So, you’ve bit the bullet and finally decided to join the world’s most rapidly expanding marketplace. Congratulations! You have done your research and scoured the internet for helpful information on becoming an Amazon seller, but there is one last decision to make: are you better off selling your goods on Amazon Seller or Vendor Central?
While Vendor Central is an invite only program, you may find an invite in your inbox relatively quickly if your performance exceeds Amazon’s expectations within the first few months. Seller
Central doesn’t require an invite to get started. Whether you stick to Seller Central or choose to embark on the Vendor Central journey, Amazon is bursting with potential business opportunities for you as a seller, and we are here to help you navigate the many features of the Amazon platform, no matter which “Central” you choose.
A Quick Introduction: Seller Central and Vendor Central
The beauty of Seller Central is that everyone is invited to use this selling platform, and once you get over the initial learning curve, it is a user-friendly platform that gives you deep insights into inventory planning and comprehensive tools to track your revenue, sales velocity, and ad spend.
Unlike Seller Central, Vendor Central is strictly invite only and therefore not open to everyone. Amazon frequently scans the marketplace to see which products are selling well and generating high revenue. If your product ranks in a certain way and Amazon sees that you maintain above average performance metrics, you will likely be invited to become a Vendor Central seller. To become a vendor within the Amazon marketplace, you need to receive an invitation that has been sent straight from the Amazon retail team, and from that point you can either accept or reject their invitation.
Here is a quick look at the major differences between the two platforms:
Open to anyone
Sell directily to Amazon's customers
Handle your own customer service
Flexible logistical options
Quick payment terms
Control over retail pricing
Limited advertising options
Complex sales process
Strictly an invite-only program
Amazon places the PO,
you fulfill the order
Sell directly to Amazon
Amazon handles all customer service,
including refunds and returns
Access to Amazon's vast network of
shipping and freight services
Traditional payment terms (Net 30, Net 60 or Net 90)
Amazon controls retail pricing
Multiple advertising options
Traditional seller-vendor relationship
How Does Amazon Seller Central Work?
As a Seller Central account owner, you are considered a third-party Amazon seller (3P), and you are responsible for maintaining the overall health of your account. This is done by controlling your supply chain, managing your inventory levels, handling all customer service related tasks, and ensuring that your shipments use Amazon approved packaging and delivery methods to maintain positive performance metrics.
Since Sellers operate as independent retailers within the Amazon Marketplace, they tend to enjoy greater control over their business activities on the platform. This is definitely the case when it comes to pricing controls, and a huge benefit to selling via Seller Central. Sellers are free to set whatever prices they want for their Amazon products and they can control the pricing thresholds with just a click of the button. Sellers can also adjust their prices at their own discretion without the pushback or lengthy approval periods that an Amazon Vendor Central user would typically face. This allows Seller Central users to easily capitalize on high-demand periods, such as the holiday season, or offer sales whenever they have a surplus of inventory, without having to wait on Amazon to make the decision for you.
While Amazon currently offers both individual and professional seller accounts, most businesses tend to opt for the professional seller account as it offers comprehensive analytics tools, preferential treatment at times, and a plethora of other features that will come in handy to a professional Amazon seller who is on a mission to scale their business.
Seller Central (3P): Pros & Cons
Complete control over prices and promotions
Access to resources through Seller Support and beyond to help address account issues
Seller fees are fairly consistent and easy to calculate
Manage inventory levels however Sellers see fit
Manage their own fulfillment (or pay for FBA)
Limited marketing tools available
Sellers must collect and remit sales tax in certain situations
How Does Amazon Vendor Central Work?
As an Amazon Vendor Central seller, you are considered a first-party (1P) seller and you have a traditional vendor-seller relationship with Amazon acting as the retailer, and you acting as the vendor who supplies Amazon warehouses with the merchandise that they need. Amazon Vendor Central is most often used by direct manufacturers and distributors. If you sell through Vendor Central you are considered a first-party seller. As noted above, registration on Vendor Central is strictly by invitation only and you will not be invited to participate as a vendor until you meet certain benchmarks as a Seller Central account holder.
Most of the time, sellers start with Seller Central and generate demand for their products to entice Amazon to extend an invitation to the Vendor Central program and give big brands the chance to buy their product in bulk, which can be very lucrative if you play your cards wisely. If a company is selling through Vendor Central the phrase “ships from and sold by Amazon” appears on the order page. Vendor Central sellers will be relieved to know that all customer service related queries and issues are handled by Amazon’s experienced support team, however, this can also be a drawback if there is an urgent issue that you need to relay to your customer base.
Vendor Central (1P): Pros & Cons
No monthly fees
"Sold by Amazon" endorsement, piggy back on Amazon's brand
Amazon handles order fulfillment and logistics
Amazon handles all customer support queries and issues - including fraud related cases
Vendors have access to additional marketing options, not available to Sellers
Amazon controls the prices
Issue resolution can be difficult using Vendor Support
Amazon constantly tries to renegotiate and lower wholesale pricing
Updating pricing is difficult and requires Amazon's approval
Amazon often runs out of Vendor inventory without notice
Vendors have to wait on Amazon to issue a Purchase Order; this can delay bringing new products to the market and impact revenue
A Hybrid Approach - The Best of Both Worlds
In some cases, it may make sense for businesses to tap into both Vendor and Seller Central to leverage the unique benefits of each platform. Some manufacturers are adopting this hybrid approach by first using Seller Central to quickly list and sell their products, get traction and focus on getting reviews while providing outstanding, personalized customer service. This helps establish their reputation on the Amazon platform, while giving sellers the chance to get ahead of the competition by providing an exceptional product and an unforgettable customer experience.
Once a product is well-established and mostly on auto-pilot, the seller will transition the SKU over to Vendor Central (once they have been invited to participate in the program) where all they have to do is fulfill the Purchase Orders placed by Amazon (which should be frequently and in larger quantities since the ASIN has an established sales history - but this depends on the product in question), make occasional updates to the product listing, and manage any advertising – which Amazon may do for you anyways if you’re a good seller.
If you are considering a hybrid approach, we never recommend selling the same ASIN in both programs, as Amazon is taking action to remove the Seller Central privileges of those who operate simultaneous Seller and Vendor Central accounts for the same product. To avoid this, always make a clean cutoff with Seller Central before transitioning to Vendor Central and make sure you are fully up-to-date on Amazon's policies on this matter.
When in Doubt, Just Reach Out
If you have any additional questions about the differences between Seller Central versus Vendor Central or want to learn more about the hybrid approach, contact our Amazon Consulting Experts. We are happy to answer any and all questions you may have, and get you started with either platform today!