Maybe you have recently received an invite to Amazon Vendor Central and are wondering if it is right for you and your business. This article aims to help you figure that out!
What is Amazon Vendor Central?
Amazon Vendor Central is an invite only way to sell your products through Amazon. The key feature of Vendor Central, is that Amazon will purchase your product “wholesale” from you, and from there, Amazon takes control of the bulk of the sales process.
It is sometimes referred to as First Party Selling – which is indicated by text alongside the product description which reads “In Stock, Shipped and Sold By Amazon”.
Do you need to have full control over the sales process?
If your answer is no then you are in luck as Amazon Vendor Central facilitates most of the sales process, as a vendor you are fulfilling Amazon’s purchase order, rather than each individual order placed by consumers. There are a few elements still down to the vendor, including the wholesale price, product descriptions and PPC & other advertising activity.
As a Seller, you are responsible for everything from fulfilment, customer service, stock issues and returns, and ensuring you’re applying your country’s tax laws correctly. As a Vendor, Amazon will handle these areas of the process.
Do you want to set your prices?
If your answer is yes then it is best to steer clear of Vendor Central. Amazon sets the pricing to ensure volume of sales for maximum profitability. This means that if someone elsewhere starts selling something similar for a lower cost, Amazon will reduce the price of your item to increase volume of sales, affecting the wholesale price you receive.
Amazon states it honours any MAP (Minimum Advertised Price) request. However, there have been instances of vendors complaining that Amazon sacrifices this in favour of guaranteeing their consumers the lowest price on the market.
It is also important to note that if you choose to sell on Amazon as a vendor, you should only expect wholesale margins which will be less than retail margins.
Can you survive with 90 days between payments?
If your answer is no then Amazon Vendor Central may not be right for you and your business. It is the one element of Vendor Central that can be off-putting.
Amazon has a few different options which it offers vendors, including:
- Net 30 – Amazon will pay you after 30 days. On this plan, however, Amazon gives themselves a 2% discount.
- Net 60 – Amazon will pay you after 60 days. This is the plan that most vendors are on.
- Net 90 – Amazon will pay you after 90 days.
The longer payment terms can cause cash flow issues for vendors, leading businesses to take out bridging loans or using invoice factoring, to allow them to replenish their inventory while they await payment.
These payment terms are more traditional and therefore those already selling wholesale will be used to this way of working and have the mechanisms in place to sustain business between payouts.
Do I have to do it alone?
The answer to this one is not if you don’t want to. Of course some vendors are very well versed in dealing with wholesale type exchanges and may not require any support. However, if you are a small brand that wants to explore widening your offering through bulk selling to Amazon, you can enlist the support of a specialist agency that can help guide you and ensure you are making the right moves early on to guarantee success.
Arthia, a full service Vendor Central Agency, has specialist Amazon consultants on hand to help you and can create a tailored mix of consultancy and management services across different areas depending on your requirements.
These areas include:
- Market Research
- Inventory Management
- Logistics, including fulfilment
- Reporting & Forecasting
- Customer Service
- Marketing & Advertising, including Amazon PPC, SEO and Content Writing