There is no one-size-fits-all strategy to sell on Amazon. However, choosing the right sales model can make a whole world of difference. There are two platforms available to sell on Amazon – Seller Central and Vendor Central. Seller Central is the default selling option for any business looking to sell in Amazon, while Vendor Central is an invite-only program.
More than often, it happens that vendors miss the freedom and control they had on their products when they were sellers. When they think of switching back to seller central, the lower feels and the privilege of selling their products directly to Amazon seem to stop them. For vendors who are in a dilemma as to which model they should choose, we advise them to go for the hybrid approach. It is a good way for the vendors to get the best of both worlds (or rather models).
Before diving deep into the Hybrid Approach, let us first get a complete understanding of the two primary models: Seller Central & Vendor Central.
Amazon Vendor Central is an invite-only platform for businesses that want to sell their products to Amazon itself. When you sell to Amazon in this capacity, you are their supplier. The core process is very simple: Amazon send you a purchase order listing what they want to buy. You send Amazon the inventory they have ordered
Amazon Seller Central is the web interface used by brands and merchants to market and sells their products directly to Amazon’s customers. If you have a Seller Central account, you’re considered a marketplace or third-party seller.
With the Amazon hybrid sales model, the manufacturer has both a Vendor Central and Seller Central in the Amazon marketplace, respectively. This strategy is intended to capitalize on the best of each, minimizing the challenges associated with 1P selling.
Seller Central – Better Control, Better Results
Sellers use the Amazon marketplace as a virtual brick and mortar store to sell their goods to customers. As a result, they are in direct contact with the end customers. Seller Central is more of like a self-service platform. Sellers are in charge of retail price, listing, inventory, fulfillment and after-sale customer service.
3P sellers have far more control than their 1P counterparts. Instead of sending POs to Amazon and keeping their fingers crossed with a hope that they will sell, they can sell their products more successfully with their own planned strategies. As the complete control of their Amazon store is in their hands, they can better forecast demand, manage inventory optimally and capitalize on tent-pole events like Black Friday & Prime Day. Their autonomy extends to product detail pages. They can update their listings in just a matter of minutes. Another advantage is the simplified marketing and advertising facilities. The opportunities and advertising types are almost similar to Vendors and the interface is much more user-friendly. Although being a seller demands more work on your side, its worth it for all the control you are able to get on the sales earned. Plus, if you hire Amazon consultants, you might not have to fall into the nitty-gritty of managing a seller account and you will end up saving a lot of our valuable time.
Vendor Central – A Hands-Off Approach
Vendor Central is an invite-only program, which was previously targeted for 1st party sellers or “brands.” As a vendor, you don’t sell on Amazon; you sell to Amazon at wholesale price. It boasts a hands-off approach to selling as Amazon manages order fulfillment and customer service. Amazon sends you purchase order and all vendors need to do is fulfill the purchase orders received and manage the advertising efforts. Amazon will have the products and pricing thereafter. Vendor Central is a preferred option for brands. Most importantly, brands get a “Ship & Sold By Amazon.” In a counterfeit-prone marketplace like Amazon, this type of validation is a great way to build customer trust.
In exchange for these benefits and privileges, vendors are asked to sacrifice their autonomy. The price of the product is set and controlled by Amazon, which, most of the time, results in low-profit margins that other sellers typically have. Moreover, there is no Minimum Advertised Price (MAP) policy, which means you can actually lose money on products. A vendor’s struggle doesn’t just end here. They face constant inventory issues because of Amazon’s not-so-accurate demand forecasting. New product launches are a challenge too. As they have no incentives to place PO for newly launched products, getting early sales is more like a dream.
The Amazon Hybrid Model – The Best Of Both Worlds
Each platform has its own set of pros and cons. Vendors have lower fees, high-end marketing tools, while sellers have greater control and better margins. What smart business owners do is utilize both to their maximum utility.
Vendor Central often catches the attention of brands who wants to wash their hands clean of managing another sales channel other than their own branded website. But at the same time, it required brands to sacrifice their freedom. For vendors who don’t want to be too reliant on Amazon, the Hybrid Approach can be a perfect choice. In the hybrid model, the manufacturer acts as both – seller and vendor. This approach is intended to capitalize on the benefits of each platform. Vendors can sell a portion of their SKUs directly to Amazon and the rest to the customers via Seller Central. Basically, the hybrid model offers greater flexibility and better security to the vendors.
This Is Why Vendors Should Consider The Hybrid Platform Now More Than Ever
Over the past few months, vendors have been receiving unfortunate mails asking them to switch to Seller Central. While some vendors claimed that they had seen a dramatic decrease in purchase orders. It seems that Amazon has lost its interest in Vendor Central. And why not? Operating through Vendor Central is proving to be costly for Amazon. Amazon initially started this program to ensure products are always available to their Prime customers. By buying the products directly from vendors, Amazon can ensure that the inventory is always ready to be shipped. But the cost associated with managing the program is massive. This was the same reason why Amazon shut-down the Vendor Express program.
We anticipate that Amazon will not completely shut down the Vendor Central program but maintain strategic vendor relationships for essential products. And at the same time to phase more and more vendors to Seller Central. Utilizing the hybrid approach is the best way to protect your brand, no matter what Amazon decides.
Advantages Of Choosing The Hybrid Model
#1: Better Inventory Management
As mentioned above, one of the most common problems faced by vendors is inaccurate inventory forecasting. “Amazon told me they would need 500 units and they just ordered 200 units!” And sometimes it happens that Amazon forecast says 200 units and they order 500 units. In such a situation, your seller account serves as a backup.
#2: Profitable Product Launches
Another reason to consider the hybrid approach is when you want to launch a product. Vendors are very well aware of the challenges they face while launching a new product. New product launches are tricky for them because Amazon has no product history on the basis of which they can calculate demand. As sellers offer much more flexibility over price and inventory, it’s a great place to test out new products and get initial sales. After your product has enough sales history on Amazon, you can start sending a purchase order to your vendor account.
#3: More Profits & Improved Price Control
Vendors have just as much control over their prices as they have on their inventory. On the other hand, sellers can themselves monitor the market and adjust the price accordingly. Vendors can take advantage of this flexibility and autonomy to adjust their prices to take advantage of any opportunities. Amazon is very competitive for buy box when they are selling the product. So, if you lower your price on Seller Central, they will adjust their price to win the buy box.
#4: Listing Products Gets Easier
The seller can make their products available on Amazon in just a few simple steps. All they need is a unique product identifier and they can list the product themselves. Things are not easy for vendors. As Amazon becomes the owner of the vendor’s products, they must require Amazon’s approval before uploading them. And this can take several weeks. With the hybrid approach, vendors can list the products easily with the help of their seller account.
#5: Detailed Data Analysis Options
Vendors do not have access to meaningful analysis data and reports as sellers have. Seller Central has a dedicated report section where they can get detailed information on conversion rates, listing traffic, orders, sessions, organic sales, PPC sales and much more. When vendors use the hybrid approach, vendors can use this invaluable data and leverage it to boost sales and profits.
#6: Increased Selling Options
Amazon considers some products as problematic and refuses to store or sell them. This includes products that are considered dangerous. In the hybrid model, you can distribute and sell these products via Seller Central by choosing FBM as your fulfillment channel. You can store these products at your warehouse and use Amazon to sell them to customers.
#7: No CraPs (Cant Release Any Profits)
Amazon does not reorder the products which Cant Release Any Profits. These are the non-profitable items and when Amazon does not repurchase these products, they just sit in your warehouses, costing you money. When you have a hybrid account, you can wait for these products to expire in your vendor account and then move them to Seller Central for distribution and selling.
#8: Advanced Advertising Tools
Vendor Central gives your access to DSP, a powerful advertising platform. Interestingly, you can take advantage of this platform to advertise any product on Amazon, including the items that are not listed in your vendor account. You can uniquely advertise your Seller Central products with Display Ads and Video Ads. Consecutively, you can use Seller Central advertising tools like coupons and promotions to boost demand and conversion rates.
But, With Great Power, Come Great Responsibilities
Amazon hybrid model is a great way to protect your business and hedge against Amazon, making an adverse decision, but this model does come with some hurdles and hiccups. Managing both accounts can be overwhelming. You will have to take care of everything. Understanding the working of Seller Central and Vendor Central is a pre-requisite. Being a vendor, you were just responsible for sending POs to Amazon, but as a seller, you are responsible for everything, including product listing, taxation, customer satisfaction and returns. It makes sense to hire expert Amazon consultants from Aden Branding to make the transition smooth and manage both the platforms moving forward. With us, you can put your Amazon account on autopilot mode and log into the account only to see the increased sales numbers.