As of 2019, Amazon already had more than 2.5 million active sellers. The Marketplace platform has more than 30 different product categories. Among them are cosmetics, technology, or children’s entertainment products. In this way, it covers all types of companies and individuals who decide to diversify their market and open up to new horizons.
Within the platform, there are two main types of sellers: vendor or seller. Each has its own characteristics, advantages and negative points. Therefore, it will depend on each specific case to choose one or the other. Read on to find out the difference between central vendor and central seller.
Amazon Vendor Central
What is Vendor Central?
Amazon Vendor Central is a service through which a seller, whether a company or an individual, can sell its products through the platform. However, Amazon does not act as a bridge for the product to reach the customer, but acts as a customer.
To make it simple to understand, the seller acts as a supplier. In this way, your products are sold like Amazon. At the same time, the platform is in charge of deciding the price of the product, taking all responsibility of choice away from you. All you have to do is create a product that is attractive to the e-commerce giant and wait for it to do everything for you.
How to join Amazon Vendor?
It is not possible to enter Amazon Vendor freely, the decision is up to Amazon. Thus, not everyone can access this service. In this case, it is the platform that sends you an invitation if it considers that you are eligible to join Amazon Vendor.
Amazon follows an algorithm to include its suppliers. Taking this into account, we could mention several situations in which the company could be interested in you. The first one is that you are a seller with a lot of sales. If you are selling a series of products, which are climbing in the ranking of that category and generate many conversions, Amazon’s alarms may go off.
If you are a well-known brand, you don’t need to go through this process. Amazon already knows that you have a solid and loyal audience and that your products are in high demand. Thus, it knows that your offer is successful in the market and does not need any further proof.
On the other hand, if you are a supplier in Amazon Seller Central, it is likely that Amazon will find you and invite you to join Vendor Central.
How much does it cost to join Amazon Vendor Central?
Joining Amazon Vendor Central does not involve any financial cost, since you are selling your product. However, becoming part of Amazon’s suppliers ends up having economic costs.
First of all, when you enter Amazon Vendor, you will need to set a Minimum Advertised Price or MAP. This translates into your pricing policies, the cost you want consumers to pay for the product you are offering. However, if it is not selling well, Amazon will proceed to lower the price, seeking to please customers. In this way, it is difficult for you to sell your product in your other sales channels, as users will always prefer the cheapest option.
In addition to this, you will have to pay for Amazon’s marketing and advertising fees to sell your product. There are also packaging and cooperative fees, the latter referring to the cost you must pay to benefit from carrying Amazon’s name.
Amazon Seller Central
Amazon Seller is the platform through which you can sell your products to the final consumer, taking care of all the paperwork, choosing the selling price and taking care of returns and shipping. This is undoubtedly the main difference between vendor central and seller central.
Amazon FBM or FBA
Regarding logistics, you can decide whether to do it yourself or have Amazon do it. The first option is called Fullfilled by Merchant or FBM and in this case, you will have the stock of your products, and you will be in charge of distributing them. Clearly, both the packaging and all the logistics involved will be your responsibility.
One of the benefits of Amazon FBM is that you will have at your disposal are the geographic and demographic data of your customers. This information is very valuable and with it, you will be able to redirect the firm’s campaigns or improve the product to get more sales. At the same time, since returns will be part of your responsibilities as a seller, you will be able to know where your product is failing and what is not convincing the customer, in order to solve it.
As for the disadvantages, you will have to comply with a series of very demanding requirements. Among them is the response time to the messages that users write to you through the chat. The response must be received in less than 24 hours. Otherwise, Amazon will penalize you. In addition, the company will also monitor the quality of service. It does this based on 3 criteria: negative reviews and complaints. Likewise, Amazon will also review late shipments, allowing a maximum of 4% of shipments in the last 30 days. Finally, your shipment cancellations will have to be less than 2.5% on orders placed in the last 7 days.
If you choose the FBA or Fulfilled by Amazon plan, the company will take care of everything, from product storage to shipping and returns.
With this plan, sales will increase because the visibility of your products will be higher, and you will be eligible for free shipping and Prime service. On the other hand, you will be able to sell outside of Spain and expand your market to those countries with the greatest potential. As if that were not enough, Amazon FBA includes an uninterrupted customer service, which operates 24 hours a day, 7 days a week.
As you might expect, the FBA plan also has its drawbacks. The first one is that you lose access to all the information about your buyers, so you will not have valuable information to customize your products and services and make them more attractive to your target. In addition, Amazon can cancel you if you do not meet their requirements.
How to join Amazon Seller?
Amazon Seller is open to all those people or businesses that want to sell their products on the great Marketplace platform. The first thing you will have to do is to decide which account plan you want to join: individual or professional.
Regarding the individual seller account, it is designed for those who want to start selling on Amazon and who are going to offer a maximum of 40 products per month. By choosing the individual plan, you will only have to pay Amazon when you make a sale, which in this case would be €0.99 per product.
As for the professional seller plan, this type of account can be present in all Amazon categories, create new products in the company’s listings or allow your products to be purchased by clicking on them. Here, the cost is €39 per month.
Finally, you will be able to create your seller account from your own customer account or with a new email address.
How much does Amazon Seller cost?
Beyond the fixed cost of the individual or professional account, when you become a seller on Amazon, you will have to pay certain fees.
- Referral fee: refers to the percentage that the platform charges you per sale and is calculated by including shipping costs in the price. This percentage varies according to the product category. The minimum is 5% and the maximum is 45%.
- Closing sales fee: this fee is payable only by individual seller accounts and is a closing cost of €0.99.
- Item sale fee: this is only applicable to some product categories, such as those related to music, software or video games. It varies between €0.81 and €1.01.
Difference between Vendor Central and Seller Central
The main difference between Vendor Central and Seller Central is what role you play in the selling process. In Amazon Seller, as we have explained above, you perform the function of a seller, being the supplier of the one you decide. In Amazon Vendor, you are the wholesaler and Amazon is your customer.
While to access Seller Central you only need to register and access is not limited, in Vendor Central you need an invitation from Amazon. This invitation will be sent to you by email and will follow the patterns set by Amazon’s algorithm when choosing or discarding you.
At Amazon Seller Central, you freely decide the price at which you want your products to be sold. Obviously, competition and the market will play a big role in selecting a price, but the decision will always be yours. With Amazon Vendor, on the other hand, you cede that right to Amazon, and you can’t do anything about it.
Fees are another element that changes. In Amazon Vendor Central the fees payable are marketing and advertising fees, remittance fees, packaging fees and cooperative fees. Occasionally, the total sum of the fees is higher than the revenue earned from the sales.
As for Seller Central, the fees are the referral fee, the closing fee, the sold items fee and the Professional Plan fee if chosen.
Regarding payment, within Amazon Vendor there are different options. The first option is to receive payment for the sale within 90 days. In case you want to receive payment in a shorter period, Amazon will keep 1% if the term is 60 days and 2% if the payment is made within the first 30 days.
In contrast, Amazon Seller makes payments within a minimum of 7 days and a maximum of 14 days. Depending on whether buyers pay before or after the order is placed, payment will be made by Amazon Payments, Inc. or Amazon Services LLC.
Delivery of orders
The final difference between vendor central and seller central is order delivery. By being part of Amazon Vendor, you don’t have to worry about shipping orders and making sure they arrive on time. This responsibility falls on Amazon, who will be in charge of making sure that everything goes as it should.
However, with Amazon Seller, you can choose between putting it in the hands of Amazon Logistics or doing it yourself. If you pick the latter option, you will have to consider that failure to meet deadlines will result in a penalty.
The same goes for inventory. If you are a seller, you will have to consider your inventory and replenish it so as not to run out of products in stock. If you are a supplier, you will not have to worry about this issue.
In short, depending on the size of your company and your situation, it will be more convenient for you to join Amazon Vendor Central or Amazon Seller Central. Both modalities have their advantages and disadvantages. Therefore, you will have to take a closer look at which role brings you the most benefits, that of a seller or that of a supplier. At the end of the day, it’s a matter of seeing which side of the scale outweighs the pros.