Have you received an email from the Amazon Retail team asking if you’d like to register for Vendor Central? You may be wondering exactly what that is, especially as Amazon doesn’t publish much information publicly about the scheme. So, what’s it all about?
What is Vendor Central?
Vendor Central is an invitation-only platform designed for brands and sellers that Amazon is particularly interested in. Invitations are typically sent to existing third-party sellers that are seeing success when selling on Amazon Marketplace. Amazon has also been known to contact potential vendors through trade shows too.
Businesses that enrol in the programme become first-party (1P) sellers. This means that, rather than selling directly to customers through the marketplace (third party or 3P selling), you sell your products to Amazon, which sells them to its customers.
1P vendors are not responsible for selling their products to anyone except Amazon. There are advantages and disadvantages to this, which we’ll look at later.
Amazon Vendor Centrals differs significantly from Seller Central, which is the platform that most Amazon sellers use. With Seller Central, businesses sell their products directly to shoppers through the Amazon Marketplace. Sellers are responsible for their inventory and pricing.
Vendor Central works as follows:
- Step 1: Amazon places an order for your product. A customer hasn’t made this order; instead, Amazon orders in bulk to have inventory in stock in readiness for shopper orders.
- Step 2: In most cases, the vendor will ship the order to an Amazon fulfilment centre. This step is slightly different if a vendor is approved for Direct Fulfilment*.
- Step 3: Amazon pays you for the order, whether the items have been sold to shoppers or not. Amazon will make payment within 30, 60, or 90 days depending on the contract you have in place.
*Direct Fulfilment means that vendors retain their stock and send products on behalf of Amazon directly to the buyer as an order comes in. Vendors must be approved for Direct Fulfilment and may be removed from the scheme if timely delivery becomes an issue.
Selling through Vendor Central in the standard way (without Direct Fulfilment) can feel a lot like selling through Seller Central with the Fulfilled by Amazon (FBA) service. There are a lot of similarities between the two, such as having inventory stored in an Amazon fulfilment centre and leaving the picking, packing, and delivery to Amazon experts.
The difference, of course, is that when you sell through Seller Central using FBA, you are still in charge of selling your products. With Vendor Central, it’s all down to Amazon.
If you receive an invitation to start selling through Vendor Central, you don’t have to accept. You can continue to use Seller Central if you prefer. However, for some businesses, this can be a tricky decision to make.
Why Use Vendor Central? And Why Stick to Seller Central?
If you’re lucky enough to catch Amazon’s eye, there are several advantages to registering for the Vendor Central platform. Some of the most significant benefits include:
Products appear on the Amazon website with the Prime logo and the ‘Sold by Amazon’ badge. These two elements tell shoppers that their products are being packaged and sent out through Amazon, and in many cases, they will be able to select their delivery day if they are in the Amazon Prime programme. Buyers also have peace of mind that, should there be a problem with their order, they will be able to deal with Amazon to resolve it, rather than waiting for a third-party seller to respond.
Ease & Simplicity
With Vendor Central, sellers don’t deal directly with their customers, which brings several advantages. Firstly, sellers aren’t subject to A-Z claims. Amazon deals with any problems in its capacity as the seller, rather than you as a supplier. Another significant benefit is that you don’t have to worry about sales; that’s Amazon’s job. Instead, you can focus more of your time and resources on growing and developing your business, safe in the knowledge that someone else is handling the sales side for you.
If Amazon is purchasing your products in bulk, they want to sell them! Products from vendors are often included in Amazon’s promotional programmes and schemes that boost the visibility of specific items to increase sales. Subscribe & Save – Amazon’s subscription service – is one programme, and Lightning Deals is another. These products can also be part of the Amazon Vine service, where Amazon sends your products to its top-rated reviewers to help build up a strong review profile to encourage more sales.
There are certainly lots of benefits. But it’s not all sunshine and roses. There are a few less-than-perfect aspects of Vendor Central that are important to take into account.
The big downside here is cost. Unlike Seller Central, which charges a fixed enrollment fee and a set percentage per sale, Vendor Central comes with a range of costs:
- Marketing Development Funds (MDF)
- Damage allowance
- Freight allowance
- International costs if Amazon chooses to sell your products internationally
- Optional fees for support and premium vendor services
Amazon will outline all of these costs in the contract. However, there are a couple of other things to consider, too.
One is that Amazon sets both the buy and sell price for your items. This means they tell you what they are willing to pay for your product (you do not have to agree, but there is little room for negotiation, especially for smaller businesses), and they set the price for their customers. While there is a Minimum Advertised Price (MAP), Amazon is known to drop below this figure to price match items selling through Seller Central.
Exploring the Platform
The good news is that if you decide to accept an invitation to Vendor Central, you should find the platform very easy to use. It’s divided up into seven simple, straightforward tabs. They are: Orders, Items, Advertising, Merchandising, Reports, Payments, and Settings.
This is where you can see all the orders Amazon is making for your products. New purchase orders will go directly to this tab, so it’s essential to watch this part of the platform closely. These orders are all automatic and are based on demand, so you might notice that orders are infrequent at first, becoming more regular the more your product sells. Weekly orders are standard for new Vendor Central suppliers.
The Items tab is where you can keep track of the products you’re supplying to Amazon. Just like in Seller Central, you’ll be responsible for keeping your listings up to date with images, product details, descriptions, content, and more. The difference is that you’ll enter a wholesale price rather than a buying price. If Amazon requests a lower price, you can accept this or mark the item as unavailable for sale through Vendor Central.
This is where you can advertise products. Most of the options available to vendors are the same as those available to sellers, so if you’re accustomed to using Seller Central (and you’re enrolled in Brand Registry), you should already know about Sponsored Products, Sponsored Brands, and Stores. The difference is that vendors can have products featured in emails and category pages, although it can be quite costly.
The Merchandising tab offers advanced advertising options such as A+ Content and Amazon Vine registry. A+ Content helps you create enhanced product listings using Amazon’s templates and comparison tables to optimise your listings for the best effect. And, as already touched upon earlier, Amazon Vine is an early reviewer programme to build up a review profile. It can work, but it’s expensive, costing thousands per ASIN.
Reports are where you can keep track of sales and profits. There are 17 different reporting options available in Vendor Central. These are separated into three categories: Sales and Traffic, Operations, and Consumer Behaviour. Some of the most useful reports include the Amazon Search Terms report. This report can help you optimise your listings for SEO. The Forecast & Inventory Planning report can help you prepare for orders.
The Payment tab is self-explanatory; it’s where you can see all the invoices you’ve sent to Amazon for their orders and all payments made to you. The standard Vendor Central contract will contain a payment agreement of 60 days, although this may sometimes be extended to 90 days. Vendors can request to be paid within 30 days, although Amazon may request a 2% discount on all orders for the privilege.
This tab is where you can manage your Vendor Central account, including your password, contact details, and all other basic account settings. To change any information, you may be prompted to enter your Vendor Central Registration Key and confirm you have permission to access account details. The Registration Key is the key issued to you when you register for Vendor Central and used for your first log in.
Is Vendor Central Worth it?
There’s no easy answer to that question. Some businesses love Vendor Central because it removes the need to interact directly with customers, allowing time to focus on growth and development.
They also enjoy the increased sales that come naturally with the ‘Prime’ logo and ‘Sold by Amazon’ badge. However, others say they feel like they’re not in control of their products and want the flexibility to sell on their terms.
It is possible to operate a Seller Central and Vendor Central account simultaneously, so if you’re on the fence, this can be an excellent way to see if Vendor Central is right for you.