SNIPPET: If you’re trying to decide whether Seller Central or Vendor Central is right for your business, the first thing you should know is that these options aren’t mutually exclusive.
Taking a hybrid approach allows a seller to maintain the hands-on control of a Seller Central channel while reaping the promotional advantages of a Vendor Central channel. Here’s how you’ll know if the hybrid approach is right for your business.
Most Amazon sellers reach a point of weighing the costs and benefits of the three selling channels. This includes Seller Central, Vendor Central, and Vendor Central Express.
These options are generally presented in a way that makes sellers feel like they have to choose between seller central or vendor central. To this, we ask: why not both?
We’re here to help you understand your options, the advantages and disadvantages of each channel and how the hybrid approach works for amazon sellers who do want the best of both worlds (both hands-on control and promotional advantages when selling on Amazon).
Understanding the difference between Amazon Seller Central and Amazon Vendor Central
What is Seller Central?
Amazon Seller Central sellers act as retailers, selling their products directly to consumers. The general public as their customer base.
What is Vendor Central?
Amazon Vendor Central sellers act as manufacturers, wholesalers, and distributors, selling directly to Amazon. In this case, Amazon is the customer.
A couple of things you should note about Amazon Vendor Central:
- It’s Invite-only. Vendors must have demonstrated impressive sales volume and feedback scores to negotiate a wholesale deal.
- Vendor accounts are managed by a combination of Vendor Managers and self-service. Though, as the number of accounts grows, the shift towards self-service is increasing
What is Vendor Central Express?
Vendor Express accounts are entirely self-service. Although it used to be open to all sellers, now it only includes companies that own or license intellectual property rights of products in their store.
Now that we’ve briefed you, let us explore what each of these means for you.
Weighing your benefits
Why choose Seller Central on Amazon?
A seller central amazon account allows you to have complete control over price, listing content, inventory management, order fulfillment, and customer interactions.
* It’s important to note that this option gives YOU all the say when it comes to your products and turning any part of this over to Amazon may result in price drops or edits to your content.*
This option also offers seller support. This is a benefit you won’t get in the other two channels. Seller support is for those times when things get out of control. Contact Amazon when issues need resolving and they can assist you.
Another advantage of Seller Central is that you are in control of customer contact. So maybe controlling customer contact sounds like something you don’t really want to deal with, but it can be extremely valuable for sellers interested in requesting product reviews and seller feedback. Plus, the personal touch of reaching out to your customers strengthens brand loyalty.
Other than that, the huge advantage here is price control. In most cases, Seller Central tends to yield higher profit margins. This is because the seller decides the price and sets it to maintain their preferred margin rather than selling to Amazon.
If nothing speaks to you here just remember price control has a direct impact on your profit ( this means you’ll never argue with Amazon about the value of your products with this option because you are the one in control of pricing them).
Why choose Amazon Vendor Central?
The huge perks Vendor central unlocks are access to promotional activities, marketing services, and merchandising opportunities. These services help make your products visible when selling on Amazon… but before we get into those details, you should understand how Vendor Central bulk orders work.
Bulk orders from Amazon allow a vendor to unload stock and make a profit in one step. However, vendors should keep in mind that bulk orders in Amazon are much smaller than bulk orders from chain retail stores. Amazon only has one store and aims to maximize its fulfillment center space by purchasing small amounts of product as needed. Instead of one huge order, you should expect frequent small orders over time. The ordering process is automated; if there is a lot of demand for your product, you’ll start seeing increases in order sizes.
Vendor Central allows you to take advantage of Amazon Marketing Services. These valuable advertising tools include Sponsored Products ads, Headline Search ads, and Product Display ads. Headline Search ads appear at the top of search results and can link to a product or brand landing page when clicked. Product Display ads appear on product detail pages, most often those of competitors. Amazon vendor central marketing services provide a huge advantage for sellers to drive traffic to their products and increase sales.
There are also merchandising opportunities available through Amazon Vendor Central. You can create coupons and promotions, participate in the review-gathering program Amazon Vine, produce A+ content, and upload videos onto your product detail pages.
The promotional activities available through Vendor Central are another advantage. For example, “lightning deals” are exclusive to the Vendor side. The deals are discount promotions guaranteed to be featured on one of the most visited pages on Amazon, the Today’s Deal Page. This can create a powerful spike in visibility.
*Something to note here: This option takes away your control over the pricing, listing content, and inventory-related stuff. Giving control to Amazon is seen as an advantage to some, as they no longer need to manage price, fulfillment, and customer service.*
Benefit as an Amazon Vendor and an Amazon Seller
How can I harness the advantages of both Amazon Vendor Central and Amazon Seller Central?
The main benefit of Amazon Seller Central is control, while Amazon Vendor Central opens access to a variety of exclusive benefits.
Remember the hybrid approach we talked about earlier? This is where it comes in, it’s the way for you to take advantage of both. You can have benefits and control as an amazon seller with the hybrid approach.
The hybrid approach involves your Amazon seller sales being fueled by both a Vendor strategy and a Seller strategy. To be successful, you’ll take on the manufacturer, wholesaler, and retailer role, and sell both wholesale and directly to the consumer.
Yeah, it sounds like a lot but here’s why it’s worth it:
Why adopt the hybrid approach?
Basically, it’s taking all the pros from both channels as an Amazon Central Seller and combining them for your benefit. You can think of it as customizing your Amazon Seller experience to suit your own business model.
This is what the Hybrid approach does:
- Maximize sales opportunity— By offering some products via a Seller account and others via a Vendor account, you’re creating the most selection for your customers for the highest sales opportunity.
- Widen customer reach— Access to Amazon Marketing Services is the premier method for gaining visibility on Amazon.
- Spread your risk— If Amazon suspends your account on one side, you’ll still have business on the other to fall back on.
- Brand awareness and credibility— Amazon deciding to sell your product equates to a stamp of approval from a global, trusted marketplace. Some of that trust and credibility then extends to your brand.
- Access to all tools— The full range of marketing, merchandising, and promotional tools that Amazon has to offer are at your disposal.
- Don’t fall behind competitors— Any competitors who adopt the hybrid approach before you do are already ahead.
How do I apply the hybrid approach?
It might seem easiest to mirror your Seller strategy on the Vendor side, and create two identical inventories. However, this is not the most strategic approach.
You may want to protect the prices of some of your items and keep them exclusive to your Seller account at first. Think about the entire product lifecycle. You may be focused on protecting the price during the introductory stage. But consider turning it over to Amazon on the Vendor side to focus on launching your next product.
Some products may not be successful on Vendor Central because the retail price point is too low. After the cost of shipping, the profit margin is too tight to be of interest to Amazon.
Look over your inventory and identify your core and non-core items. Core items are anything you consider to be “staples.” Things that you want to guarantee are never out of stock because there is a consistently high demand for them. These items are best suited for Vendor Central.
Non-core items, which may be seasonal or niche, will have more limited stock and can stay on Seller Central. This also applies to parts and accessories associated with your core items. These may be slow sellers, but you still want to make them available. In this case, a Seller account supporting your Vendor account full of core items is a good move.
If you want to maintain control over your inventory but need access to the promotional opportunities, create a “sacrificial SKU.” Offer one product through Vendor Central Express to unlock the benefits, which can be used to generate awareness for products on Seller Central.
Before adopting the hybrid approach, know what tradeoffs you’ll have to make in order to reap the benefits:
- Loss of control over pricing— Any SKUs on your Vendor account will be relinquished to Amazon to decide the price. (just keep in mind that you do have control over the other ones in seller central)
- Loss of control over listing— The content used on Vendor listing pages is “locked” into Amazon’s retail catalog. Even if you decide to close your Vendor account, the content remains and is almost impossible to override.
- Loss of buy box— Amazon will do everything it can to win the buy box. The only way to compete with your Seller account is to drop your price point so low that Amazon would no longer be making a profit. Of course, this forces your own profit margin to tighten.
- Slow initial sales velocity— Moving some of your inventory from the Seller side to the Vendor side may cause a temporary lull in sales. Amazon needs some time to learn about your product to show and advertise it to the right customers.
- Impacts on profit margin— Amazon requires certain allowances when accepting your products on Vendor Central. A damage allowance accounts for any damaged products they are unable to sell. A freight allowance covers the cost of shipping so Amazon can offer free shipping to customers. Both of these are small percentages that will be agreed upon in your initial contract.
Source: McLeod, Carina. “Managing Vendor Central and Seller Central to Build Your Amazon Business.” Prosper Show, 12 April 2017, Las Vegas, NV. Conference Presentation.