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The Difference Between Amazon Vendor Central and Seller Central

February 4, 2019
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Once you’ve decided to expand your online reach in Europe by selling products on the Amazon EU Marketplaces, you’re going to have to answer this question: do you want to use Vendor Central or Seller Central?


The Difference Between Amazon Vendor Central and Seller Central

When you sell on Amazon, you’re going to be selling as either a retail or a third-party partner. And there’s a world of difference between the two.

If you opt to become a retail vendor, you’ll use Vendor Central. You’re selling items in bulk to Amazon, and Amazon in turn sells those items in its own name to customers.

You can tell which items on Amazon are provided by Vendor Central partners because there’s usually a section in the description that reads: “Ships from and sold by Amazon.”

If you decide to become a third-party vendor, you’ll use Seller Central. You can choose to use Fulfillment by Amazon (FBA) so that Amazon processes and ships all your orders. Alternatively, you can handle shipping yourself using Fulfilled by Merchant FBM).

But what are the advantages and disadvantages of Vendor Central and Seller Central? For the answer to that question, read on.


The Difference Between Amazon Vendor Central and Seller Central

Would you like have more control over pricing for your products on the Amazon EU Marketplaces? If that’s the kind of control that you’re looking for, then you’re going to want to use Seller Central in Europe.

Amazon in the EU cannot honour any minimum advertised price (MAP) requests. Vendor Central partners as a result are known to complain regularly about price erosion.

Remember, Amazon tries where possible to match any other seller’s price. So if someone notifies Amazon that there’s a cheaper price of a product you’re selling somewhere else online, you can expect the price of your item to drop.

That’s when the price war begins. This is when the brand suffers in retail and etail.

Bottom line: a price war will hurt your bottom line.

The good news for Seller Central partners is that they can set whatever price they want to sell the products for.

Advantage: Seller Central partners. They have more control over pricing than Vendor Central partners.


Seller Support – Vendor Central vs Seller Central

Looking to partner with Amazon in such a way that the company supports you when things go awry? Good luck getting that as a Vendor Central partner.

The reality is that you aren’t likely to receive any support when you sell through Amazon Retail unless your brand is a household name (in which case, you probably wouldn’t be reading this) or you fork over hundreds of thousands of euros to Amazon.

However, you can expect decent support if you use Seller Central. Amazon offers a Seller Support service that responds to problems related to inventory, payments, and listings

There’s nothing on the Vendor Central side that compares to Seller Support.

You also have more flexibility as a Seller Central partner when it comes to updating your listings on Amazon. That includes changes to images, titles, bullet points, and descriptions.

Advantage: Seller Central partners. Vendor Central partners receive minimal, if any support. Seller Central partners have access to a Seller Support service.


Costs You Need To Know

Are you skilled in the art of negotiation? If not, then you’re probably going to struggle as a Vendor Central partner.

Why? Because Amazon will negotiate for the best possible wholesale price on your products so the company can earn a healthy profit margin.

In addition to that, you can also expect the company to ask for a 4-10% cash payout to cover what it calls “slotting costs.”

Also, don’t be surprised if Amazon tries to negotiate the price down even further at a future point in time as sales increase.

None of that will be of concern if you decide to use Seller Central. Instead, you’ll pay a flat fee (figure 7-15%) that’s a percentage of the price for each item sold. You’ll of course pay a little extra for fulfilment if you opt for FBA, but this is typically very competitive.

Advantage: Seller Central partners. The flat fee that third party sellers pay makes it easy to account for marketing costs.


Margins Amazon Vendor Central vs Seller Central

As we’ve just seen, Amazon will try to maximize its profit margins by negotiating for as low a price as possible from Vendor Central partners.

But what about the profit margins of the partners?

If you decide to sell to Amazon as a Vendor Central partner, you can expect wholesale margins. On the other hand, if you sell as a Seller Central partner, then you’ll earn retail margins.

Which is better? That’s a question that you should ask your accountant.

Remember, though, if you opt to go with Vendor Central, Amazon will likely attempt to negotiate your prices down even more over time. If you don’t comply, the company might look for another supplier.

Then your profit margin becomes 0. At least with Amazon sales.

As a Seller Central retailer on Amazon, though, you’re free to set the price that you like. Of course, if it’s not competitive, you might find that you price yourself out of the market. You’ll likely have to thread a needle that gives you a great profit margin while still maintaining a competitive edge.

Advantage: Seller Central partners. They can basically dictate their own margins.


Marketing as an Amazon Seller

Seller Central & Vendor Central partners now have the same access to Marketing.

Marketing options are now available to people who sell their products through Amazon Retail and third-party sellers.

Seller Central & Vendor Central partners can have their own Brand or Store page, vendor-powered coupons, enhanced content, and headline ads.

Seller Central partners can create pricing promotions. However, creating awareness about those promotions is a little more challenging.

Also, Seller Central partners can create ads that appear on Amazon’s website. The company currently offers three places for the ads: the login page, the home page, and the application page.

Advantage: Seller Central partners. They can gain more from Amazon’s marketing efforts.


Staying Stocked Amazon Vendor Central vs Seller Central

If you decide to become a Vendor Central partner, don’t be surprised if Amazon runs out of your products. The company is known to let that happen without any “low inventory” notice.

Also, Amazon tends to trim down its inventory of certain products over time, furthering the risk that it could run out.

Staying Stocked Amazon Vendor Central vs Seller Central

If you opt to go with Seller Central, though, you have much more control over inventory. You can store it in your warehouse or at an Amazon fulfilment centre if you’re using FBA, or list from both to maximise availability. Keep in mind that storage at fulfilment centres comes with a price tag based on the amount of space you use, so manage your inventory wisely.

Advantage: Seller Central partners. They have greater control over their inventory.


Getting Paid With Vendor Central And Seller Central

Sadly, there’s no shortage of horror stories about Amazon’s reluctance to pay Vendor Central partners.

For starters, the terms could cause cash flow problems for many small businesses. Amazon usually offers 2% Net 30, Net 60, or Net 90 terms.

In some cases, vendors who opt for Amazon Retail had to hire third-party companies to provide proof that products were actually delivered to Amazon. In other cases, Amazon insisted on a $25,000 co-op fee payment in order to receive $250,000 in accounts receivable.

If you can’t deal with those headaches, you definitely shouldn’t use Vendor Central.

On the other hand, Seller Central partners get paid every 7 or 14 days, or more regularly if needed. Of course, those payments are minus the sales commission and any applicable FBA fees. But the payment is much faster.

Advantage: Seller Central partners. Payments are much quicker.


Customer Service – Vendor Central vs Seller Central

Vendor Central partners have an advantage when it comes to customer service. That’s because Amazon handles all aspects of customer service, including issues related to fraud.

It’s true that Seller Central partners can use FBA to handle most aspects of customer service. However, the seller will still be responsible for customers who make claims about receiving fake products.

Bottom line: if you decide to sell as a third-party on Amazon, you’ll find that it’s more difficult to challenge dishonest competitors who pose as customers.

Advantage: Vendor Central partners. Amazon takes care of all issues.

Conclusion: If you wish to control your brand in Europe then Seller central is the model you require.

Why TBM Solution: To avail of Amazons full capabilities within Europe you need to be register for VAT across Europe, in a minimum of 7 countries to maximise Prime availability and minimise fulfilment costs by using Pan EU FBA. Within the European Union there are 28 countries, each with their own VAT (Value Added Tax), and duties, which could mean dealing with up to 28 separate regulatory bodies as revenue increases.

Talk to TBM about their European Amazon Seller Central platform.

sales@tbm-solution.com

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