Selling online is one of the easiest ways to earn passively and Amazon is undoubtedly the best eCommerce platform to sell on. The Amazon marketplace has more than 300,000 active sellers and 2.5 million active customers, still, it has continued to grow exponentially. AMZ businesses provide an enormous income boost to new sellers every quarter, about 44% of sellers earn between $1000 – $25,000 monthly. (Source: Jungle scout)
Prospective and existing entrepreneurs love the AMZ marketplace. This is because it is an easy business model compared to managing physical stores.
There are two related yet different types of accounts or channels for sellers.
- Seller Central Account (Third-Party Sellers)
- Vendor Central Account ( First-Party Sellers)
However, the question prospective sellers often have is, “what’s the best channel to sell on”? Thus, the comparison between seller central vs vendor central is one every seller is familiar with.
If selling on AMZ interests you, then you will have to choose one out of these two options. In this post, you will learn all you need to know about seller central and vendor central. We will also consider the pros and cons of using a seller central account to help you make an informed decision.
What is Seller Central?
Seller central is AMZ’s dashboard for third-party sellers. In other words, third-party sellers who want to sell on Amazon must create a seller central account to enable them to manage their inventory and execute other business tasks. With seller central, anyone can sell on AMZ without having to worry about things like payments processing, website design, and returns processing.
Seller Central Pros and Cons
- Sellers have control over their inventory and prices
Third-party sellers get to fix their prices. So if a seller chooses to sell on several marketplaces, they can regulate their prices. Price changes can also be implemented swiftly, especially in a competitive market.
Also, sellers who want to succeed in the Amazon marketplace must be able to adapt to changes in customers’ needs. This is even more important for sellers who are on a budget and want to avoid losses. Since third-party sellers are in control of their inventory, it is easier for them to do this.
- Sellers can access data to scale their businesses
AMZ provides large amounts of consumer data for free to sellers. Third-party sellers can easily access this data through their seller central dashboard. Usually, this data includes trending products and customer information. This data can also serve as a template for major business decisions like choosing a logistic firm or deciding which fulfillment centers you should use.
- Flexible logistic options
Third-party sellers can either opt for FBA or FBM. Both options avail sellers the opportunity to be in control of their branding to a large extent. But, sellers who use the FBM option may incur extra costs on storage and shipping.
- Access to a large customer base
Vendors sell directly to AMZ, so if there is no demand from AMZ, then they’re not likely to make sales. In contrast, third-party sellers have access to AMZ’s customer base of over 300 million shoppers, this guarantees a relatively stable demand for their products. Moreover, third-party sellers can use Amazon advertising as a strategy to expand their audience and make more sales.
With ads, like sponsored brands ads, sponsored products, and display ads, sellers can increase their chances of showing up in search results.
- More responsibility
AMZ expects third-party sellers to take control of their business. A large part of an AMZ business depends on technical processes. These processes take time and may be overwhelming for new sellers. Thankfully, AMZ seller tools can help to relieve some of the work. Also, sellers can outsource packaging, shipping, and customer service to AMZ via FBA.
To make sales, sellers will have to carry out product research, keyword research, and listing optimization. These processes may be exhausting and time-consuming, however, sellers can automate them using FBA software. There are many AMZ software options available, keep reading to discover the most effective one for your business needs.
- Increased costs
FBM Sellers have to bear shipping costs and all third-party sellers pay AMZ’s fees. FBA sellers are not left out, they will also have to pay a number of FBA fees.
- No Advantage over competitors
The competition on the Amazon marketplace is stiff and third-party sellers are often up against each other. However, sellers can use Amazon advertising or AMS as a strategy to show up in search results and make more sales.
In contrast, vendor central products are marked with the words “ships from and sold by Amazon”, this gives them a slight advantage over their competitor. As a result, Vendor central products routinely outperform Seller Central goods.
How To Set Up Your Seller Central Account
Setting up a seller central account is not complicated. First, ensure you have the necessary details and information, a few of them are listed below.
- Business name
- Contact information (Preferably separate details; one for your customers, and the other for AMZ)
- Seller’s real name and address
- Proposed shipping locations (Regions or countries you’re willing to deliver to)
- Bank account information
- Logo and business information
- Return and refund policies if you sell in a category that qualifies for return shipping.
If you have the necessary requirements, the following steps will help you set up your account.
- Go to Amazon.com and click on ‘Sell’. Alternatively, you can also visit services.amazon.com to create an account
- Next, click on the sign up button and you will be redirected to the account creation page. Input your name, email, and password.
- After signing up, log in to your newly created account and you will be taken to the account configuration page, provide all the required information.
- Next, you will be required to provide your details in five sections and all the sections are easy to navigate. Under the tax information section, you will have to input your tax information details and social security number.
- Ensure you go over all your information before completing the configuration process. Also, note that you can only create one seller central account if you intend to sell in one region.
Related: Selling Private Label Brands on AMZ
Amazon Selling Plans For Third-Party Sellers
Third-party sellers who want to sell on Amazon will have to choose a selling plan to operate on. AMZ offers two selling plans; the individual plan and the professional plan. Of course, the number of products that can be sold on each plan as well as the cost of selling differs.
The individual plan is best for sellers who want to sell as a hobby and do not intend to sell more than 40 items per month. You’ll have access to a basic set of order management tools as part of a pay-as-you-go plan.
Sellers can create a listing by matching their product to an existing product page. They can also put up a new product page on AMZ, it all depends on choice. Also, on the individual plan, AMZ charges a flat-rate fee of $0.99 for every sale you make. This is besides the regular seller fees.
Sellers who choose the professional plan have to pay a non-refundable monthly fee. This fee is independent of sales inflow. AMZ charges $39.99 on every sale as opposed to $0.99 on the individual plan, this is alongside other regular Amazon fees.
The professional plan is best if you intend to sell on AMZ full-time and not a one-off hobby to kill boredom.
Using the professional plan gives you access to a wide array of tools for inventory and other business procedures. In addition, it increases your chances of winning the buy box, or selling in restricted categories. Uploading multiple product listings at once is also an added feature of the plan.
Fulfillment by Amazon (FBA), Seller Fulfilled Prime (SFP), or Fulfillment by Merchant (FBM)
There are three fulfillment options available to third-party sellers on the Amazon marketplace.
- Fulfillment by Amazon (FBA)
- Fulfillment by Merchant
- Seller Fulfilled Prime
Under Seller Fulfilled Prime (SFP), sellers can sell to Prime subscribers. But, they’ll have to offer free same-day or two-day delivery.
Fulfilled by Merchant (FBM) requires sellers to store and fulfill orders themselves. In other words, this fulfillment option is the opposite of FBA, and sellers who opt for it will have to bear the cost of fulfillment. Due to the unpredictable nature of shipping and fulfillment costs, FBM may not be the best plan for sellers who are on a budget and want to cut down costs.
Fulfilled by Amazon FBA is the most popular option. This is because sellers who use FBA can outsource major business processes to AMZ. As a result, the fulfillment option is easy to use and the majority of third-party sellers conclude that FBA is the best and most cost-effective option.
How Does Amazon FBA Work?
With FBA, AMZ will store products, ship orders, handle return processing, and provide 24/7 customer service on behalf of sellers. As a result, thousands of third-party sellers use this fulfillment option because it frees up time for them to focus on other important aspects.
When you use FBA, your products will carry AMZ’s branding and packaging. So, if your intention is to build a brand through the private label model, this may not be a suitable option for you. However, it is a great way to build credibility as a third-party seller.
Setting up an FBA account is pretty easy, and using it is a great strategy to build a hands-free AMZ business and earn passively.
What is Vendor Central
Vendor central is AMZ’s platform for its first-party sellers. First-party sellers or vendors are entrepreneurs who sell their products (in wholesale) directly to AMZ. Seller Central lets you sell to consumers (Seller Central is a B2C platform). In contrast, Vendor Central gives you the ability to sell to AMZ as a B2B (business-to-business) company.
Becoming a first-party seller using vendor central is based on invitation. In other words, AMZ sends exclusive invitations to sellers who are eligible to become Amazon vendors and only sellers who meet up with the requirements can become Amazon vendors.
Here’s what the process of becoming a vendor looks like.
- You get an invite and wait for AMZ to request your products
- Fill the purchase order that will be sent to you
- AMZ gets the goods and handles the sales aspect.
How To Get Selected For Vendor Central
AMZ has put a retail team in charge of sending out invitations. Usually, these invites are sent to brands that are considered capable of handling bulk orders. Moreover, private label brands and top sellers form a large part of AMZ vendors. So, manufacturers and brand owners are AMZ’s main partners. However, distributors can also work with them if they have products that are difficult to come by.
How Does Amazon Place Orders From Vendors?
On average, AMZ receives orders from vendors once a week, but high demand can result in more frequent orders. Also, you may not see a request if you post a new product unless AMZ identifies the demand for your goods. Whenever demand is high, orders are higher.
Is FBA Different From Vendor Central?
FBA and Vendor central are two different platforms. With FBA, you are an independent or third-party seller, but AMZ will handle storage, shipping, and customer service on your behalf. Vendor Central, on the other hand, is an invitation-only platform where you only get to sell your products directly to AMZ.
Pros and Cons of Vendor Central
- Brand Credibility
Vendor central products carry the tag “Sold by Amazon”. This often makes customers trust and opt for these products more.
- Better Advertising Opportunities
Businesses can access many options for promoting their products. Vendors can increase traffic to specific product pages by using keyword-targeted ad campaigns. Amazon Marketing services are available to sellers and vendors alike, but Vendor Central provides more powerful features for running ads through AMS.
- Easier Way To Sell On AMZ
Managing your business is easier when you use Vendor Central rather than Seller Central. A vendor’s main concern is to fulfill orders and fix prices. In contrast, third-party sellers bear a lot of other responsibilities. Also, it is easier to run your business when AMZ is your only customer. For third-party sellers who have to sell to hundreds of people, managing the business may be tough.
- Additional Tools
First-party sellers have access to exclusive promotional programs. For instance, they can take part in AMZ’s Subscribe and Save program. Vendors can also sign up for Amazon Vine. With the vine program, vendors can get feedback from trusted reviewers. Knowing how important reviews are, the Vine program is a great investment for vendors. The reviews gotten via the program can help boost brand trust and increase revenue.
- Sellers have no control over the inventory and retail price
Vendors do not fix product prices, AMZ does. Hence, the prices may change at any time as AMZ deems fit. A drastic decrease in price is possible. This is because AMZ does not strictly follow Minimum Advertised Pricing (MAP) guidelines. Thus, Amazon is free to change its retail prices at any time based on its internal algorithms. If prices go below a seller’s profit margin, losses are inevitable.
- Strict fulfillment procedures
The guidelines for filling AMZ’s orders are very strict and specific. Vendors who have trouble maintaining stock or fulfilling orders may face unexpected chargebacks. In the long run, this can lead to a reduction in their profits on Amazon.
- Vendors may find it difficult to build a brand on AMZ.
Vendor central products are trusted by customers, but vendors have no control over them. AMZ repackages the products, and vendors lose control over their branding. As a result, most customers have no idea who the real manufacturers of these products are. So they would rather buy directly from AMZ. Hence, it is impossible for vendors to build a credible brand on their own.
How To Scale An FBA Business with ZonBase
If you read to this point, your questions and comparisons related to seller central vs vendor central must have been resolved. However, if you’re just joining the Amazon marketplace, chances are that you will have to start with a seller central account.
In this case, you will have to constantly develop new strategies to help you outrank your competition and succeed on Amazon. Using FBA software is your best bet if you intend to get your AMZ business off the ground in little to no time. It is recommended that you use an all-inclusive AMZ Seller tool if you are a new seller. This is because all-inclusive software gives you access to product research, keyword research, and listing optimization tools in one place.
ZonBase is the best all-inclusive software. It comes with a diversified collection of seller tools. These tools are designed to take care of all your Amazon business processes.
The processes include product research, keyword research, and listing optimization. With ZonBase, you will have access to a wide range of AMZ seller tools under one platform.
Seller central vs Vendor central, which is the best option for you? The conditions for determining which of these options is the best vary. But, if you get invited to become a first-party seller, should you take it? It would be in your best interest to make your decision based on the dynamics of your business, making sure to consider whether you’ll be able to meet up with Amazon’s demands and bulk orders. Avoid making decisions based on the perceived benefits of either option.
So, can you manage AMZ’s demand for bulk orders? Do you mind having little or no control over your business? Then Vendor central will be a good choice. If you answered no, then seller central is a better option for you.
On the whole, when it comes to making a decision between seller central vs vendor central, ensure you weigh your options and choose what’s best for you. If you opt for a seller central account, you can leverage Amazon advertising offers like Sponsored brands ads to gain visibility and improve your conversions.