Amazon Seller Central gives businesses and individuals the opportunity to sell their products on Amazon, having access to their wide fan base of consumers.
As your business grows you may start to explore what options there are for expansion and one that may come up is Amazon Vendor Central. Unlike Seller Central which is open to everyone with few restrictions, Vendor Central is only available to those that have received an invite to join, and there isn’t much a seller can do to influence Amazon’s decision to send one.
What is the difference between Seller Central and Vendor Central?
Aside from the accessibility of Seller Central in comparison to the exclusivity of Vendor Central there are a few key differences. The first is that you do not sell directly to consumers in Vendor Central. Amazon purchases your products in bulk at a wholesale price which is agreed by both parties (although Amazon will have a figure in mind and won’t stray too far from it). You then fulfil the purchase order to Amazon and the rest of the sales process is out of your hands and fulfilled by Amazon themselves. This includes delivery, customer service, returns and so on.
Another key difference is that Amazon sets the pricing for stock bought from vendors. This can mean that if a similar product starts selling for a lower cost elsewhere, Amazon will reduce the price of your item to increase volume of sales, which in turn will affect the wholesale price you receive.
Amazon does state that it honours any Minimum Advertised Price (MAP) request by vendors, however there have been complaints that this isn’t always the case and for some Amazon will sacrifice the MAP in order offer their customers the lowest price.
It is also important to bear in mind that if you do choose to sell on Amazon as a Vendor, you should only expect wholesale margins, with Seller Central you will get retail margins which will be higher.
What are Amazon Vendor Central payment terms?
One element of Vendor Central that can be really frustrating compared to Seller Central is the payment terms. Seller Central payments are typically made after 14 days, each of these payments includes 14 days of your orders (minus Amazon’s fees) that were delivered at least seven days ago. Amazon has many different options which it offers vendors, all longer than two weeks, which include:
30 days – Amazon will pay you after 30 days. However, on this plan, Amazon gives themselves a 2% discount, meaning the amount you receive will be less in order to be paid faster.
60 days – Amazon will pay you after 60 days. This is the plan that most vendors are on.
90 days – Amazon will pay you after 90 days.
If your business is used to these more traditional payment terms then this method of payment will not be an issue, however, if you rely on money coming in monthly, the latter two terms can cause cash flow issues.
What are the Amazon Vendor Advertising Options?
As Amazon wants to sell as much as your product as possible, as do you, one benefit of Vendor Central is the access to a wider range of options within Amazon Marketing Services (AMS). The Vendor version of AMS includes hyper-targeted keyword based ad-campaigns to drive traffic directly to product pages.
There will be access to a variety of advertising opportunities using a Pay Per Click (PPC) model. PPC is an advertising format where you pay a nominal fee every time someone clicks on your ad. During peak times, for instance Black Friday, Cyber Monday and the run up to Christmas, Amazon PPC gets more competitive, which drives up the costs per click (CPCs) price. Luckily this is usually offset by volume sales and high conversion rates, so isn’t likely to impact margins.
What does a Vendor Central Agency do?
Selling directly to Amazon can be very daunting at first and can leave less experienced sellers feeling a little out of their depth. It is often best in these cases to hire a Vendor Central agency to handle one, or all aspects of your relationship between you as a vendor, and Amazon.
Often these agencies can work with vendors to create a bespoke offering based on a mix of consultancy and management services across different areas dependent on the needs of the vendor. Some of these areas include, but are not limited to, reporting & forecasting, inventory management and marketing & advertising, including Amazon PPC, SEO and content writing.