If you've ever browsed the internet looking for the topic Selling on Amazon, you've probably already come across the topic Amazon Seller vs. Vendor Amazon.
In 2020, the world's leading marketplace had over 3 million active sellers representing nearly $500 billion in sales.
To sell on Amazon in 2022, you will have to ask yourself THE right questions: in fine, who will manage the sale and distribution of my product? Who will have the final say on my shipments? What will happen to my return policy? Finally, what will be my relationship with my customers and how will my account be managed on a daily basis?
You will need to know how to answer these questions before you can select the sales plan that seems most appropriate and implement the most relevant and effective sales strategy to make your sales take off!
So, merchants, manufacturers or resellers, which models should you choose? What are the differences? And what are the opportunities that you could get out of it?
The Amazon Vendor Central sales plan was initially the basic model offered by the marketplace. Sometimes called "Amazon 1P" or "First Party", it is an e-Retail oriented sales model. Focusing on a more BtoB perspective, Amazon positions itself more as a retailer, while you take on the role of a wholesale supplier.
How does it work in practice? Amazon's A10 algorithm analyzes the market and scans the web, compares sales prices, studies the quality of existing content, the desirability of your product, your category and your brand; it then decides on the quantity and the purchase price that it will offer you for your catalog via a purchase contract. You will then have to wait for the invitation from the platform before you can start your adventure.
Why do you want to do this? The main purpose of this step is to test the potential of the product and the relevance of integrating it in your catalog. After that, you will be able to send the products ordered through the marketplace to one of the available warehouses, which will then sell them at the price defined by A10. Amazon will then ship them to the final customers. At first glance, you don't need to be very experienced in e-commerce to start selling on Amazon if you integrate this model.
Because the customer experience is THE priority of the marketplace, Amazon guarantees its consumers products at the best prices and sold in the best conditions of purchase and shipping. But not only that.
It is therefore important to note that, because Amazon will officially become your reseller, the platform will then strive, and throughout the life of your product, to negotiate down your purchase prices, if necessary. This is simply to remain competitive with competitors and other sales platforms. Of course, Amazon will try to respect the brand's recommended price as much as possible.
Finally, once you have obtained this Amazon Vendor status, you will accept to lose control over a part of your products and its entire supply chain.
But how do you recognize the products distributed in Vendor Central? It's simple, Amazon notifies it by adding the mention "sold and shipped by Amazon" on the product sheet.
To get visibility that will turn into conversion, you will have to check as many boxes as possible, according to the rules established by Amazon. The referencing on Amazon brings together several criteria: optimization of the textual and visual content, customer reviews, rating of the relevance of the listing, pricing or even the good management of your stocks and your returns.
So keep in mind that:
Since the marketplace manages the logistics for you, you are guaranteed to always have stock available. A good point for your visibility!
The integration and updating of your product sheets will be more complex. You will need to fill in all the attributes beforehand, in order to be able to modify the content.
For a faster brand or product launch, Amazon offers the "Born to Run" formula, always by invitation. When your product listing has no sales history or reviews, it can be very difficult to sell in the shortest time possible. Born to Run allows you to sell in a hurry. The supplier commits to Amazon, on an initial stock basis and over a period of 10 weeks, to sell a certain number of units. Thus, if the stock provided is not exhausted at the end of this period, Amazon will be able to send back or keep what is left in its warehouses. If the marketplace keeps the remaining stock, the supplier will have to refund 25% of the price. A decision to be made at the start of the program, but one that can be very useful!
Also called "3P" or "Third Party", the Amazon Seller Central is the marketplace part.
In contrast to the Vendor profile, it is possible here to sell products directly to customers, without intermediaries, via the platform. Here, the Seller will be more autonomous and independent on the whole management of his catalog.
Indeed, we notice that the commercial profiles of the Amazon Seller are often brand owners or sellers of other brands, with their own inventory, and use Amazon rather to list their products and activate an additional sales lever.
Just like the Vendor, the sellers in Seller also have a platform to manage their business called: The Seller Central. Another subtlety of the Amazon Seller is that you have the choice between two shipping methods: FBM or the Amazon FBA model (we encourage you to read our detailed article on the Amazon FBA model, if this point particularly attracts you).
In both cases, this service allows you to keep more control over your selling prices, to access your business data and most importantly, to sell faster. Indeed, in a few clicks, it will be possible to start your activity unlike the Vendor. You will just have to send your stock to Amazon on consignment and the platform will pay you once the sale is made.
This implies that you will need a person/team (depending on your turnover) dedicated to the management of your account. In addition to the tasks mentioned above, you will also need to take care of accounting, after-sales service (and even more so in FBM!), the management and optimization of your brand content and the overall management of your catalog including product assortment or new product launches.
As you can see, here : "with great power comes great responsibility"!
Since you are the only manager (or almost) of your brand on the marketplace, you will be able to :
Keep control over the quality of your product sheet and updates.
Have access to easy expansion in Europe (to Germany, the United Kingdom, Spain, Italy and Holland), excluding the US.
Better visibility of account accounting (payment report, detailed expense report, etc.)
The possibility of managing shipments in FBM and therefore keeping control during the direct sale with your buyer. Training is available, with free access, at Seller University offering various guides and videos for sales training!
You will have the possibility to have access to more features, depending on the type of your products: "Small and Light" program, "Subscribe and Save", etc. Solutions that can turn out to be real opportunities!
More responsive and efficient support: for better management of your support cases, you will be able to open a case in parallel with the Support Brand Registry, if your brand is well registered.
Go on a hybrid FBM and FBA format (yes, it's possible!) to ensure you always have stock available.
There is no model that is better or worse than another.
There is only a model more or less adapted to your needs, to your objectives or simply to the type of products you want to sell.
Between Seller and Vendor, there is not necessarily a drastic choice to make. You will not use the same sales model for a barbecue, stationery or home furniture.
Also, the hybrid sales models can be very interesting for some brands.
These are cases where the brands have a large catalog, with products that sell well and have a low supplier purchase price. Indeed, Amazon will be able to more easily manage and adjust the profitability of these products on its platform: optimization of costs related to transportation, development and international expansion.
As you can see, selling on Amazon France is something that needs to be prepared and thought through!
According to Jungle Scout, it is estimated that 82% of the sellers registered on Amazon would have selected the Seller model against only 21% for the Vendor model and 3% in hybrid Vendor and Seller.
At Bizon, our experts are always available to provide you with advice, strategies and to build, with and for you, the foundations that will enable you to perform on Amazon!
Head of Editorial & SEO
Jun 27, 2022
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