With more people starting their product search on Amazon than Google, it’s the sales channel that every online business needs. But which Amazon model suits you best – Amazon seller vs vendor?
While one has a wholesale relationship with the marketplace, the other sells directly to the customer. One sells to Amazon, and the other has full control over things like pricing. Seems straightforward so far. But deciding on the right account isn’t quite as simple.
Firstly, Amazon vendor accounts are invite-only, so you’d need to reach out to Amazon if you wanted to become a vendor. Plus, the right account for you depends on the particulars of your business, how it’s run, your product range, and your long-term business goals.
If you’re looking to sell on Amazon, read our comprehensive guide on Amazon seller vs. vendor accounts, how they differ, and their pros and cons.
An Amazon seller is a third-party seller that sells products directly to customers on the Amazon marketplace. Because you are selling to customers, you will choose your own pricing and compete directly with other sellers on the platform.
This is the most common Amazon model because you don’t need to be invited to sign up.
Amazon sellers at a glance:
An Amazon vendor, on the other hand, is a first-party wholesaler to the platform. They use Amazon Vendor Central to sell goods to the marketplace, and these products are then sold by Amazon to the end consumer. Meaning no involvement in how the product is presented, priced or listed to customers.
Amazon vendors at a glance:
Opening an Amazon Seller Central account is much easier than becoming a vendor, as it’s open to all businesses. As a seller, your relationship with Amazon is a retailer. You deal directly with the end customer, and the Amazon marketplace is the platform in which you sell your goods (for a fee).
Almost anyone can have an Amazon Seller Central account. It’s the most popular Amazon model, with retailers of all shapes and sizes, and across every product category. While it takes time to build up credibility as a new seller, this type of account is pretty much open to all.
There are no volume requirements with an Amazon Seller Central account, so it’s ideal if you’re a small business, a start-up, or a made-to-order business that doesn’t hold a lot of inventory.
When it comes to Amazon seller vs. vendor benefits, one of the biggest advantages of being a seller is control over things like pricing. Plus, more autonomy over your listings means you get to decide on what product information your customers see and how customer interactions are handled.
With no volume requirements and fewer guidelines, sellers tend to have more flexibility than vendors. You choose the products you want to sell, you set the price, and you decide on fulfilment options. If you need to make things a little easier logistically, you even have the option to use Amazon FBA (Fulfilled by Amazon), which handles all the packing and delivery for you at a fee.
With more control over your listings comes more control over your brand. Run ad campaigns, set up an Amazon Storefront, and sense check any content or communication that is going to be seen by the customer.
As a seller, you typically pay lower fees, as you are required to handle a lot of the work yourself (such as inventory management, logistics and shipping). This means you can enjoy higher profit margins on the products you sell.
Payments for sellers are faster than they are for vendors, ensuring better cash flow for your business. The marketplace will pay you every two weeks for any sales made.
While you get lots of control as a seller, you also have to deal with a lot of competition. Some product categories are more competitive than others, but without the “Sold by Amazon” credibility, you’re pretty much left to battle it out by yourself. That being said, an Amazon Seller Central account comes with lots of tools to help you identify trends to grow your business.
Compared to an Amazon vendor, there is a lot more work to be done. You’ll need to stay on top of inventory management to ensure you have enough stock to meet demand.
In addition to looking after your inventory, you’re also responsible for all the fulfilment and customer service tasks. Amazon puts a lot of emphasis on CX (customer experience) on its platform, and the Amazon algorithm favours products with the best reviews. So customer service really isn’t something you can neglect if you want to well on the marketplace.
Sellers don’t have as much clout either when it comes to the Amazon seller vs. vendor argument. Not only do you need to work hard to maintain a high level of 5-star reviews in order to succeed in such a competitive marketplace, but your account or listings can be shut down by the platform with very little explanation or recourse.
Although Amazon seller fees are typically cheaper, they can still add up. Especially if you sign up for Amazon FBA or use Amazon’s advertising services. In order to ensure better return on ad spend, it’s important to optimise ads well. For sellers who are new to the platform or those who have little understanding of Amazon PPC, it can help to use a fully managed Amazon ads solution by working with an experienced Amazon agency.
As mentioned, this club is a lot harder to get into. But once you’re in, there are some great perks to be had! Amazon Vendor Central is invite-only so if you’re a seller wanting to become a vendor, you’ll need to reach out to your Amazon account manager and show your interest.
The criteria is high but if you tick all the boxes in terms of sales and reviews, you may be lucky enough to receive an application to request an invitation.
As a vendor, your relationship with Amazon is a wholesaler. You won’t deal with the end customer, and will hand over your stock to Amazon and let them do the rest.
For many customers, this is the badge of approval. For them, it prevents problems with counterfeits or poor quality control. They know that products are the real deal and will have been fully vetted. It also means fast and reliable shipping, so customers are more likely to buy the product.
One of the reasons why so many sellers want to become vendors is the 3P model. While there’s still a lot of initial work to get your products to Amazon, once you’re set up, Amazon handles everything else such as pricing, fulfilment and customer service.
If you’re an established business with high levels of inventory, this model works well. Large orders and logistics can be taken care of quickly through your Amazon vendor account, and businesses can shift high quantities in a short amount of time to increase cash flow.
While there are a range of marketing tools for both sellers and vendors, there are definitely more perks to being a vendor. The AMS (Amazon Marketing Services) platform within Amazon Vendor Central typically has more advertising tools than Seller Central, and more A+ content module choices.
With an Amazon Vendor Central account, you’ll likely get more support too. There’s potential for more personal contact with a vendor manager. It’s their job to maintain high business results, and this includes dealing with Amazon vendors and their accounts.
While fees are higher, Amazon is usually more flexible with vendors and will provide more favourable payment terms to make things easier. There’s also the option to receive early payments in exchange for a discount.
As well as being invite-only, there are also plenty more steps involved in becoming an Amazon vendor. You’ll need to meet certain volume requirements and you’ll also need EDI (Electronic Data Interchange) compliance in order to handle business documents like purchase orders and invoices electronically.
A vendor is responsible for ensuring there’s enough stock to meet demand while avoiding overstocking. So it’s important to have great forecasting in place, which can sometimes be complex and time-consuming. Vendors must also adhere to Amazon’s frequently stringent delivery window requirements.
As a wholesaler, you’ll have no control over the pricing of products. Vendors could end up seeing the price of their products fluctuate on the marketplace as Amazon tries to remain competitive (even outside of the Minimum Advertised Price).
Typically, wholesale margins are a lot smaller than retail. But factor in Amazon’s aggressive negotiating, shipping and handling costs to get your products to Amazon warehouses, and the higher Amazon fees, and you could be talking about even lower margins. If you’re struggling to meet volume requirements, this could put pressure on your supply chain which could also lead to higher costs, lowering your margin even further.
While sellers get paid twice monthly, vendors will get paid for their products either 30, 60 or 90 days after the invoice date (depending on the terms you agreed with Amazon).
There’s a lot to think about in the case of Amazon seller vs. vendor. Both models have their benefits as well as their drawbacks, and the right one will very much depend on what type of business you have.
For most businesses, an Amazon Seller Central account probably makes more sense as it’s open to everyone and there are no volume requirements. It’s important to bear in mind though, while there are less rigid logistical requirements, Seller Central can actually be a lot more work to learn and manage. Some retailers may not have the time, resource or in-house knowledge of how to run an Amazon Seller Central account effectively.
More established businesses with high volumes of products are the ones who will benefit from Amazon Vendor Central the most. And the biggest advantage for these companies, above all else, is having the words “Sold by Amazon” displayed on product listings. Vendors can tap into a ready-audience who have instant trust because that product is being sold and fulfilled by the platform itself.
However, not everyone can become a vendor with Amazon, and the marketplace will reach out to manufacturers and distributors directly to invite them to join. Some vendors may start off as sellers, developing a good track record before reaching out to Amazon.
It’s also possible to have both an Amazon seller and Amazon vendor account. Some businesses will do this to maximise their sales and reach on the platform. While other retailers will choose to remain as a seller in order to have more control over pricing and maintain better product margins.
Ultimately, the right choice will depend on what your goals are, both short and long term.
If you would like to find out more about Amazon Seller Central account management (or other services such as Amazon PPC, Amazon Store setup and Amazon listing creation), get in touch with Seller Presto today.
Let us know your requirements via our online contact form, call us on 01642 054694, or email our team on 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.
Sign up for our newsletter and receive our free guide on boosting your Amazon sales this Q4 without breaking the bank on advertising.