Considering the Switch: Vendor Central to Seller Central

As a brand selling products on Amazon, you have two options: Sell your products at wholesale to Amazon’s Retail arm through the Vendor Central platform (1P sales), or sell directly to consumers yourself through Amazon’s Seller Central platform (3P sales).

As a vendor, you may be considering if Seller Central is a better option for your brand in the long-run, particularly if you're a smaller vendor seeing fewer POs from Amazon. Or maybe you simply want to create a contingency plan should Vendor Central become unworkable for you in the future. 

For some vendors, the impetus to move to Seller Central was sparked by glitches with Vendor Central that occurred earlier this year. A number of brands who sell to Amazon through Vendor Central experienced disruptions and delays in their purchase orders, causing speculation that Amazon might be planning to dial back the vendor program for smaller brands, essentially pushing them to Seller Central. Turbulence within the Vendor Central world has quieted down somewhat since then and many brands continue to be comfortable with their 1P sales, or they manage a hybrid of Vendor and Seller. 

When and if you decide to move your brand to Seller Central, timing is important, as making the switch during the critical Q4 season could prove to be disruptive to your operations, and so too your sales. Waiting until the new year before you make the switch is advisable. In the mean-time, you can observe what moves Amazon makes regarding Vendor Central and continue to weigh the potential benefits and negatives of making the switch.

The Benefits of Seller Central

  • Launching New Products: Amazon has little incentive to order new products with no attached sales history, so launching new products through Vendor Central can be difficult. On Seller Central, brands are empowered to promote and market new and existing products as they see fit.  

  • Control Your Product Page Content: Once enrolled with Brand Registry, you’ll gain control of the product detail pages on Seller Central, so you can ensure the content is consistent with your preferred brand messaging. Seller Central also gives registered brand owners the option to add Enhanced Brand Content (EBC), which you can utilize to further polish-up your product pages and turn browsers into buyers.

  • Customer Feedback: With Seller Central, you can directly engage with customers and get faster feedback on your products. Engagement with consumers will enable you to more nimbly respond, innovate, or adapt to any quality or fulfillment issues that may occur.

  • Price Control: Seller Central also gives you direct control of product pricing, which can mean better profit margins and protecting your brand from price erosion.

  • Better Cost Control: Costs on Seller Central can be more predictable; Amazon’s fees are fairly stable, and they typically update their FBA fees annually. Or if you’re using FBM, you can buy your shipping through Amazon at their contracted rates, which are often cheaper than you could get otherwise. 

  • Data & Analytics: In Seller Central, you gain access to rich analytics and data on your sales and customer base (at no additional cost), enabling you to optimize product listings, fine-tune your advertising, and accelerate sales.  

The Potential Negatives 

You’ll certainly have more control over your account in Seller Central, but you’ll gain more responsibilities too, like price setting, inventory management, running your own advertising and promotions, and customer service. This could be a whole new set of tasks that you aren’t currently equipped to take on, and you’ll have to decide for yourself if you have the resources to meet the demands of Seller Central. 

Planning for the Switch

After weighing the pros and cons for your own business, you might decide making the switch is the right call for you. So what’s next? There are several things you can consider now that will help you make a smooth transition to Seller Central when the time is right.

Amazon Brand Registry -  Enrollment in Brand Registry strengthens your probability of success with a Seller Central account. Brand Registry gives your business greater control over your brand’s representation on Amazon, and it grants you access to robust analytic tools, and protects your intellectual property. 

To be eligible for Brand Registry, you must have a registered and active trademark and meet country-specific requirements. Be advised: registering your trademark can take several months to complete, so plan accordingly. If you’re already enrolled through Vendor Central, you can transfer your Brand Registry to your new Seller Central account.

Operational Capabilities - Migrating to Seller Central’s direct-to-consumer model requires different operational capabilities.

  • Order Fulfillment: Are you prepared to fulfill customer orders yourself (FBM) or will you utilize Fulfillment by Amazon (FBA)? Consider the costs of each fulfillment model carefully and evaluate your profitability at the SKU level to ensure you choose the right fulfillment method(s) to meet your profit goals. Understand that Amazon is obsessed with delighting the customer, so they hold marketplace sellers to very high standards. If you are unable to meet Amazon’s seller performance targets, you risk having your account suspended. Make sure you review and can meet all Seller Performance standards, particularly if you are FBM. Click here for a more in-depth breakdown of FBA vs.FBM.

  • Inventory Control: Do you have the resources and tools in place to monitor and forecast inventory, rather than fulfill Amazon’s purchase orders? If you are fulfilling your own orders, can you maintain adequate stock levels across your various sales channels and keep your Amazon listings up-to-date with your available quantities? Amazon expects sellers using FBA to maintain efficient inventory levels and monitors their in-stock rates, sell-through rates, excess inventory, and stranded inventory. FBA sellers who do not meet minimum inventory performance metrics can incur additional storage fees, as well as have FBA storage limits imposed.

  • Customer Service: Seller Central requires a higher level of customer support and engagement: responding to customer emails/feedback, answering product questions, and abiding by Amazon’s rules regarding seller engagement with customers. FBM in particular entails customer service responsibilities that you will need to take on. While many brands like to have this direct customer contact, be sure you can handle the extra workload, and that you can absorb the associated operational costs.

Tax Obligations - As more states pass new laws regarding e-commerce, tax obligations for sellers are rapidly evolving. As the seller of record, your tax obligations will be different than they were as an Amazon Vendor. Consulting with a tax advisor with a strong understanding of the current sales, income, and other tax laws that impact e-commerce sellers will help you understand and plan for meeting your tax obligations.

Remember, Seller Central won’t make sense for all brands, and if you do decide to make the switch, timing is key. An e-commerce team that specializes in optimizing your Amazon account can assist you in weighing the pros and cons of making the switch, and guide you through the transition that will get you on the path to accelerating your sales.

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