Why Shift from Vendor Central to Seller Central?
If you currently wholesale to Amazon Retail in Vendor Central, why would you consider switching to Seller Central?
Sellers Have More Control
For most brands that come to ponder this question, the answer lies in control. They want more control over their brand’s representation, pricing, margins, marketing strategy, and customer experience.
Amazon Retail is known for not accepting increased wholesale prices mid-year, which creates challenges for manufacturers if the costs of materials, production, shipping, and/or receival rise.
Working with Amazon Retail has plenty of perks, but the lack of control can become a deal breaker.
Some Vendors Get Less Support
Amazon Retail prioritizes servicing top-tier vendors. Brands that fall in the lower half of the Vendor Central base are no longer assigned an Amazon account manager. Instead, their accounts are serviced almost exclusively through automation.
This lack of personnel attention and tailored strategy leads some brands to explore alternative options. This may include wholesaling to third-party retailers instead of Amazon Retail, or launching their own Seller Central account. As a seller, brands can allocate in-house personnel to give their Amazon channel the attention it deserves or hire an Amazon agency to implement strategy on their behalf.
Leaving Vendor Central
If you’re dissatisfied with your Vendor Central experience, this post is for you. We’ll compare some of the biggest differences between Vendor Central and Seller Central, then explain how to switch from Vendor Central to Seller Central in 10 steps.
Vendor Central vs Seller Central: What are the Biggest Differences?
Amazon Fees
Amazon Vendor Central
As a vendor, you’re well aware that in Vendor Central, all brands are subject to percentage-based fees, such as:
- Marketing co-op
- Damage allowance
- Early payment
- Chargebacks
- Shipping to Amazon
The exact percentage for each of these fees varies by brand. Larger brands have greater value to Amazon, and therefore have more strength at the negotiating table. Smaller brands may have to accept the terms Amazon offers.
Amazon Seller Central
In Seller Central, sellers do not pay these fees. Instead, sellers pay:
- Referral fees
- Inventory storage fees
- Fulfillment fees
We’ve included the standard fee breakdown for each type here. We’ve also written a blog post about how to minimize seller fees, which is especially helpful if you’re dealing with slim margins. Do note, Amazon periodically updates their fees, so always check Seller Central before finalizing any calculations.
Getting Paid on Amazon
Amazon Vendor Central
In Vendor Central, vendors are typically paid in one of two ways: through a manual purchase order (P.O.) received via email from Amazon, or through an EDI (this is Amazon’s preferred option).
It’s worth noting that Amazon provides vendors a shipping window for when they want to receive inventory. This shipping window can be set for months after the P.O.
One more thing worth noting: Amazon sometimes pays invoices in pieces due to chargebacks or fees. Vendors have to dig through multiple reports to determine why there were chargebacks. One of the most common types of chargebacks is due to products being incorrectly prepped for FBA centers, which is why many vendors (and sellers) employ FBA product prep services.
Amazon Seller Central
In Seller Central, sellers’ income comes straight from consumer sales, rather than a periodic large P.O. Sellers receive a direct deposit from Amazon within five business days after Amazon initiates the payment.
While vendors receive chargebacks in the event of an error or inadequacy, sellers receive additional fees. The effect is the same, but the means differs based on the cashflow of each model: Amazon already paid vendors, so it charges them back; Amazon hasn’t transferred sellers their payment yet, so it applies fees before delivering the payment.
Amazon Logistics
The logistics experience for vendors and sellers can be quite similar. If using Fulfillment by Amazon (FBA), then as a vendor or a seller, you’re shipping products into Amazon FBA centers for storage and eventual fulfillment. When using FBA, Amazon manages returns and provides customer service.
Amazon Vendor Central
As a vendor, you’ll spend much of your time monitoring operational performance scores on the Operational Performance Dashboard and correcting any issues that arise. If your prep issue rate exceeds 5%, Amazon Retail will designate you as a “poor” partner, and they may reduce P.O. size or frequency.
Amazon Seller Central
Sellers may choose to use alternatives or supplements to FBA, which fall under the umbrella term “FBM” or Fulfillment by Merchant. FBM is sometimes called Merchant Fulfilled Network, or MFN. FBM options include dropshipping, third-party logistics (3PL), peer-to-peer fulfillment, and more.
If a brand is operating on the vendor model and wants to tap into these supplementary fulfillment solutions, they would need to create a Seller Central account and manage these solutions through it. This practice protects vendors from FBA turbulence, but it can put them at odds with Amazon Retail.
Amazon Listing Optimizations
Amazon Vendor Central
Amazon will create and optimize listings for vendors. If listings already exist, Amazon may not conduct any optimizations unless requested.
Amazon Seller Central
In Seller Central, sellers oversee creating and optimizing listings. Listing updates must pass through an Amazon compliance review, so they can take up to several days to go live.
Amazon Advertising
In years past, vendors and sellers had access to different Amazon-native marketing tools, but Amazon has steadily reduced those differences, bringing the Venn diagram of marketing services for vendors and sellers into almost complete overlap.
The main difference between marketing as a vendor and as a seller now is in your incentive to do so.
Amazon Vendor Central
In Vendor Central, brands can run marketing themselves, pay Amazon Retail to manage their marketing campaigns, or pay an Amazon agency. As a vendor, your customer is Amazon. If you want to run marketing, you’re paying more money to drive extra sales for Amazon, in the hopes that Amazon will place larger and/or more frequent purchase orders to you.
Amazon Seller Central
As a seller, your customer is the end consumer. Any marketing dollars you invest are going toward your sales. There is no intermediary between you and your return on investment. Sellers can run their Amazon advertising campaigns themselves or hire an Amazon marketing agency to manage ad campaigns on their behalf.
Control of Product Price
Amazon Vendor Central
As a vendor, you may wish to increase your wholesale price (especially as material, transportation, and warehousing costs continue to rise), which would likely necessitate an increase in retail price. The trouble is that Amazon boasts that it offers the largest product selection at the lowest prices. Asking Amazon Retail to increase their retail prices and/or pay a higher wholesale cost will be met with resistance.
Vendors can request that Amazon Retail increase the product price. Amazon then has 60 days to consider the request, at the end of which they can accept or deny the request.
Amazon Seller Central
As a seller, you have absolute control over the retail price and can easily adjust it at any time. There are other factors that may make you reticent to increase retail price, such as risking sales loss due to higher prices, loss of buy box control if other Amazon sellers carry the same product for less, or a suppressed buy box if the product is offered for less on another online marketplace. But at the end of the day, the choice is in your hands.
Amazon Product Badges
Some product categories feature special badges that indicate a particular value add. For example, beauty products can get a Professional Beauty badge. The badge appears within the product listing, and the product also appears on the Professional Beauty page.
If you transition from Vendor Central to Seller Central, your products will retain any special badges.
How to Switch from Vendor Central to Seller Central
We now have a better idea of some of the key differences between the vendor and seller experience on Amazon, but what does a vendor-to-seller transition actually look like?
We’ve broken it out over 10 steps:
1 — Create a Seller Central Account
Amazon does not permit all brands to operate as sellers; Amazon is known to require brands to sell to Amazon Retail if they want their products to be sold on Amazon.com. So, step one is confirming with your Vendor Manager that you are not prohibited from transitioning from wholesaler to retailer.
If you’re in the clear, your next step then is creating a seller account. To create a Seller Central account, you’ll need:
- Legal business information (address, company name, contact information)
- Chargeable credit card
- Government ID
- Tax ID
- State tax ID
- Phone number
- A bank account (to accept deposits!)
You’ll also pick a payment plan, but if you were successful enough that Amazon Retail wanted to buy your products, you’ll certainly be using the Professional plan, which starts at $39.99/month.
2 — Notify Amazon Retail that ASINs are Permanently Unavailable for New Orders
One extremely important step when claiming your listings as a seller is to mark your ASINs in Vendor Central as “permanently unavailable.” This will prevent Amazon from attempting to place new orders.
If Amazon Retail was acquiring inventory through any of your distributors, notify them that you are no longer selling to Amazon Retail. If you don’t, Amazon Retail may continue acquiring inventory, forcing you to compete with them on the marketplace. Amazon favors their own listings, making this a difficult battle to win.
3 — Claim Your Amazon Listings
Once your Seller Central account is created, you need to claim your listings. By claiming your existing ASINs, you retain reviews, ratings, product rank, etc., making it much easier than starting from scratch. As the brand owner, you’ll have the necessary paperwork to prove that you own inventory.
If you need to create new listings, we’ve written a thorough step-by-step guide to creating Amazon product listings in Seller Central that you can reference.
4 — Optimize Amazon Listings
Once you’ve secured your listings, take time to review them and make any updates needed. As a new seller, you lack seller authority. Seller authority consists of seller age, total seller reviews, average seller rating, number of returns, number of sales, historic inventory coverage, and more. Seller authority is a ranking factor in Amazon’s search algorithm.
Effectively, being a new seller means you’re giving up some momentum in exchange for more control. As you build seller authority, you’ll regain that momentum, but it will take time. So, it’s important that you optimize every other ranking factor you can to make up the difference.
To optimize your listings, start with keyword research using tools like Merchant Words, Jungle Scout, Helium 10, and Sellzone. You can also read customer reviews on your and competitors’ listings to see what terminology shoppers use to describe your product and features. While you’re at it, see what keywords competitors seem to be targeting in their product listings.
Once you’ve identified ideal keywords, make sure they are thoroughly incorporated throughout your listing title, bullet points, product description, and backend. Check out this post on how to create fully optimized Amazon listings for more details.
5 — Create A+ Content & Brand Store
According to DataHawk, A+ Content is one of the top three most influential factors for a customer conversion. This aligns with Kaspien’s insights, which show A+ Content increasing conversion rate up to 12%. This suggests that acing your A+ Content is a differentiating factor for shoppers, separating the amateurs from the professionals.
Similarly, Brand Stores help set you apart. Think about in terms of brick & mortars. What’s the biggest difference between walking into a branded store like Nike and walking into the mall? In a mall, you see hundreds of brands. In a Nike store, you see only Nike products.
Amazon Brand Stores offer a similar benefit. When you have an Amazon Brand Store, you gain access to the millions of shoppers flowing through the marketplace, while keeping competitor products out of sight.
6 — Launch Amazon Ads
Once you have a firm foundation built with optimized listings, A+ Content, and a Brand Store, you’re primed (pun intended) to bring in and convert extra traffic through Amazon advertising. At Kaspien, we see an average sales lift of 30% when we implement Amazon advertising for our partners. It truly can be a game changer, and is increasingly important as number of sellers and their ad budgets increase.
If you’re new to Amazon advertising, here are few blog posts you may find helpful:
7 — Establish Inventory Forecasting Software
As a vendor, Amazon Retail dictated how much and how often it wished to purchase from you, and best believe they took a data-driven approach to calculating that figure. Now, as your own seller, you have that responsibility. You need to know how much inventory to produce and when in order for it to arrive at fulfillment centers on time and maintaining a healthy cashflow.
To do this well, you’ll likely need to invest in inventory forecasting or sales prediction software.
8 — Establish FBM Capabilities
If you’ve been selling on Amazon since March 2020 of thereafter, you’re well aware that FBA has been extremely volatile. The global pandemic overloaded Amazon’s capabilities, and FBA has been in constant growing pains ever since as Amazon races to catch up.
As a vendor, you were kind of stuck with FBA unless you sold to third-party retailers as well or created your own seller account. If you are transitioning fully out of Vendor Central to Seller Central, you would be wise to invest in FBM capabilities. This may include enabling dropship capabilities, partnering with a 3PL, or exploring peer-to-peer fulfillment.
9 — Codify Customer Service Processes
Your customers can be your greatest advocates or your greatest detractors. Which they are depends largely on your customer service.
In Vendor Central, Amazon Retail was the seller, so they handled customer service. As a seller, you may be liable to provide customer service. Amazon handles fulfillment-related issues, but other customer concerns will fall to you. This can be a great opportunity to strengthen your brand’s relationship with your customers, but it does take effort.
Do you due diligence. Take the time to write out exactly how your customer service team should respond to various scenarios. By codifying your process in advance, you equip your customer service team to work independently and scale with you.
10 — Ongoing Management
From here on out, you’re in sustain and grow mode. Regularly review and update your listings and ads, manage your inventory levels well, provide a stellar customer service, and grow your brand. We can promise it won’t be all sunshine and rainbows, but if you put in the effort, the opportunity is still very real.
Get Help Switching from Vendor Central to Seller Central
If you’re feeling intimidated after reading more about the process, that’s understandable. Transitioning from Vendor Central to Seller Central is a big undertaking. Fortunately, you don’t have to go at it alone.
Ease the Shift by Starting with a 3P
One of the greatest barriers to transitioning from a vendor to a seller model is cashflow. As a vendor, you are paid in large, periodic P.O.s. As a seller, you’re dependent on a steady stream of sales. This is a big difference in your operating model, and many brands find it to be too large an obstacle to overcome in one big push.
In that case, consider partnering with a third-party seller. This model closely resembles your first-party seller experience with Amazon Retail, but the balance of power can shift in your favor. Amazon Retail may have had more strength at the negotiating table. You may have more strength at the table than a third-party seller. This power shift means you gain more control over how your brand is represented, including pricing.
From there, you can get more in the weeds with your brand’s Amazon strategy, preparing yourself to eventually shift to selling your products yourself if that remains your end goal. When you do shift, you can make the cashflow transition easier by selling alongside your 3P seller for a time, accepting P.O.s from them while you get your financial feet under you as a seller, so to speak.
Ease the Shift by Hiring an Amazon Agency
If you’re adamant about becoming a seller ASAP but you don’t have the personnel or expertise needed to run seller operations — like marketing, logistics, and customer service — consider hiring an Amazon agency. In this way, you still create your own seller account and gain all the benefits that come with it, while the Amazon agency provides the time, personnel, tools, and strategy needed to run it day-to-day.
Your Amazon agency can lay the groundwork for your success. Once your seller account is running like a well-oiled machine, you can decide if you want to continue using the agency or if you’d like to bring management fully in-house.
If you’re not sure whether a 3P or an agency is the better route for you, perhaps this post can help: “Amazon Retailer vs Amazon Agency: Which is the Better Financial Fit?”
Kaspien Can Help with Either
And here’s where we get a little self-promotional: Kaspien is uniquely positioned to provide both services. In fact, Kaspien can serve brands as their third-party retailer, Amazon agency, software provider, and even buy your brand outright if you’re looking to sell.
We’ve built ourselves into a marketplace growth platform, which is a fancy way of saying that brands who partner with us can seamlessly transition from any of our partnership models to any another. As a result, you retain your historical data, access to industry-leading technology, Kaspien’s familiarity with your brand, and Kaspien’s ecommerce expertise. Effectively, you have support across the lifespan of your online business, no matter how your goals or needs evolve.
No other Amazon seller, agency, or acquirer can offer you that same holistic value.
If that sounds helpful, reach out today. If you’re still considering options but found this post helpful, consider subscribing to our weekly blog newsletter.
