Amazon Vendor vs Amazon Seller: Which Approach is Best for Your Business?

How do you break into becoming an Amazon Vendor? Do you even want to? 

This article will break down the difference between Amazon Vendors and Amazon Sellers, the perks of each, and how to evaluate your options as an Amazon business owner.

We’ll cover:

1. What is an Amazon Vendor?
2. What is an Amazon Seller?
3. Seller Central vs. Vendor Central: Key Differences
4. Pros and Cons of Amazon Vendor Central
5. Pros and Cons of Amazon Seller Central
6. Can You Be a Vendor and a Seller?
7. Deciding Which Approach is Best for Your Business

What is an Amazon Vendor?

If you’ve ever wondered who’s behind the products listed as “Sold by Amazon,” then you’re about to meet the Amazon Vendors. These are businesses that sell their products in bulk directly to Amazon rather than selling products on Amazon’s marketplaces themselves. To manage their transactions with Amazon, vendors use the Vendor Central platform. 

Unlike the typical seller-to-customer relationship, Amazon Vendors are considered first-party sellers. This means they sell their products wholesale to Amazon, and then they’re sold under the Amazon brand in much the same way as suppliers to brick-and-mortar retailers operate. 

Vendors have no direct influence over the customer relationship as Amazon handles all customer service, fulfillment, and pricing. 

However, it’s not as simple as just signing up. The relationship is typically invite-only, requiring an invitation from Amazon to participate.

So now that we’ve introduced Amazon Vendors, let’s shift our focus to another key player in the Amazon marketplace – Amazon Sellers.

What is an Amazon Seller?

Amazon Sellers are individuals or businesses that sell products directly to customers on Amazon’s marketplaces. Unlike vendors, anyone can become a third-party Amazon seller with the option to fulfill orders themselves or use Amazon’s Fulfillment by Amazon (FBA) service. With FBA, Amazon takes care of storage, packaging, and shipping, while the seller focuses on selling.

Sellers retain control over their listings, inventory, pricing, advertising, and direct customer interactions. This means they can set their own prices, manage stock levels, and interact directly with customers.

Sellers also have the option to fulfill orders themselves or use Amazon’s Fulfillment by Amazon (FBA) service. With FBA, Amazon takes care of storage, packaging, and shipping, while the seller focuses on selling.

Amazon Seller Central Services

• Fulfilled by Amazon
• Fulfilled by Merchant 
• Seller Fulfilled Prime 

Seller Central vs. Vendor Central: Key Differences

Now that we’ve covered the basics of what Amazon Vendors and Amazon Sellers are, there are some noticeable differences between the options, particularly in the way business is managed via Vendor Central or Seller Central.

	Amazon Vendor Central	Amazon Seller Central
Access	Invite-only	Open to all individuals and businesses
Platform	Vendor Central	Seller Central
Relationship with Amazon	First-party seller (wholesaler to Amazon)	Third-party seller (direct to consumer)
Pricing Control	Amazon controls retail price	Seller controls retail price
Payment Terms	Typical payment terms between 30-90 days (bespoke to each vendor)	Payouts are every 14 days
Marketing Tools	Access to advanced tools and analytics to optimize products	Marketing & analytics tools with advanced options for registered brands
Fulfillment	Handled by Amazon	Seller’s choice (self-fulfillment or FBA)
Customer Interaction	Managed by Amazon	Direct interaction unless using FBA
Inventory Management	Amazon manages inventory. Vendor sells to Amazon in bulk	Seller manages inventory
Product Placement	Potentially higher visibility and prioritization	Competing with other sellers and products sold by Amazon
Logistical Support	Hands off after bulk delivery to Amazon	Optional support via FBA

Pros and Cons of Amazon Vendor Central

Choosing to become an Amazon Vendor can have significant implications for your business – both positive and potentially negative. Let’s explore them:

Pros of Amazon Vendor Central

• Enhanced Customer Trust: Products are listed as “Sold by Amazon,” which can enhance customer trust and potentially boost sales versus selling under an unknown brand name.

• Advanced Marketing Tools: Vendors automatically have access to advanced marketing tools like A+ Content (formerly known as enhanced brand content) and Amazon Marketing Services, which can help to increase product visibility and sales.

• Hands-Off Logistics: With Amazon handling all aspects of fulfillment, vendors can focus on product development over logistical challenges.

• Security of Wholesale Selling: The wholesale model affords much more security than selling directly to customers as your stock is purchased by Amazon in bulk, guaranteeing income at scale.

• Potential for Higher Visibility: As a vendor, your products may receive higher visibility and prioritized product placement in search results. After all, it makes sense for Amazon to favor “sold by Amazon” products.

• Eligibility for Amazon’s Prime Program: Products sold by vendors are automatically enrolled in Amazon Prime and vendors can leverage programs like Amazon Vine as well.

Cons of Amazon Vendor Central

• Limited Access: Participation in Vendor Central is invite-only, which means it’s out of reach for many businesses.

• Less Control: Vendors have no control over pricing and inventory decisions, which can be a disadvantage for businesses that prefer to manage these aspects themselves.

• Longer Payment Cycles: The longer payment cycles associated with Vendors (usually 30-90 days) can strain cash flow for businesses.

• Strict Guidelines: Vendors are subject to strict compliance and operational guidelines set by Amazon, which can be challenging to navigate.

• Limited Customer Interaction: With Amazon handling customer service, vendors have limited direct interaction with customers, which can impact their understanding of the market and customer needs.

• Risk of Over-Reliance on Amazon: Becoming overly reliant on a single large customer is a risk that can affect the stability of your business if Amazon changes its terms or stops purchasing your products altogether.

Pros and Cons of Amazon Seller Central

Pros of Amazon Seller Central

• Open to All Businesses: Seller Central is open to any individual or business so there is little to no barrier to entry.

• Faster Payment Processing: Sellers typically receive faster and more frequent payments compared to vendors, with scheduled payouts every 14 days.

• Pricing and Advertising Control: Sellers can set their own prices and directly manage their listings, giving them more control over their Amazon business.

• Fulfillment Flexibility: Sellers have the flexibility to choose their preferred fulfillment method by using FBA or handling fulfillment independently, depending on their capabilities and preferences.

• Access to Customer Data: Sellers have access to extensive customer data and direct feedback as they tend to deal directly with customers, which can be invaluable for understanding their needs and improving products.

• Branding and Marketing Opportunities: Sellers have opportunities for branding and personalized marketing strategies, which can help differentiate their products in the marketplace and create a sense of loyalty to their brand.

• No Volume Requirements: Unlike vendors, sellers do not have volume requirements, allowing for more flexible inventory management.

Cons of Amazon Seller Central

• High Competition: The Amazon marketplace is highly competitive, which can dilute visibility and make it harder for sellers to stand out.

• Responsibility for Customer Service and Fulfillment: Unless using FBA, sellers are responsible for all aspects of customer service and fulfillment, which can be time-consuming, costly, and challenging.

• Layered Fees: Sellers are subject to various fees that can impact profit margins, including FBA fees, storage fees, and referral fees. If not properly accounted for, they can make a huge impact on expected profit margins.

• Hands-On Management: Amazon sellers are required to actively manage and monitor listings and operations, which can be demanding, especially for small businesses.

• Changing Policies: Amazon’s policies and marketplace conditions can change rapidly, requiring sellers to be adaptive and responsive to ensure they remain compliant.

• Risk of Suspension: There’s a risk of account or listing suspension with little recourse, which can disrupt business operations. However, these risks can be mitigated by monitoring your account health and working with the Amazon review team to rectify issues if your account is ever suspended.

Can You Be a Vendor and a Seller? A Hybrid Approach

While we’ve been discussing Amazon Vendor Central and Seller Central as separate options, it’s worth noting that it is actually possible to do both. Yes, you heard it right! Businesses can operate as both an Amazon Vendor and Seller, leveraging the benefits of both strategies.

For eligible brands, this hybrid approach can provide the best of both worlds. For instance, you can enjoy the enhanced customer trust and simplified logistics that come with being a vendor, while also maintaining control over pricing and direct customer interactions as a seller.

Or you might choose to sell high-volume, low-margin products as a vendor while selling high-margin, niche products as a seller.

However, it is important to consider the potential impact on your business operations. You’ll be managing two separate supply chains if you’re fulfilling orders yourself as a seller, while also supplying products to Amazon as a vendor. But if your brand has been invited to be an Amazon Vendor, you can likely manage this added complexity. 

It’s not for everyone, but for some businesses, it could be the perfect solution.

Deciding Which Approach is Best for Your Business

Choosing between Amazon Vendor Central, Seller Central, or a hybrid approach depends on various factors related to your business model, capabilities, and goals. Consider these questions:

1. What level of pricing control do you require?
2. Do you have the cash flow to accept longer payment terms as a vendor?
3. How does each option align with your business model?
4. Have you evaluated the profit margins associated with both solutions?
5. How important is controlling customer service to you?
6. Do you have the logistical capabilities to fulfill orders yourself? Do you prefer a hands-off approach?
7. What is the strategic importance of Amazon’s marketplace for your overall sales and growth goals?

Remember, there’s no right answer. The best choice depends on your unique business circumstances and goals. It’s important to carefully consider these factors and, if possible, seek advice from experts or other businesses with experience in selling on Amazon.