There is an enormous difference between Seller Central and Vendor Central – that’s why we’re here to help with a complete Amazon Vendor Central Guide. From beginning to end, for interested Sellers and bewildered Vendors we have answers for you all.
But let’s break things down from the start. We’ll take a look at:
- What is Amazon Vendor Central?
- What’s The Difference Between Amazon Vendor Central and Seller Central?
- Amazon Vendor Central vs. Amazon FBA
- How Can I Become an Amazon Vendor?
- Amazon Vendor Central Guide: The Obligations For Vendors
- Amazon Vendor Central Guide: The Benefits For Vendors
- How Do Vendor Purchases Work?
- What If I Can’t Fulfill A Purchase Order?
- What Are Vendor Chargebacks?
- Amazon Vendor Central Guide To Getting Paid
- Are there software tools for Amazon Vendors?
- Amazon Vendor Central Guide Conclusion
What Is Amazon Vendor Central?
Amazon Vendors sell their products wholesale to Amazon, and Amazon then distributes them under first-party selling. This is ideal for businesses who want a greater number of orders and engage in less hassle. After all – one bulk order compared to many separate orders can cut down on a MOUNTAIN of paperwork.
To put it in simpler terms, have you ever scrolled through Amazon for a particular product? You will have seen certain products listed as “In Stock, Shipped and Sold by amazon.com” or something like the image on the right.
This is Amazon Vendor Central. Amazon purchases orders directly from Vendors and then sells them under its own name.
As far as Vendors are concerned, the process goes like this:
- Amazon sends a Vendor a Purchase Order detailing the inventory that Amazon wants to purchase.
- A Vendor sends Amazon the inventory on the Purchase Order.
- Amazon pays the Vendor (eventually, but we’ll cover that part later!)
What’s the Difference Between Amazon Vendor Central and Seller Central?
The difference between Vendor Central and Seller Central lies in 1p vs. 3p selling. With Seller Central, you are a third-party seller using Amazon’s marketplace platform. Each Amazon Seller is responsible for:
- Selling each individual unit
- Fulfilling and packaging orders
- Ensuring delivery times
- Dealing with customer support issues
There are also a great deal of other factors which all contribute to your workload. For more information, check out our guide on how to become a profitable Amazon Seller (we offer so much more advice than just an Amazon Vendor Central guide!)
However, as an Amazon Vendor, you simply fulfill Amazon Purchase Orders. They might be half a dozen units at a time, or hundreds depending upon your products and their demand. After that, everything is on Amazon Retail, as they are the official retailer. Order fulfillment, packaging, delivery and customer support rest solely on their shoulders.
Amazon Vendor Central vs. Amazon FBA
If you’re new to Amazon, Vendor Central and Amazon FBA can seem similar. Both involve shipping products to Amazon en masse after all.
However they are fundamentally different processes. As we said before, Vendor Central involves fulfilling purchase orders. After that moment, Amazon Retail is the official retailer, and they handle the selling of each product after that.
With Amazon FBA you are still responsible for the sales of each item, you simply pay Amazon to fulfill that process for you. You can find a whole list of the fees involved in our Amazon FBA Fees Guide.
How Can I Become An Amazon Vendor?
You don’t – you have to be invited.
Yes, Vendor Central is an exclusive circle that is only extended to extremely promising merchants. Once you pique their interest, your business will receive an invitation to join the lofty echelons of Amazon Vendors.
That isn’t to say that you can’t maximise your chances. In fact, Amazon dedicates an entire workforce to seeking out potential Vendors to join their team. If you want to increase your chances of becoming an Amazon Vendor, you need to be:
- An existing Seller with an extensive history of successful sales with your own products.
- A brand with exceptionally high demand for your products.
- An exhibitor with products that Amazon believes have high-selling potential.
Unfortunately there isn’t much an Amazon Vendor Central Guide can do to help you in this area. You’ll need to exercise a flair for business and unique product creations in order to effectively become an Amazon Vendor.
Amazon Vendor Central Guide: The Obligations For Vendors
Despite Vendor Central cutting out a huge amount of the nitty-gritty compared to Seller Central, there are in fact a few obligations that Vendors have to stick to, as well as a few fees (that Amazon dub “allowances” for obvious reasons.)
You primary obligations are as follows:
- Fulfill Amazon purchase orders
- Provide up-to-date shipping information
- Maintain your product information, eg: images, prices etc.
These are your essential obligations as an Amazon Vendor, but let’s have a brief look at these “allowances” that you should bear in mind.
- Fees
- Internal customer support
- Damage allowances (approximately 2%)
- Market Development Funds – find out more below
- Potential access to Premium Vendor Services including:
- Amazon Vine
- A+ Content
- Amazon Retail Analytics Premium
- Shipping Costs / Freight Allowances
- International Shipping / Return Shipping
- Taxes and Duties
- Currency Conversions
Although admittedly, some of these are only necessary when it comes to international shipping.
Market Development Funds
Market development funds are a relatively unknown type of fee, so we wanted to explain a little more on this one.
It’s a fairly ambiguous umbrella term that Amazon created for their behind-the-scenes work. This covers catalogue management and various marketing initiatives Amazon employs in order to promote and encourage product sales.
This “allowance” is usually around 10% with some occasional variances.
Amazon Vendor Central Guide: The Benefits For Vendors
Well the last section made Amazon Vendor Central seem like a complicated, messy and expensive endeavour, but bear with us! There are a whole host of benefits for Amazon Vendors which are not only numerous, but incredibly effective as well.
Enhanced Product Reputation
Amazon customers are always more likely to purchase from Amazon Retail, rather than a third-party seller. Even if the products are the exact same price and specifications, first-party selling appears more trustworthy than third-party selling.
Being the eCommerce giant that they are, customers have huge trust in the Amazon name, brand and its products. Even if the products themselves are directly from Vendors, that trust in the “Amazon” name affects the mindset of customers across the world.
More Qualified Audience
As an Amazon Vendor your products are automatically listed under the Prime program. Customers that pay for Amazon Prime are not only more likely to make purchases through Amazon than non-prime members, but they are also more likely to purchase Amazon Prime products over non-prime alternatives.
Essentially you have a more qualified audience at your disposal, and your products are highlighted in front of these enthusiastic customers – all 200 million of them.
Amazon Buy Box Advantage
It is entirely possible for you to win the Amazon Buy Box as an Amazon Seller. It requires time, effort, planning and careful price handling, but with Vendor Central you have a major advantage.
Amazon Retail tends to win the Amazon Buy Box more than any other third-party sellers. Their repricing strategies and inventory management ensure that unless there are any other excellently qualified contenders, they will have the largest share of the Buy Box at any one time.
As a Vendor – your products are being sold by Amazon retail. This gives your products an enormous advantage without the hassle.
Larger Orders
As an Amazon Seller, you handle each sale individually. One unit order here, another few units sold there, and now you have to confirm, prepare, package and ship these separately at any given time.
Or Amazon can handle all of that. They order enough units to meet their expected sales numbers for the immediate future, and you deliver the products batch by batch. That’s not to say that they will order an enormous surplus – they prefer smaller and more frequent orders in order to maintain efficiency in all their warehouses. However they’ll certainly order more than a single customer at a time!
You’ll just have to wait a while to get paid, that’s all.
Customer Support Handled
An Amazon Vendor Central Guide wouldn’t be complete without mentioning our personal favourite aspect of the program – you don’t have to handle customer support.
As we know the customer is always right (or is that the other way around?) and occasionally, customer support can become a taxing, thankless task. You navigate irate customers who may or may not have ordered from your company at all, or explain why the product that they ordered two hours ago isn’t there yet.
Goodbye, farewell and ciao to all of that frustration. Your focus is on creating and maintaining sufficient inventory to supply Amazon whenever they place a Purchase Order – they can handle the customers.
How Do Vendor Purchases Work?
Small, but frequent is the general rule for Amazon Vendors.
Their team selected you for your promising products – which means that there should be high demand. In turn, Amazon will maintain a small amount of your inventory and regularly order larger and larger amounts with each Purchase Order as it becomes clearer that your product sells out quickly enough to justify larger bulk shipments.
So once you become a Vendor, don’t expect to receive an order for a year’s worth of your product – you’ll still need to maintain viable production channels. However you should be ready to upgrade your production to meet Amazon’s needs.
What If I Can’t Fulfill A Purchase Order?
Once you’ve read this Amazon Vendor Central Guide, you’ll hopefully be prepared for the realities of Vendor Central. Part of which involves scaling up your production to meet Amazon’s requirements. The other part should be to preemptively mark certain items as temporarily unavailable so that Amazon does not Purchase products that you do not have prepared.
If you do not have enough inventory to fulfill a Purchase Order, your options are limited. If you are authorised, you can put these items on backorder. However this is an uncommon option, so you’ll be faced with three choices.
Be Late
- You ramped up production at the last minute and managed to provide the correct number of units, but your products reached the destination outside of the time window set in your Purchase Order.
You just got hit with chargebacks of 3% of the cost of each unit that failed to arrive on time.
Deliver Less
- While you do have five calendar days after the ship window starts to declare if you have enough units to fulfill the order, you didn’t do this. However, you did decide that punctuality outweighed quantity and delivered products that were on time, but were down confirmed.
You receive chargebacks of 3% of the cost of each unit that failed to match the Purchase Order.
Fail To Complete
- Don’t do this. You failed to send the confirmed products promised on the Purchase Order before the auto-cancel date.
You receive chargebacks of 10% of the cost of each product that you failed to deliver.
Not to mention that each infraction, every chargeback and shortage goes on your record. Every Vendor must work within a narrow margin of compliance with Amazon’s rules or face extra fees, Buy Box restrictions and worse!
What Are Vendor Chargebacks?
Vendor chargebacks deserve their own guide. They are complex and tricky even at the best of times, but they do serve an essential purpose. Without Vendor Chargebacks, Amazon would not be able to process Vendor deliveries as easily, resulting in greater manpower required to vet each delivery. This would ultimately result in greater costs for Vendors, and a hugely delayed supply chain.
For a full explanation, check out Amazon Chargebacks For Vendors where we break down the subsections of chargebacks, their purpose, and how to avoid them.
It’s also why we created Vendor Connect Managed Service – a tool specifically designed to safeguard Amazon Vendors against chargebacks and shortages and reclaim lost profits.
Amazon Vendor Central Guide To Getting Paid
You receive Amazon’s Purchase Order and fulfill that order (on-time, just so we’re clear at this point) and now you need to get paid.
However, make sure that your business plan does not expect an immediate windfall. Amazon Vendors have to wait a decent amount of time for Amazon to fulfill their end of the deal. There are three different potential payment plans. These are:
- Net 30
- The quickest form of payment from Amazon to Vendors. Vendors receive payment after 30 days. However, due to this being the quickest option, Amazon gives themselves a 2% discount.
- Net 60
- The most common payment plan for Vendors is this one. Vendors receive full payment after 60 days.
- Net 90
- Hopefully it is self-explanatory at this point. On this plan Vendors receive payment after 90 days.
Are There Software Tools For Amazon Vendors?
Yes, there are several indispensable tools available. In fact this wouldn’t be much of an Amazon Vendor Central guide if there weren’t. Our first recommended tool is a revenue-reclaim tool designed to safeguard Vendor profits.
Vendor Connect Managed Services
In brief, many Amazon Vendors face unfair chargeback and shortages. Due to the sheer scale of Amazon and its Vendor operations, automation is rife. The issue with this automation is that Vendors incorrectly face chargebacks due to simple mistakes.
Vendor Connect Managed Service automatically disputes these chargebacks without the hassle. Vendors that would otherwise pay hundreds of minor chargebacks now no longer have to face these charges thanks to this Amazon Vendor tool. Most of these chargebacks are immediately withdrawn, the profits are reclaimed and then this tool also strengthens supply chains by suggesting improvements or fixes.
For a full breakdown, find out more about this Managed Service here.
Vendor Central Connect
Vendor Central Connect is the comprehensive tool that covers everything that Amazon Vendors face. This tool optimises and improves shipping, compliance, labelling and so much more. Vendor Central Connect:
- Ensures compliance with all ASN, LPR labels and invoicing.
- Consolidates shipping and groups together shipments based on destination and time to suggest the most efficient groupings to save on costs.
- Automatically disputes chargebacks just like VC Managed Service.
- Has helped combined clients grow their businesses up 689%!
This tool does not require any other software to function. It simply sits between your ERP and your Vendor account. After a brief integration period that includes data validation, testing and intensive training, any Vendor can use this essential tool to grow their business.
Amazon Vendor Central Guide – Our Conclusion
Vendor Central does come with difficulties, but overall it can be a lucrative opportunity for successful Amazon Sellers. With just a few tweaks to your business plan, and the correct tools, any Vendor can increase their profits and scale up their business in a relatively brief period of time.
If this Amazon Vendor Central Guide wasn’t comprehensive enough for you, get in contact with us and a member of our team will answer all of your questions. Or if you’re looking for some more advice, make sure to check out our resources page for information, guides and advice about the world of online business!
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We help you minimize financial deductions incurred due to chargebacks, shortages and price discrepancies. Request a FREE Audit to reveal possible supply chain issues.
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Simply complete the form out down below and our representatives will contact you!
