Marketplaces February 06, 2019
Vendor vs. Seller: which one should I choose for my business?
A key topic for many sellers when trading online via Amazon is understanding what the benefits of Amazon Vendor Central versus Amazon Seller Central are. Being able to navigate the Amazon environment is crucial to get the biggest bang for your buck.
The Amazon Ecosystem
- Information gathering
Amazon obtains information about what customers want in a particular department, primarily acting as a merchant or marketplace operator and documenting its sales. This is how Amazon determines a product’s demand…
- Value added
… and can offer the products or services for which there is a sufficient margin. Due to the fact that there are so many stages in the value chain at Amazon, from manufacturing to product presentation and delivery to customer contact, it always has the possibility to interpose its own products.
Amazon is convinced that processes can always be optimised. In the warehouses, workers are already being exchanged for robots because the latter work flawlessly and are more cost effective. Another emblematic example: Amazon is a leader in the field of grid computing, whereby the available computing capacity of all connected computers is made available worldwide.
- Customer service
Whether it is in a product’s searchability, availability, delivery, exchange or return, Amazon has created a new standard in terms of customer service. These necessary investments have paid off, which is partly why Amazon requires that its competitors follow suit.
- For the long haul
Optimisation and customer service expenses do not have to bear fruit immediately. When compared to the speed of the modern corporate world, Amazon operates at a rate comparable to biblical times. From the outside, Amazon appears to suffer from suicidal investments and catastrophic quarterly statements; masked behind those apparent tunnel vision disasters; however, is actually quite often Amazon‘s hidden, greater ten-year plan for marketplace dominance.
- No mercy
Owing to its sheer size, unbeatable performance and expansion, Amazon is not dependent on others — and likes to remind them of that fact. It is thus an ecosystem, which is flourishing and constantly occupying more of the biosphere for itself.
Just as in nature, the “whatever for” question is a rather metaphysical one, to which there is no satisfactory answer. It must be enough to understand the natural laws of the system without being distracted from the original question. For only those who understand it can assert themselves within the system. In the face of this unprecedented expansion, sellers need to think about how they will find and defend their niche in the Amazon system.
What is Seller Central?
Amazon Seller Central allows “third parties” (third-party seller) to use Amazon as a marketplace, to list products there and to sell them independently. They have full control over their product listing and price. In addition, retailers also have the option of using Amazon (FBA, Fulfillment by Amazon) for shipping. Amazon will simply deduct the costs related to storage, packaging and shipping. The goods, however, belong to the dealer at all times and are only available in Amazon’s warehouses until they are sold and processed.
What is Vendor Central?
A retailer that sells via Amazon Vendor Central is called a first-party retailer. Companies are like suppliers and products are sold on Amazon in large quantities. After the sale, Amazon becomes the owner of the goods and takes over the responsibility for marketing, sales and price. This means that the retailer becomes dependent on Amazon. Vendor Central is invitation-only and is primarily intended for major manufacturers and well-known brands.
The biggest advantages of Amazon Vendor Central
- Customer satisfaction
Many customers trust a first-party seller more than a third-party retailer. “Sold by Amazon” gives you the trust that third-party suppliers lack and the certainty that the ordered goods will arrive.
- Marketing opportunities
When vendors sell through Vendor Central, they have the opportunity to participate in different marketing programs such as Subscribe & Save or Amazon Vine.
- A+ Content
Retailers who sell through Vendor Central have the possibility to create A+ content on their product page. A+ Content is an extension to the basic product description and offers the possibility to explain further features and advantages of the product and to supplement additional product photos.
The biggest pitfalls of Amazon Vendor Central
- Customer service
With the Vendor Central program, customers cannot be contacted. In this case, it is not possible to receive or control a customer’s feedback regarding the satisfaction of the delivery. In addition, it can not gather any demographic customer data. The service is completely in Amazon’s hands. If there are any issues with the shipping or quality control, the retailer doesn’t have the possibility of contacting the customer or taking care of the issue personally. Consumers who aren’t satisfied with Amazon’s service may gain a negative impression of the retailer.
- Inflexible pricing
Vendor Central is inflexible regarding pricing. The sale of the goods to Amazon also entails the transfer of control over pricing. Amazon chooses the price that seems most reasonable. This does not always have to be in line with the retailer’s own price expectation.
Therefore, the crucial difference is how much control you have over your product supply chain. Amazon Vendor Central and Seller Central are geared towards different business models: the first allows you more control while the latter gives you more visibility. Knowing this will allow you to take your business to the next level.