In this article, we review the key differences between Vendor Central and Seller Central, how to transition from Vendor Central to Seller Central, the financial implications of the change, and some case studies.
In recent months, many businesses have been affected by Amazon’s decision to reduce or terminate their Vendor Central relationships. This has created a significant disruption for retailers who relied on Amazon’s wholesale model, known as 1P (first-party), to distribute their products. Instead of continuing to function as suppliers to Amazon, these companies now face having to shift to the Seller Central model, where they become third-party (3P) sellers, selling directly to customers.
This change forces businesses to rethink their strategies, as they no longer benefit from large purchase orders (POs) and predictable income streams from Amazon. Instead, they must adjust to a direct-to-consumer (DTC) model that is more dynamic but comes with its own set of challenges. The transition, while daunting, can open new opportunities for businesses to take control of their pricing, inventory, and customer relationships.
The first step in making the transition is understanding how Vendor Central and Seller Central differ in terms of operational control, pricing flexibility, and overall business strategy.
Vendor Central is an invite-only platform where businesses sell their products wholesale to Amazon. Once a business is onboarded, Amazon issues large POs and handles everything, including pricing, inventory management, customer service, and shipping. For many businesses, this arrangement can be highly beneficial due to its simplicity. There’s no need to worry about fulfillment or customer inquiries, as Amazon takes care of everything.
However, the downside of Vendor Central is the lack of control over key aspects of your business. Amazon controls the pricing of your products, which means you could see your products sold at a discount that doesn’t align with your broader pricing strategy. Amazon can also dictate the price at which they purchase your products. Additionally, while the POs provide regular income, businesses often operate on terms such as NET 60, which means payments are delayed for two months. This can create cash flow challenges, particularly for small retailers.
Seller Central, on the other hand, operates under the 3P model, allowing businesses to sell directly to customers through Amazon’s marketplace. In this model, retailers are responsible for managing product listings, setting prices, and handling customer service. The benefits of this model include greater control over pricing, branding, and the ability to respond to market trends more quickly.
While Seller Central offers more freedom, it also comes with increased responsibility. Sellers must manage their inventory, decide whether to fulfill orders themselves or use Amazon’s Fulfillment by Amazon (FBA) service, and deal with customer inquiries and returns. The added complexity of managing these tasks can be difficult, especially for businesses accustomed to the more hands-off approach of Vendor Central.
Transitioning from Vendor Central to Seller Central is a process that requires careful planning. Below is a step-by-step guide to help ensure a smooth transition:
The first step in transitioning is to review your product portfolio. Some products may perform better in Seller Central, while others are better suited to wholesale. For example, fast-moving consumer goods (FMCG) and highly commoditized products may struggle in the more competitive 3P marketplace. In contrast, niche or specialty items can thrive when you have control over their pricing and branding.
You may want to consider retaining some wholesale relationships outside of Amazon while moving other products to Seller Central. A hybrid approach could work well for businesses looking to diversify their sales channels. Our suggestion would be to initially list the products that makeup 25% of your sales on Amazon Vendor. Another consideration if Amazon has terminated their Vendor relationship with you, is whether your products are actually a good fit for Amazon. There is a reason that Amazon has terminated your account and the hard truth may be that your products are not good enough.
The easiest way to do this is by uploading the products utilising the Vendor ASINs. Remember that all of your content such as bullet points, A+ content, etc will be contributed by your Vendor account. Therefore you should keep the Vendor account open or speak to Amazon Brand Registry about disconnecting the brand from the Vendor account and switching it to Seller Central.
This would also be a good moment to review your Amazon SEO strategy, for more information about this read our handy guide on Amazon SEO.
One of the most significant changes you’ll face in Seller Central is pricing. On Vendor Central, Amazon sets the price based on its algorithms, which can lead to pricing that may not align with your strategy or profit goals. As a Seller, you have the ability to set your own prices, but you must also account for Amazon’s referral fees (usually 8-15% of the sale price) and FBA fees, if you opt for Amazon to fulfill your orders.
To develop an effective pricing strategy, you’ll need to factor in these costs and make sure your margins remain healthy. Tools like Trellis and Profasee can help automate pricing decisions, ensuring that you stay competitive without sacrificing profitability.
Inventory management is another area where the transition can become complicated. In Vendor Central, Amazon takes care of purchasing and managing stock levels. But in Seller Central, you’ll need to decide how much inventory to send to Amazon’s warehouses if you choose FBA, or whether to fulfill orders yourself via Fulfillment by Merchant (FBM).
FBA comes with advantages, such as access to Amazon’s Prime customers and faster delivery times. However, FBA fees can add up, especially if your products don’t sell quickly which could result in the seller incurring long-term storage fees. FBM requires you to manage logistics, shipping, and delivery enquiries, which can be time-consuming and you don’t gain the advantage of having the Prime badge displayed on your listings.
In Seller Central, you are responsible for responding to customer queries, however if you utilise Amazon FBA this should be minimal as Amazon handles all delivery queries. Unlike Vendor Central, where Amazon manages customer service, Seller Central allows you to contact customers. As an example, you may send a customer one email after purchase to introduce your company and request a review.
Seller Central comes with a different set of compliance requirements in comparison to Vendor Central. As a Seller, you’ll need to maintain high performance metrics, including order defect rate and customer feedback score. Failure to meet these standards can lead to account suspension or the removal of your selling privileges.
It’s crucial to understand Amazon’s policies and stay up-to-date with any changes. Utilising tools like Sellerboard to track your performance metrics in real-time can help ensure you meet Amazon’s requirements.
The financial impact of transitioning from Vendor Central to Seller Central could be significant, particularly in terms of cash flow.
In Vendor Central, you tend to receive POs on a predictable basis, often with terms such as NET 30 or NET 60. This provides stability but delays cash inflows. With Seller Central, payouts are disbursed every two weeks, based on actual sales. This shift to more frequent, smaller payments requires a significantly different approach to cash flow management.
To adapt, businesses need to develop robust financial tracking and forecasting systems. You’ll need to carefully monitor your sales velocity, inventory levels, and Amazon fees to ensure that cash flows smoothly, that you don’t run out of stock, and that you have enough liquidity to cover operational costs. Tools like QuickBooks or Xero can help manage these aspects effectively.
In Vendor Central, your margins are often slimmer due to wholesale pricing and discounts offered to Amazon. In Seller Central, you have the opportunity to achieve higher margins by setting your own retail prices. However, these margins are impacted by Amazon’s referral fees, FBA fees, and other selling costs.
It’s essential to analyse your margins in detail, taking all fees into account and adjust your prices based on demand, ranking and seasonality.
Seller Presto has helped many businesses to successfully transition from Vendor Central to Seller Central, and their stories can provide useful insights:
One mid-sized alcohol retailer, which relied heavily on Amazon Vendor Central for its revenue, faced challenges when Amazon reduced its POs. The company decided to move to Seller Central, where it could set its own pricing and take advantage of FBA. Initially, they struggled with managing inventory and cash flow due to the more frequent but lower payouts and higher operational demands. However, by investing in forecasting tools and streamlining overheads, they were able to improve profitability and revenue within a year.
A niche skincare brand used Vendor Central to sell its top-selling products but found that Amazon’s pricing didn’t align with its premium brand image. After transitioning to Seller Central, the brand gained full control over pricing and branding, allowing it to target higher-margin customers. By leveraging customer reviews and engaging with their audience directly, they improved customer satisfaction and saw a 25% increase in revenue within six months.
Several tools can help make the transition from Vendor to Seller Central more manageable:
Investing in the right tools can make a big difference in your success on Seller Central, helping you manage the increased complexity of the 3P model.
Transitioning from Vendor Central to Seller Central can be a complex process, but it offers opportunities for businesses willing to take control of their product portfolio, pricing, and customer relationships. While there are challenges—such as managing cash flow and handling inventory, the benefits of increased flexibility and higher margins can make the transition worthwhile.
By following a clear strategy, utilising the right tools, and preparing for operational and financial changes, businesses can not only survive the transition but thrive in the Seller Central environment.
At Seller Presto, we have years of experience supporting brands to move from Vendor Central to Seller Central. Our Amazon Store setup service takes care of the entire process for you. We can take care of the process allowing you to focus the cashflow and operational implications the change.
Get in touch with the team and Seller Presto today and let’s chat about how we can transform your online sales. Fill in our online contact form, call us on 01642 054694, or email our team at info@sellerpresto.com.
If you want to unlock your Amazon growth potential but simply don’t have the time, Seller Presto can manage your entire Amazon operations. Get in touch to find out how we can transform your product sales today.
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