Amazon Vendor vs. Seller Central: Which is Right for Your eCommerce Strategy?
Millions of consumers shop on Amazon every year. In fact, according to CNBC, Amazon was expected to capture almost 50 percent of the US eCommerce market in 2018, which comes out to $258.2 billion in sales.
With stats like that, it’s easy to understand why Amazon should play a role in every eCommerce merchant’s digital strategy. But before you get started, you need to be prepared. One of the first decisions you’ll need to make is whether to be on Vendor Central or Seller Central.
Below, Taylor Smith, Director of Amazon strategy at BVA (previously, he worked for Amazon for nearly four years), shares insights on how to differentiate between the two options and what to consider when making your decision.
First Things First... What IS Vendor Central and Seller Central?
Seller Central: Amazon Seller Central is the platform that brands use to sell products directly to consumers. Merchants on Seller Central are called marketplace, or third-party, sellers.
On Seller Central, the seller determines how products are presented, as well as the messaging used to promote those products. When it comes to fulfillment of these orders, vendors on Seller Central have two choices: they can either manage fulfillment internally, or use Amazon’s fulfillment services (fulfillment by Amazon, or FBA).
Vendor Central: Amazon Vendor Central is the platform that first-party sellers use to list their products on the eCommerce marketplace. It is a wholesale relationship between you (the seller) and Amazon. Vendor Central is invite-only, so it’s not available to everyone.
Fulfillment of products sold on Vendor Central is always handled by Amazon. Because of this, you’ll often see these items listed with “ships from and sold by Amazon.”
Vendor Central vs. Seller Central - Let's Compare
Aside from the obvious, there are four key areas in which Vendor Central and Seller Central differ:
1. Brand/customer experience: “While you can influence your content through Vendor Central, you OWN it on the Seller Central side,” says Smith. That means that you get to choose how your products are presented to online shoppers.
Furthermore, you can interact with customers through Seller Central after their purchase using a tokenized email address on the Amazon platform. This allows you to develop meaningful relationships with customers, provide necessary support, give product recommendations, and solicit reviews.
2. Pricing: On Vendor Central, Amazon controls the pricing. A price aggregator matches the lowest price on the marketplace, whether or not that’s what you’ve intended. “There are also automated markdowns if product isn’t moving,” Smith says.
In comparison, you get to set the pricing on Seller Central.
As you might have already guessed, this means that Vendor Central can hurt your profit margin. It’s a good place to get rid of aging or fast-moving stock, but overall, you surrender control of pricing and your bottom line can suffer.
3. Data: On Seller Central, you gain access to your customers’ full names and addresses, giving you the opportunity to match that data to an email address through paid third-party software. You can then use those email addresses to run targeted marketing and ad campaigns.
4. Inventory management: On Vendor Central, Amazon is both selling your products and fulfilling orders for you. Because of this, you do not have any unit limit options which can lead to stock-outs, and unpredictable pricing also means forecasting challenges.
On the other hand, Seller Central requires a more hands-on approach as you sell the products and choose to handle fulfillment or use FBA.
...are you noticing a common theme here? Seller Central offers brands more control across the board, allowing you to own the experience, set pricing, gain data, manage inventory and fulfillment, and have predictable cash flow. Vendor Central places more of the control in Amazon's hands.
So, Which is Right for Your Business?
“We typically recommend that brands on Vendor Central at least follow a hybrid strategy, where they're on both Vendor and Seller Central,” Smith says.
"If we are choosing between one or the other, we generally recommend Seller Central for our clients because of the added control it offers," he continues. "Seller Central can (and should!) be integrated into a holistic, long-term eCommerce strategy. Because brands have control over pricing and inventory, they can make more concerted efforts to have a broader eCommerce strategy that they own.”
Incorporating Seller Central into Your eCommerce Strategy
“On Seller Central, you can choose which collection to launch and when,” Smith explains. “Amazon is an acquisition channel, and we can grow D2C without cannibalizing it through Amazon.”
How can you do that?
“Put your best foot forward on Amazon when it comes to evergreen-type products,” Smith says. “Then list the hottest styles, best deals, and full product collections on your D2C site.” Amazon can gain traction for your brand, and when you deliver on customer expectations, they’ll likely seek out a deeper, more direct experience on your owned channels."
Growing and scaling on Amazon takes daily management and deep knowledge of the platform — as well as consistent execution on your own DTC website. Amazon has made consumers accustomed to convenience, so how can your site serve them more deeply?
Overall, the ability to integrate Seller Central into an overarching eCommerce strategy and leverage the customer data Amazon provides makes this a no-brainer for us here at BVAccel.