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Path: Sourcing News & Advice
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Sourcing >> Amazon vendor central vs. seller
central

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Amazon vendor central vs. seller central

Posted: November 07, 2016

By Will Tjernlund

VENDOR
CENTRAL: All products sold and fulfilled by Amazon on Amazon are sourced by
Vendor Central partners. In this business model you act as a wholesaler to
Amazon. The Vendor Central business model breaks down like this.

1) Amazon directly
buys your product.

2) You ship your
products out to Amazon's warehouses.

3) Amazon turns around
and sells your product as Amazon on Amazon.

At
the beginning of the vendor central relationship you "the company" will send
Amazon a list of your SKU's and pricing. From that point Amazon analyzes the
marketplace to see if your pricing is competitive to what is currently being
offered. When they decide your pricing is competitive, they will offer you an
opportunity to sell to Amazon. Amazon monitors other websites and almost always
makes sure they are the lowest price on the internet.

Typically
they will purchase inventory from you weekly. Amazon will forecast the demand of
future months and on the Vendor Central platform you will have access to see
these forecasted amounts so that you can manage your inventory accordingly.
Amazon handles all shipping, returns and customer service responsibilities after
they purchase the product from you.

But
not all responsibilities fall on Amazon once they buy your product. You "the
company" are still responsible for creating and editing the product's listing
which is a critical component to your product's success.

Some
benefits of Vendor Central include:

• A + listings - A+
Listings are aesthetic format for your listings that only Vendor Central sellers
have access to.

• Automatic Top Rank
Category Listing - We will get into further detail about this later but this
greatly increases sales volume.

• Amazon
Invoice/Billing and Inventory Request fits great in wholesale business
models.

Now
let’s take a look at Seller Central

SELLER
CENTRAL: Seller Central is a way for third party sellers to sell their products
on Amazon. In this business model you sell your product on Amazon. There are a
couple of business models within seller central that are offered to third party
sellers by Amazon. We'll go into these business models in further detail but
first let’s take a high level look at how seller central operates.

1) You create listings
for your products on Amazon.

2) Amazon's customers
buy the product directly from you.

3) Depending on the
business model being used, either you are responsible for shipping, customer
service and returns or you can pass that responsibility off to
Amazon.

Now
let's take a look at the main business models within Seller Central. There is
Vendor Fulfillment and Fulfillment By Amazon or FBA. Vendor Fulfillment is a
very hands on business model. In Vendor Fulfillment you "the company" take on
full responsibility for product shipping, customer service and returns once the
sales are made on Amazon. Next let's talk about Fulfillment By Amazon or
FBA.

Fulfillment
by Amazon is a business model offered by Amazon to relieve these
responsibilities that can become crippling as your ecommerce business scales.
Fulfillment By Amazon (FBA) leverages Amazon's massive supply chain and
logistics systems to your advantage. In the FBA business model, you ship
Inventory in bulk to Amazon's Warehouses. From there once a sale is made, Amazon
ships your product out of their warehouse and to the customer. Amazon also
handles all customer service and returns for the product. With this business
model, Amazon takes a percentage of every sale as a fee and there are fees
associated with your inventory storage in Amazon Warehouses.

In
both business models, you are in full control of the product pricing, listing
design and marketing.

Some
benefits of Seller Central include:

• Price Point
Control

• Quick Payment
Turnaround Time (sales revenue minus fees transfers to your account every 14
days)

• Low Barrier to
Entry

AMAZON
BUSINESS MODELS CONCLUSION: In conclusion there is no perfect Amazon business
model for every business. The choice of which business model your company should
pursue is truly a case by case decision. There are many different variables and
factors to take into consideration including but not limited to the type of
product you are selling, how your business is structured, how your supply chain
operates, inventory limitations, product price point etc. Goat Consulting
completely understands all of Amazon's business models and the factors that need
to be considered when deciding between them. We can point your company toward
the direction of eCommerce success and help you walk the path!

Will
Tjernlund and Eric Sutton

http://www.goatconsulting.com/

Want
to learn more sourcing best practices?

Join the Global Sources Summit that combines conferences and
networking, co-located with our Hong Kong trade shows. The event will be held
April 17-19, 2017, and is geared toward online and Amazon
sellers.

Will
Tjernlund is the co-founder of Goat Consulting, a consulting service that helps
companies take control of their brands on Amazon.com and other online
marketplaces. Will has been selling full time on Amazon.com for 3 years and
speaks at conferences all over the world. To learn more, contact him through http://www.goatconsulting.com/

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