If you are an Amazon Seller, then you must read this article to know:
- Different Ways of Selling Products on Amazon
- What is Amazon Seller Central and Why Should You Choose?
- What is Amazon Vendor Central and Why Should You Choose?
Most of us are only aware of selling on Amazon as third parties or Amazon sellers. That is, you register as a third-party seller on Amazon by creating an Amazon Seller Account and get access to your seller portal that helps you manage everything related to your Amazon sales. Right from adding products, updating inventory, managing payments, to accessing content that helps you carry out Amazon sales, everything is managed through this single Seller Central portal.
However, there is one more way in which you can earn money from Amazon. And that is by becoming a vendor to Amazon, also called Amazon’s first part sellers.
First-party sellers to Amazon are vendors or suppliers to Amazon who sell products to Amazon as a buyer and get paid for them. They are sent invites to be able to sell their products to Amazon and get paid.
Now, both third-party sellers and vendors to Amazon end up making their products available for sale on Amazon. However, Amazon Sellers and Vendors are two very different ways of earning revenues from Amazon. As a result, there one must know the difference between Amazon Seller Central vs Vendor Central accounts.
Let’s first have a look at two ways of selling your products on Amazon.
Overview of Various Amazon Sales Platforms
With over 300 million active customers in more than 180 countries, you simply cannot ignore these platforms if you’re planning to sell online. Every month, over 197 mullion people across the world get Amazon on their devices. Additionally, Amazon had a share of 49% in the US e-commerce market in 2018. This is more than the share of its three main competitors put together – Walmart – 3.7%, Apple – 3.9%, and eBay – 6.6%.
Thus, Amazon leads by leaps and bounds and is one of the important eCommerce platforms for online sales.
If you are planning to sell your products through Amazon, you must know that there are two ways of doing so. That is, Amazon offers two sales platforms for sellers to sell their products through Amazon. These include becoming third-party (3P) sellers and selling through Amazon Seller Central. Or serving as vendors or first-party sellers (1P) to Amazon through Amazon Vendor Central.
3P Sellers Selling Via Amazon Seller Central
Amazon Seller Central is a portal through which you can directly sell goods to customers who come on Amazon to buys products. You act as merchants or third-party sellers who can upload their product listings and manage sales within the Amazon marketplace through your Amazon Seller Central Account. Basically, it is an interface that you get access to once you register as a seller by signing up for Amazon Seller Central Account.
Upon registering, you get access to your Amazon Seller Central portal. Through this portal, you can directly sell your goods to customers who come for purchasing goods on the Amazon marketplace. This portal provides you with everything you need to make sales to customers within the Amazon marketplace.
For instance, you can:
- list your products and their associated details,
- track your inventory and update inventory regularly,
- download customized reports giving you statistics about sales
- use customer insights, metrics, and tools that help you evaluate your selling performance
- raise tickets by getting in touch with contact selling partner support for issues faced
- tracking the sale of goods that takes place on Amazon
- download the Amazon seller application and track your sales, inventory, create product listings, answer customer queries from any part of the world.
Further, there are various selling plans that you can choose from to sell goods as third parties via Amazon Seller Central.
Selling Plans Under Amazon Seller Central
There are two different plans that you can choose from if you want to sell products as a third-party on Amazon.
1. Individual Selling Plan
Under the individual plan, you can sell even a single item as Amazon charges $0.99 for every item you sell. Thus, this plan works on an individual item basis. That is, Amazon charges you as a merchant based on per item sold.
Ideally, this plan is suitable for you as a merchant if you:
- sell less than 40 items every month
- do not require advanced selling tools offered by Amazon
- haven’t yet decided what items to sell on Amazon
2. Professional Selling Plan
A Professional Selling Plan includes a flat fee for sales you make as 3P sellers on Amazon. Thus, unlike the Individual Plan, the Professional Selling Plan does not charge you on a per-item basis. It is a fixed charge per month with no limitation on the number of items you sell directly to consumers.
Accordingly, you must go for the Professional Plan if you :
- sell over 40 items in a month
- want to advertise your products
- earn a top spot on the products detail page
- use advanced tools that help in selling like reports and APIs
- sell restricted category products
There are a host of tools that you get with Professional Plan that help you sell goods to customers. Some of these include creating bulk lists, managing inventory with reports and spreadsheets, on-site advertising tools, adding multiple users to an account, etc.
Thus, you can choose the plan that best fits your needs. Also, you can easily switch between the plans if you change your mind by paying extra fees.
Cost of Selling on Amazon
Amazon collects certain fees if you sell products as a 3P seller on Amazon. The amount of fees you pay depends on the type of goods you sell and the selling plan you choose.
Here’s the bifurcation of the cost you pay to Amazon as a 3P seller.
- Subscription Fees – this includes the fees of your selling plan. That is $0.99 in the case of the individual plan and $39.99 in the case of the professional plan.
- Selling Fees – this covers the fees you pay for selling via Amazon and is charged on a per-item basis. This fee includes the referral fee which is a percentage of the selling price of your product and varies for each product category. Apart from the referral fees, the selling fee also includes the variable closing fee which is charged only in the case of items that fall into media categories.
- FBA fees – if you choose to ship the products to customers through Fulfillment by Amazon (FBA). The FBA fee includes a fee for the storage, fulfillment, and other services.
- Shipping Fees – this includes fees that Amazon collects from you if you choose to fulfill the customer orders yourself. The amount charged depends on the type of product you sell and the shipping service selected by the buyer.
Fulfilling Customer Orders – Merchant Fillment Vs Fulfillment by Amazon (FBA)
Another critical aspect of earning revenues as a 3P seller on Amazon is the way you choose to fulfill customer orders. You need to choose the correct order fulfillment mode depending on the products you sell, the margins you seek to earn, etc.
1. Merchant Fulfillment
If you go for Fulfillment by Merchant (FBM), you as a 3P seller or merchant are responsible for fulfilling customer orders. That is the charge of order processing and shipment is in your hands.
Apart from order processing and shipping, you also need to provide customer support and manage product returns and refunds, whenever needed.
However, to fulfill orders yourself, you as a merchant need to meet certain requirements:
- having proper storage for storing inventory
- capacity to process orders in a timely and efficient way which includes both packaging and labeling
- have a trustworthy logistics network that you can count on for seamless delivery
- a proper system of processing refunds, returns, and providing customer support at your disposal that in no way affects your business negatively.
Now, there are several benefits of using FBM for order fulfillment. For instance you:
- can keep track of inventory easily as you have the charge
- have more control over packaging as you can package and label goods your way
- earn better margins as you are not paying higher FBA fees
- can get the opportunity to become eligible for Amazon Seller Fulfilled Prime (SFP). SFP is much like FBM where you as a merchant are responsible for processing and shipping the orders. But, in SFP, you can put the Prime Badge on your product listings that you process and ship yourself and at the same time receive the benefits of Amazon Prime Eligibility, which is available to sellers who use FBA. Becoming eligible for Amazon Prime opens you to benefits like access to over 80 million Amazon Prime subscribers who make more purchases and are half of Amazon’s total customers.
2. Fulfillment by Amazon (FBA)
FBA is a service provided by Amazon which handles the shipping, packaging, returns, refund, and customer support for you as a 3P seller. Thus, all you need to have is a seller central account, product listings, and access to FBA. You get access to a reliable logistics network to ship your products to customers efficiently.
You as a 3P seller simply send your products to Amazon’s fulfillment centers. For customers purchasing your products, Amazon handles everything from packaging, labeling, shipping, to returns, refunds, and extending support to customers.
However, Amazon charges separate fees for FBA. This fee includes:
- Inventory storage fees – this is the cost that you pay for storing your products in FBA centers. The amount of fees charged is based on your daily average inventory stored in FBA centers in cubic feet.
- Removal Order Fees – this is the cost that you pay Amazon for returning or discarding your inventory items. The cost is charged on a per-item basis.
- Fulfillment Fees – this includes the cost of picking, packing, storing, shipping, handling, returns, and extending customer support.
- Long-Term Storage Fees – this is the cost that you pay to store your inventory for over 365 days in FBA storage centers.
- Returns Processing Fees – this is charged at the time Amazon gives free return shipping to customers.
- Unplanned Services fees – you as a 3P seller pay this fee when your inventory items arrive at the FBA storage center without any preparation or labeling.
Given this cost and services provided, availing of FBA can be beneficial for you as a 3P seller. Some of the FBA benefits are as follows.
- Your goods become eligible for Amazon Prime two-day shipping and free shipping for all customers on specific orders. Amazon places the Prime Badge on some of the select product listings, ensuring customers that Amazon is managing fulfillment.
- You don’t have to worry about extending customer support, handling orders, and managing returns and refunds and Amazon takes the charge of it.
- Grow your business easily with various services under FBA. For instance, you can offer discounts on select FBA products for repeat customers, export products to various countries with no extra cost, etc.
- Save cost as you pay only for the inventory that is stored and fulfilled by Amazon.
Why Choose Amazon Seller Central?: Key Amazon Seller Central Benefits
- Easy way to sell goods on Amazon. All you need to do is sign up for the Seller Central account and list your products. However, Amazon needs to send you an invite to start selling as a vendor under Amazon Vendor Central.
- You earn superior margins under Amazon Seller Central as you serve as a 3P seller who is directly selling to customers on Amazon. However, with Amazon Vendor Central, you are selling your goods in bulk to Amazon and getting paid for them. It is Amazon that further sells those goods to end customers, with you nowhere engaged in selling to end-users. Thus, the margins you enjoy are relatively less since Amazon is doing the hard work of selling goods to customers.
- Next, you receive your payments under Seller Central quickly. This is because it takes not more than two weeks for your money from sales to pour into your Seller Central Account. Whereas, you get paid in two to three months if you’re selling goods to Amazon as a vendor under Vendor Central.
- Further, it is you who decides the product prices as a 3P seller under Seller Central. However, under Vendor Central, it is Amazon who decides the prices at which the products you sold to Amazon are to be further sold to the customers.
1P Sellers Selling Via Amazon Vendor Central
Amazon Vendor Central is an invite-only sales platform where you are selling goods as a vendor directly to Amazon. Accordingly, once you sell goods to Amazon, you get paid for the goods sold. It is Amazon that does the labor of deciding the prices and reselling your goods to end customers.
This is unlike Seller Central where you as a 3P seller sell products directly to customers. Thus, under Vendor Central, you receive an invitation from Amazon post which you sell goods in bulk to Amazon and get paid for them.
How to Apply for Amazon Vendor Central?
Having an Amazon Vendor Central Account is challenging. This is because you can only become an Amazon vendor if you receive an invitation for the same from Amazon. Unfortunately, there is no way you can apply for becoming a vendor under Vendor Central. You first need an invite from Amazon.
However, there are ways in which you can have Amazon send you an invite. Amazon has a global team of recruiters. These recruiters are in search of fresh brands and goods for selling on Amazon.
Typically, recruiters are in search of:
- Sellers who sell on marketplaces and have whose products are the highest selling
- Sellers under Seller Central and whose products have a high demand
- Traders showcasing goods at trade fairs and exhibitions
Accordingly, you can increase your chances of receiving an invite from Amazon by:
- participating in trade fairs
- building strong contacts with Amazon recruiters
- selling goods that Amazon might be keen on buying
What are the Advantages and Disadvantages of Joining Vendor Central?
It is important to evaluate the pros and cons of joining the vendor central to understand how it would affect you as a seller.
Advantages of Joining Vendor Central
1. No Hassle of Selling Directly to Customers
You are a vendor to Amazon who sells goods directly to Amazon and gets paid for the same. Accordingly, you are not engaged in selling the goods to customers as Amazon has the charge of doing so. Thus, right from deciding the price, listing, selling, handling, and shipping and returns, everything is managed by Amazon.
Thus, your job as a vendor is simplified as all you need to do is sell goods to Amazon.
2. More Advertising Facilities
With Amazon Vendor Central you get advanced advertising facilities. These help you get more traffic for your products through advanced features and ad campaigns.
3. Special Promotional Programs Only for Vendors
Amazon offers special vendor programs like Amazon Vine and Subscribe and Save. Being part of these programs enable you as vendors to get more customer reviews, higher placement in organic search, and boost sales.
Amazon Vine Progam
You can subscribe to the program if you have less than 30 reviews on your products and have an eligible Amazon Standard Identification Number (ASIN). All you have to do is send the list of 30 products to 30 Vine voices for free. These are product reviewers that are selected by Amazon to write correct and valuable reviews about your products.
Amazon Early Review Program
This is for vendors who have less than 5 reviews on their products and have newly joined as Amazon vendors. In this, Amazon gives incentives to customers such as a gift card worth $1-$3 in return for them leaving a product review for your products.
Disadvantages of Joining Vendor Central
1. Since Amazon decides the pricing, you have no control over product prices. This may even impact your profit margins if Amazon decides to change prices.
2. Relying upon Amazon only as your buyer can cost you your business. Also, Vendor Central is a good option for established brands and wholesalers who want to count on Amazon for its logistics network.
3. You also have no control over packaging and labeling, which are important for brand building.
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