad audience, you’ll also be in competition with many other third-party sellers, all fighting for the top search rankings and securing sales.
Another disadvantage lies in the fact that you retain responsibility for the majority of your business operations. As an Amazon Seller you retain full ownership of your supply chain, but managing fulfilment and logistics can be quite challenging, especially for new or less-established Sellers. Dealing with chargebacks and returns can also be complex and time-consuming, especially if you do not have an established customer service function.
Amazon Sellers are also responsible for tax liabilities and compliance, as well as navigating listing restrictions and limitations in product categories.
How to become an Amazon Vendor
Eligibility criteria for the Amazon Vendor Program
To be eligible for the Amazon Vendor Program, you need to meet certain criteria. This includes having a strong product offering with high demand potential and demonstrating a consistent sales record with positive customer feedback. It’s also important to maintain good operational metrics, adhere to Amazon’s policies and fulfil their requirements for product quality and reliability. Additionally, you must pass through Amazon’s evaluation process for vendor consideration and prepare your product catalog to ensure it meets the requirements.
How to apply for the Amazon Vendor Program
Becoming an Amazon Vendor is not as simple as submitting an application – it is an invitation-only platform, so you have to wait to be invited to join.
Amazon has a global vendor recruitment team that is constantly searching for new businesses to join the platform – they’ll be looking at particularly successful Sellers on Amazon Seller Central, as well as more conventional retail distribution routes such as trade shows.
Once you have been invited to join the platform an Amazon representative will explain more about the process and their terms and conditions. If you agree, you’ll be granted access and can start selling to Amazon directly.
How to become an Amazon Seller
Eligibility Criteria for Amazon Seller
To become an Amazon Seller, you need to meet certain eligibility criteria. You will need to submit details such as your government identification, tax information and the bank account into which your sales income will be paid.
International sellers have additional requirements to fulfil, as do those in more highly regulated retail categories, such as ‘fine art’. It is also important to comply with Amazon’s policies and guidelines, but by meeting these criteria, you can start selling on Amazon’s vast e-commerce platform and tap into its powerful tools to reach millions of Amazon customers.
How to register as an Amazon Seller?
To register as an Amazon Seller, visit Amazon Seller Central and click on “Register Now.” Select the appropriate marketplace, provide your business information and tax details. Set up shipping settings and preferred fulfilment method, then confirm your registration. Once approved, you can start selling as a first-party supplier.
Individual sellers can start with basic selling plans, while professional sellers pay a monthly subscription fee.
Tips for success as an Amazon Vendor or Seller
Optimize your product listings
For both Sellers and Vendors, getting your products in front of potential customers is key, so product listings should be optimized to include the keywords that customers will likely be searching for.
You then need your product to stand out from competitors with a similar offering – showcase your product in its best light by using high quality images and compelling and accurate descriptions.
You should also make it a priority to monitor and respond to customer reviews and questions, as well as regularly updating your listings with new information.
Following these tactics can help improve your visibility in search results, but also help convert more of the customers that do find you.
Utilize Amazon advertising
Amazon advertising is a powerful tool to increase visibility and drive traffic to your listings, particularly if you use the tool alongside customer data and insights.
Run keyword-targeted ad campaigns that increase the visibility of your products on the platform and leverage Amazon Marketing Services (AMS) for more comprehensive marketing campaigns.
Additionally, taking advantage of promotional programs like Amazon Vine can help boost your product’s exposure and increase your brand’s credibility.
Focus on customer experience
Competitive pricing, high quality products that leave customers satisfied and an overall seamless purchasing experience are all likely to lead to repeat custom.
Providing accurate product information and detailed product pages that enable customers to make informed purchasing decisions can help with this, as well as responding promptly and professionally to customer inquiries.
Issues or complaints should be dealt with in a timely manner and actively encouraging and responding to customer feedback will help contribute to a satisfactory experience for Amazon customers.
Both Amazon Vendors and Amazon Sellers have their own advantages and disadvantages, but deciding which option is right for your business depends largely on your business model and your broader plans for growth.
While operating as an Amazon Seller keeps you in the driving seat and enables you to leverage the distribution benefits of Amazon.com, for a more established or aspiring business that is looking to achieve volume, becoming an Amazon Vendor would likely be more suitable.
Frequently Asked Questions
Which is better for small businesses, Amazon Vendor or Amazon Seller Central?
When deciding between Amazon Vendor and Amazon Seller Central, businesses should consider their specific needs and goals. While Vendor Central is ideal for larger or more established businesses selling in bulk, Seller Central offers more control over pricing and inventory, which may be more appropriate for smaller businesses. Factors like cost, fees and marketing opportunities should also be taken into account when making the decision.
What are the fees associated with selling on Amazon as a Vendor or Seller?
When selling on Amazon as a Vendor or Seller, there are various fees to consider. Both vendors and sellers are charged referral fees, which can range from 6% to 45% depending on the category. Vendors also have additional costs like marketing development funds and freight charges. Sellers may incur storage or fulfilment fees if they use Amazon’s FBA service. It’s important to carefully evaluate all fees before choosing a selling method.