FAQ: Seller Central vs Vendor Central
If you are selling on Amazon or looking to start, there is one question you will see thrown around, is it better to be a seller on the Seller Central platform or a vendor on the Vendor Central platform?
For those of you who don’t know, there are two options available to sell on Amazon as a seller or a vendor. Below is a table that highlights the key differences between the two programs. In short, the vendor platform is a B2B relationship where you sell your stock to Amazon and they own and sell the goods. The seller platform allows you access to Amazon’s customers, you own the stock and sell to the end customer. You can utilise FBA (Fulfilment by Amazon) which is a fulfilment program that lets Amazon store and dispatches your stock to the end consumer, you’ll also display the all-important Prime badge for these products.
So what are the main differences between the two platforms?
A detailed breakdown:
Easy Access – Anyone can sign up and become a verified seller via Seller Central. The vendor program is invite-only.
Stock – As a seller you will have full ownership of your goods until an order is confirmed, and your product is shipped. Your business relationship is with the end customer and Amazon just allow you to facilitate the transaction on their site. As a vendor, this is a B2B relationship as it would be with any other retailer. You will agree on a cost price and target retail price with them and Amazon will buy and take ownership of your goods.
Selling Fees – A vendor doesn’t have any direct selling fees, they do have marketing fees which we will cover further down but there is no direct fee per item sold. As a seller, you will have a referral fee based on the category you sell in, these range from 8.16% all the way up to 45%. The majority of sellers will see themselves paying around 15% of the total sale price to Amazon as a referral fee.
Marketing Fees – As a vendor, you will have yearly negotiations on the percentage of your sales you give away to cover marketing and returns etc. This can be anywhere from 5-10% of the cost of goods sold, you can negotiate this down but you need to have a solid business case backed by data as to why this should be lowered. There is no marketing fee associated with the Seller central platform.
Fulfilment Fees – If you are a seller on the Seller Central platform and opt to use FBA as your fulfilment method you will pay a per unit fee for Amazon to handle the picking, packing and dispatch of your item. The price you will pay for this will range depending on the dimensions and weight of the product sold. On the vendor platform, because the goods have been sold to Amazon there is no fulfilment charge, it’s up to Amazon to deliver the goods. This is helpful if your products are very large, heavy or have a low selling price that would be adversely affected by an FBA fee.
Stock Replenishment – As a seller, your are in control of how much stock you store with Amazon and how often it’s replenished. As long as you have a strong IPI score and there are no inventory restrictions, you can replenish stock, daily, weekly, monthly or however you see fit! As a Vendor, Amazon will send you weekly purchase orders for your products, there can be more than one PO and Amazon will often ask you to split your shipments and send the same ASIN to multiple warehouses. There are punishments for sending in stock late or with incorrect quantities so it’s important to have reliable stock and efficient warehousing to make sure POs are handled on time.
Manage Stock Levels: On the Vendor platform Amazon are in control of your stock, they typically aim to keep 30 days of stock on hand but this can fluctuate and they have been known to be slow to react to sales volume changes. You can use the Born to Run program which allows you to dictate to Amazon how much stock to order but the stock will be returned or a 25% cost reduction applied if you don’t sell out of the initial order within 10 weeks. As a seller, you are in full control of how much stock you store with Amazon.
Inventory Restrictions – As a seller, Amazon can alter how much stock they allow you to store within the warehouses. These stock limits can change overnight with no warning or reasoning. As a vendor, you are not affected by these inventory restrictions at all.
Retail Price – As a seller, you can dictate the price of your products, you can change this by the day and increase or decrease as you see fit. With the vendor platform, as you sell your goods to Amazon, it’s up to them what they set the selling price as. If you’re a larger brand and you sell to multiple retailers, Amazon will check their prices daily to ensure they are the same if not cheaper. This can be a huge problem for sellers who run promotions with other retailers, Amazon may try to reduce your cost price if they are not making margins due to them price matching other retailers or your own site.
Selling Fees – There are no fees to be part of the vendor platform. As a seller, there is £30 monthly charge which gives you access to seller central.
Storage Fees – With Seller central, you will pay a monthly charge based on how much space you have used with Amazon’s warehouse, the fees increase from October-January during peak season. There are no storage fees within the vendor platform.
Payment – As a vendor, Amazon will pay invoices 60-90 days after they are issued, this can cause cash flow issues for businesses not used to this type of agreement. As a seller you are paid after each order is dispatched, this collects in your Amazon account and is sent to your bank account every 14 days. You can manually request a payout as often as you’d like if you’d prefer.
Vine – As a seller this costs £140 per ASIN, as a vendor this is £1,000! We have no idea why and it’s exactly the same program.
Fines – Vendors are subject to fines for a whole variety of reasons, they all relate to compliance and delivery. You will be fined for late delivery, if the delivery quantities don’t match the POs and if the prep for your item is incorrect. Essentially if there is anything wrong with your shipment, expected to be charged. There are no fines relating to these same issues with Seller central.
Advertising – Both sellers and vendors have access to the same advertising portal. All of the metrics within the ad console for both accounts are based on retail price, with a vendor relationship you need to factor in that you sold your goods to Amazon for a different price than the retail price so your metrics within the ad console are not accurate and you need to factor that in.
This covers the key differences in the accounts, historically the Vendor platform was more suited to bigger brands who only dealt with B2B and so the Amazon platform worked well for them. Now we are seeing larger brands jumping to the seller platform and smaller sellers joining the vendor platform all with the goal of improving their margins.
There is also the possibility of operating both a seller and vendor account at the same time, the only caveat is you can’t sell the same ASIN on both platforms. This can be great as a way to launch new products as a seller where you have more control and then move over to the vendor program once they are established. Or de-listing older products from your vendor accounts to improve your overall margin and using seller central to sell these items.
If you are thinking of making the switch from one platform to the other, about a hybrid approach or would just like someone to help you make an informed decision on which platform is best, reach out to ThePurposeLed and one of the team will be happy to walk you through this tough decision.
