Vendor to Seller Central Transition Made Simple: A Definitive Guide

 

Deciding how a brand interacts with Amazon is crucial. Should they be a Seller or Vendor, or perhaps both? This choice is often considered final and irreversible, but it doesn’t have to be that rigid. Many brands are starting to question the 1P Vendor model due to challenging vendor negotiations, increasing costs, and complex pricing algorithms. Could switching to Seller Central (3P) be the solution?

In this article, we will guide you through the advantages and disadvantages of selling in Seller Central and Vendor Central so you can make an informed decision that best fits your business needs.  What is Vendor Central?  When selling through Vendor Central, one becomes a first-party seller. Essentially, you act as a supplier by selling your products in large quantities to Amazon. Subsequently, Amazon resells these products directly to consumers. It is important to note that registration on Vendor Central is exclusive and requires an invitation. What is Seller Central?  Amazon Seller Central serves as the online platform brands and merchants utilize to promote and distribute their products directly to customers of Amazon. 

As a marketplace seller, you have two alternatives for fulfilling orders from Amazon’s customers. You can personally manage the shipping, customer service, and returns for each individual order. Alternatively, you can use Amazon to handle these aspects by enrolling your products in the Fulfilled by Amazon or “FBA” program.

Seller Central vs Vendor Central 

• Vendor Central Pros 

• • • Consumer confidence
      • The main reasons for obtaining Vendor status are high sales potential and customer confidence in the AMZ brand.
    • Simplified model of business
      • Doing business via a Vendor account is much simpler than the seller one. The primary focus of vendors is to fill bills and orders and steer clear of chargebacks. On the contrary, sellers will be responsible for taxation liabilities, lost inventory, and sales reconciliation.

• Vendor Central Cons 

• • • Warehousing
      • The use of Vendor Central on Amazon.com means that you are a supplier. Therefore, it puts a huge responsibility on your shoulders. The reason is that you have to supply products to all AMZ warehouses throughout the United States.
    • No control over pricing
      • Amazon will not always follow the Minimum Advertised Price (MAP) guidelines the manufacturers define. It’s probably one of the most significant downsides of the Vendor Central account. Amazon always has the right to make changes in retail pricing. They can do it whenever they want based on internal data.
    • Logistical demands
      • Amazon has established strict and specific guidelines for filling purchase orders. As a result, those vendors who could not efficiently fill orders might end up paying huge chargebacks.
      • Inventory forecast isn’t reliable, and inventory management is a challenge.
    • Lack of customer service control
      • You’re dependent upon the customer service of Amazon when it comes to vendor accounts. If there’s an issue with quality control or shipping, you can’t contact the customer to clarify things. Similarly, it can hurt your business if a buyer’s not satisfied with the customer service of Amazon.

• Seller Central Pros 

• • • Detailed business reports
      • The Seller Central users have an extremely rich and interactive dashboard. It allows users to track numerous metrics like conversion rates, traffic, and sales.
    • FBA service
      • Amazon offers returns and customer services for FBA products as well. In addition, the FBA program also makes the products Prime Eligible. As a result, your products become eligible for free shipping to Amazon Prime buyers.
    • You can control prices.
    • Fast payments
      • You will receive your payments biweekly. 

• Seller Central Cons 

• • • Fulfillment charges 
    • You will be responsible for taxation liabilities, lost inventory, and sales reconciliation.

• Hybrid approach Pros

• • • Better Inventory Management
      • The most common problem faced by vendors is inaccurate inventory forecasting. “Amazon told me they would need 500 units, and they just ordered 200 units!” And sometimes, Amazon’s forecast says 200 units, and they order 500 units. In such a situation, your seller account serves as a backup.
    • Profitable Product Launches
      • Another reason to consider the hybrid approach is when you want to launch a product. Vendors are very well aware of their challenges while launching a new product. New product launches are tricky for them because Amazon has no product history based on 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 send a purchase order to your vendor account.
    • 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. This can take several weeks. With the hybrid approach, vendors can list the products easily with the help of their seller account.

 

When should you consider transitioning to Seller Central? 

It is essential to have a contingency plan in place, particularly if:

• There has been a decline in purchase orders (POs) within the last year.
• There have been increased wait times between POs over the past year.
• Your annual revenue is $10 million or less.
• Amazon has recommended or requested that you transition to Seller Central.
• You believe that you are losing out on significant profits as a vendor.

If you are a vendor without your brand and cannot enroll in the Amazon Brand Registry, there may be cases where you are not eligible to switch from Amazon Vendor Central to Seller Central. The decision to switch must be mutually beneficial, or at least not detrimental, for yourself and Amazon. Therefore, profitability, business reliability, product standards, and other considerations will be considered before approving the switch. Before making any changes, it is crucial to consult with your Vendor Manager. This step ensures that Amazon approves of your business operating as a retailer rather than a wholesaler. Maintaining a positive relationship with Amazon is also good practice and can help support future collaborations.

 

What to consider for a seamless transition to Seller Central? 

• Timing and careful planning are critical when transitioning to Seller Central. We recommend waiting until your peak season has ended if your products are seasonal. Doing so can avoid disrupting your sales momentum during profitable times. Even if your products aren’t seasonal, it’s best to avoid transitioning during special occasions like Prime Day or Black Friday.
• The second consideration is the remaining inventory that Amazon still holds in its warehouses. It’s ideal to make the switch when this inventory is running low. This allows for a clean break and eliminates the need to repurchase inventory from Amazon. You can ensure a smoother transition by strategizing these factors – timing and remaining inventory level.
• Once your remaining inventory reaches a low level, another important decision is determining how much inventory to order as a seller going forward. This shift can be significant in terms of volume and timing. As a seller, your orders will be based on customer demand rather than Amazon’s purchase orders.

How to transition to Seller Central? 

• Reach out to your Vendor Manager for guidance on switching over to Seller Central and obtain approval to maintain a strong relationship with Amazon’s team.
• Create a fully functional Seller Central account with existing ASINs.  It is crucial not to register new ASINs as this would reset your products’ rankings and reviews.
• Ensure that all your products meet Amazon Seller Central’s product standards by obtaining approval.
• Streamline your fulfillment process by choosing an appropriate option and validate that orders are being fulfilled properly through Seller Central. Take care of any necessary tax obligations and have an efficient inventory management system.
• Transfer your advertising campaigns from Vendor Central to Seller Central platform. While both platforms offer similar advertising tools, familiarize yourself with Seller Central’s tools by running a few test campaigns.
• If you have brand registry status on Vendor Central, seamlessly transition it to the Seller platform.
• Verify that your inventory tracking system is properly set up for smooth operations across all ASINs under your jurisdiction within your seller account.

Need help with the process? 

Contact our team of experts to help you seamlessly transition to Seller Central and scale your business on Amazon. 

 

 

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