Today, we’ll break down Amazon Seller Central vs. Vendor Central. We’ll also introduce a third business model: the Amazon Hybrid Model. This combines selling on both platforms instead of just one.
The Amazon Hybrid Model is a business model composed of 2 strategies: selling as a first-party vendor on Vendor Central and selling as a third-party seller on Seller Central. It’s a strategy known as the hybrid model because it promotes business for both your own and sponsored goods, optimizing the 2 ways to sell on Amazon.
Seller Central vs. Vendor Central
What is Vendor Central
The first thing to know is Amazon Vendor Central, a web portal for first party-sellers. Vendor Central is often called Amazon Retail.
If you’re a first-party seller, you’re often referred to as 1P. This means you act as a sales manufacturer or direct supplier to Amazon, giving your first-hand experience and products for the Amazon brand. You directly correspond with the Amazon retail team.
How Vendor Central Operates:
- It’s Invitation Only: It’s invitation-only because only those with large market traction and can sell well with large volumes are invited, according to Amazon.
- You Only Sell to Amazon: You sell your products wholesale directly, so you have a simplified business model and Amazon takes care of everything. They take charge of prices, shipping, inventory, and customer service. As a vendor, your focus will be on purchasing orders and billing.
- You Have Endless Advertising Options: In terms of advertising, you will be part of Amazon Marketing Services (AMS), a paid digital marketing platform to promote products. Amazon Marketing Services include Sponsored Brands, Headline Search, and Product Display Ads. Vendors can create PPC campaigns. Your brand will get more traffic for your listings using these methods.
- Unstoppable Growth: Perhaps the #1 reason for selling on Vendor Central is the growht of the revenue acquired from being on Amazon. As a revenue model, it is ideal. Your products are Amazon products, and have the privilege of being branded “sold on Amazon.”
Also, you pay slightly less than Amazon sellers when you’re a vendor because you sell in bulk and you don’t have internal operations costs. Although you’re selling individual items for less due to Amazon price controls, you sell wholesale. Plus, no internal operations costs. This means increased revenue throughout for vendors than for sellers.
What is Seller Central?
What if you want to sell and promote directly to Amazon customers? That’s where Seller Central comes in. Seller Central is the web interface used for the various operations of the marketplace or third-party vendors, called 3P.
If you have a brand and know it well, you will most likely already be familiar with the marketplace called Seller Central.
How Seller Central Works:
- The Ability to Control Pricing: Amazon plays no part in pricing here so you can maximize control over the prices you want to set for your products.
- Use Data to Your Advantage: There are many Amazon analytics out there to gain data and advertising options to promote your brand. There’s Amazon Web Services (AWS), using cloud computing strategies. On AWS, there’s also Amazon Kinesis Analytics (AKA). AKA is capable of processing big data in real-time for high volumes of streaming data from operating logs, financial transactions, and social media feeds.
- Take Stock of the Amazon Fulfillment Program: As a seller, make sure your brand takes stock of the Fulfillment by Amazon program (FBA). This paid eCommerce service allows 3P sellers to use Amazon fulfillment or distribution centers. The FBA network has many advantages from a physical product perspective.
- Everyone’s A Competition: Sales revenue may not be the same compared to an Amazon vendor because of thousands of competitors. You’re also investing more in internal operations that will do much of the back-end procedures.
In comparison to Amazon Seller Central vs. Vendor Central, sellers usually do much of the heavy lifting themselves. Their profit goes to internal operations, as well as back-end marketplace costs for being on Amazon. Therefore, their profit margin is slightly less than 1P vendors.
What is the Amazon Hybrid Model?
Most people have trouble setting prices and in Vendor Central, you can’t set your prices at all. When Amazon sets the price, it goes for a lower retail value.
When you utilize the hybrid model, you will use Seller Central which has no restrictions on prices for products.
Therefore, you can maximize your profitability by using both models. You gain profit from prices set by Amazon as a 1P vendor as well as your own prices as a 3P seller. Basically, you have two sites for revenue using the hybrid model.
Advertising and Reviews
With Vendor Central, Amazon is handling most customer-related services. However, if you transition to being both 1P and 3P, you can control reviews for your product. On Seller Central, you can use Amazon Vine, the Early Reviewer Program, and a number of other Amazon tools at your disposal. Your customer service team can handle most of the product reviews.
Because you’re using the hybrid model, your brand will still get the seal of approval from Amazon, which you acquired by using Seller Central. You can use this to your advantage when it comes to content marketing and advertising.
Vendor Central requires that you have a steady stream of inventory for all of your items. You will be penalized by Amazon if you don’t. The same is not true for Seller Central.
When using the hybrid model, make sure to refurbish your core items for Vendor Central, and to place your non-core items (that can go out of stock any time) on Seller Central. Do this by using effective inventory management strategies.
Things to Keep in Mind When it Comes to Seller Central vs. Vendor Central
- Keep the seal of approval: When you transition to the Amazon Hybrid Model from being a 1P vendor, make sure you keep your Amazon prime badge. This will reinforce the fact that your products are still certified by Amazon. With this guarantee, you won’t sacrifice sales.
- Don’t mirror your product selection on both sides: You will be penalized by Amazon if you do and your products may be taken down. Most companies have the misconception that the Hybrid Model allows them to both. In order to take full advantage of the Hybrid Model, you must learn to pick the products that would suit the 1P needs as well as 3P needs simultaneously.
- Keep product cycles alive: By using Seller Central to introduce new products, then transitioning them to Vendor Central when they become household names, you can prolong the life cycle of a product. Of course, the longer a product is in demand, the more you want to keep in the cycle but make sure to use both models to do this.
There are many advantages to Vendor Central: Amazon is the retailer, many advertising options, and revenue growth is up to par.
In comparison, Seller Central also has advantages: pricing control, data analytics, and fulfillment programs.
By using both models in a Hybrid Model, your brand maximizes advertising and inventory management to the fullest and increases revenue.
If you’re ready to transition from a 1P vendor to a 3P seller but are running into problems, MarketplaceOps is here for you. We are a team of eCommerce experts who have been in the industry for many years. We’re willing to help you every step of the way.
If you have more questions about our article or if you simply need help in handling your Amazon business, reach out to us by sending an email to email@example.com or contacting us here.