Amazon Vendor vs. Seller – Which Is Better?

When it comes to selling on Amazon, you have two main options: Amazon Vendor and Amazon Seller. Both models allow you to sell on the platform but operate quite differently, each with its own benefits and drawbacks, which often leads sellers to switch between them. Understanding these differences is crucial for choosing the best path for your business. This article explores the key distinctions in structure and operations between Amazon Vendor Central and Seller Central and examines why more vendors are motivated to switch to Seller Central.

What is an Amazon Vendor?

An Amazon Vendor is essentially a supplier who sells products directly to Amazon in bulk. Amazon then sells these products to consumers. Vendors are typically larger manufacturers and distributors. When you become a vendor, you operate on Amazon Vendor Central, a platform where you manage your wholesale business with Amazon.

How Does Amazon Vendor Central Work?

What Is an Amazon Seller?

An Amazon Seller, on the other hand, sells products directly to consumers via the Amazon marketplace. Sellers have more control over their business operations and can choose between two main selling plans: Individual and Professional. Amazon Seller Central is the platform used for managing sales. Apart from this Amazon sellers are also able to delegate a lot of operational tasks to Amazon by leveraging Amazon FBA. This is however not comparable to the Amazon Vendor model at all, since in this case, Amazon is acting as a service provider, not a reseller. Click on the following link if you want to read more about Amazon FBA and who benefits most from it.

How Does Amazon Seller Central Work?

Key Differences Between Amazon Vendor vs. Seller

Control Over Pricing

Fulfillment Responsibilities

Business Model and Flexibility

Payment and Fees

Pros and Cons of Being an Amazon Vendor

Pros:

Cons:

Pros and Cons of Being an Amazon Seller

Pros:

Cons:

Logistics and Fulfillment

With marketplaces extending over the whole world, the topic of logistics and fulfillment on Amazon is never straightforward. The same goes when you compare the Amazon vendor vs. the seller model with each other in terms of fulfillment management. 

Amazon sellers can choose to either coordinate their fulfillment scheme on their own (Fulfillment by Merchant or FBM) or leverage Amazon to fulfill for them (Fulfillment by Amazon or FBA). When sellers choose FBA, the only thing left to do is send the product to the fulfillment centers and let Amazon handle the shipping, returns and customer service. The management of inventory is still in the hands of the seller though, which means that they monitor their stock and availability to meet Amazon’s demands. In the third option – Seller Fulfilled Prime (SFP) – sellers can deliver their products directly to the Prime customers from their own warehouses.

The Amazon vendor model for fulfillment and logistics is a lot simpler in that regard. Amazon makes a purchase order with the vendor, who then has to deliver the agreed upon amount of products to an Amazon fulfillment center. After that, the vendor has no more influence on that process whatsoever.

Amazon Vendor vs. Amazon Seller – Making the Right Choice for Your Business

Choosing between Amazon Vendor and Seller depends on your business size, goals, and resources. Consider the following factors:

Vendor Returns on Amazon

From time to time, vendors will receive returns from Amazon because of overstock or damaged items. As a vendor, you can then access Vendor Central and check “purchasing terms”. You will see the reasons for vendor returns listed there. If there are issues with your vendor returns, you can address these with your Vendor Manager.

Advertising

When it comes to advertising opportunities, there is no clear winner when you look at the Amazon vendor vs. seller scenario. While Amazon vendor central used to be much better for advertising, this changed in 2020 and found its final transformation in 2021. This is when Amazon decided to streamline advertising options for sellers and vendors alike, enabling the same options for sellers in regard to Sponsored Product, Sponsored Brand Ads, and most recently Sponsored Display Ads. 

Regarding Sponsored Display Ads, there is still a retargeting feature that is only accessible to vendors. But apart from this, there is very little difference between an Amazon vendor and seller in terms of advertising enablement.

Support 

There is one factor in our Amazon vendor vs. seller comparison that is undeniably a benefit for vendors. The availability of an Amazon Vendor Manager. This is an Amazon employee that acts as a contact person for vendors. They support by increasing profitability and sales in a certain category.

But even here, there is a drawback that needs to be mentioned. Vendor managers are notoriously overworked, often taking on 100 – 150 vendor accounts at the same time. They also rotate regularly, meaning that vendors are not able to form long-standing business relationships with them. Moreover, a vendor manager on Amazon is only responsible for a certain category, not for a certain account.

Switching Roles – Amazon Vendor to Seller or a Hybrid Solution

While this has little to do with Amazon vendor or seller central in a technical sense, it’s still worth mentioning. Many vendors have recently switched from the vendor model to the seller option. There are two main reasons for this. 

The first is Amazon’s pricing policy. Especially when it comes to upholding the minimum advertised price agreed upon with the vendor, Amazon’s algorithms often undercut these prices. This of course leads to a general detriment for the manufacturer, since everyone ends up buying their product on Amazon (and nowhere else) because of the competitive pricing.

The second reason is that being a seller is the simpler option of the two. Especially manufacturers are able to retain more control over their brand positioning and profitability when selling as merchants.

Another exciting option for manufacturers could be a combination of both models. It of course requires a well-wrought strategy. Products, for which it is important to keep a certain price for brand maintenance, are better included in the seller program. When other channels are involved and it may be necessary to regulate the launch of the products, the seller model is also more suitable. For generic items, however, which should be accessible to as many customers as possible, the vendor model would definitely be the better choice.

Final Thoughts – Seller vs. Vendor on Amazon

Both Amazon Vendor and Seller models offer unique advantages and challenges. By understanding the differences and evaluating your business needs, you can make an informed decision that aligns with your goals. Whether you choose to be a vendor or a seller, Amazon provides a platform with immense potential to reach millions of customers worldwide.

With the right strategy and approach, your business can thrive in the ever-evolving world of e-commerce. Consider your priorities, resources, and long-term objectives to determine the path that best suits your business on Amazon.

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