The amazon marketplace offers a number of options for vendors to sell their products. However, for a beginner in the field, the process can be quiet challenging and it is important that you display a considerable amount of knowledge and time to excel the selling process on Amazon.
If you are also interested in selling products on Amazon, then look no further than this guide. Here we list down everything you need to know about being an ace seller on the platform.
Option 1 – Amazon Vendor Central
The vendors who choose this option grant Amazon the ownership of their entire inventory. This means that you, the owner of a specific product sell their complete inventory to Amazon who market and sell your product to other customers – at their own designated price and shipping methods.
Some of the prime benefits associated with Amazon Vendor Central include:
- Frees the product owner from handling the marketing, selling, and shipment procedure for their sales
- Allows them to sell products in bulk
- Provides them with tools that are not available to individual sellers
Cons of choosing Amazon Vendor Central
The biggest drawback of the Amazon Vendor Central program is the inability to control prices dictated on the platform. Amazon does not usually follow the Minimum Advertised Pricing (MAP) guidelines from manufacturers and may adjust prices according to the demands.
Moreover, vendor’s part of this program are in charge of their own logistics. Amazon has a strict guideline for fulfilling orders and many times the vendors struggle to maintain stocks as per the demand.
Option 2 – Amazon Seller Central
A popular option on Amazon is selling products through the Amazon Seller Central feature. The sellers who choose this option have the ownership of their complete inventory and are able to maintain their own brand identity. In fact, this is the most preferred method of selling on Amazon with more than half of total sales coming from third-party sellers.
Those who wish to sell through this method are required to first register their brand name with Amazon. The sellers are responsible for their own marketing, selling, and shipping – which is extra hassle on their part. However, they have more control over their inventory and are able to sell the products at their desired price level.
The sellers can also choose if they would ship their products through their own logistic medium or have Amazon ship it on their behalf. The online marketplace of Amazon will charge the sellers, depending on the program they choose.
The benefits of choosing the Amazon Seller Central program over the Amazon Vendor Central include:
- Enhanced exposure for the brand
- More revenue in sales
- Ability to garner more customers
Cons of choosing Amazon Seller Central
As we mentioned above, the biggest drawback of choosing this program is that the seller is liable to handle all aspects of the selling process. From marketing to keeping touch with the customers and shipment – the seller has to handle it all, which can often be troublesome for many.
Additionally, if you have a low-priced product, you are often unable to sell through the marketplace due to the high shipping cost as well as Amazon’s commission.
How much does Amazon charge to the sellers?
You may wonder what the commission is charged by Amazon to the sellers. When a product is sold on Amazon, the amount is collected by the marketplace itself – from which it takes out its commission.
Here, the sellers can choose between an individual plan and a professional. The individual sellers pay no subscription fee. However, they are liable to give $0.99 commission for each product sold to Amazon along with a variable closing fee that is dependent on the product category.
On the other hand, professional sellers are free from the $0.99 commission. However, they are obliged to pay a $39.99 monthly subscription fee along with a variable closing and referral fee.
Should you sell via Amazon Vendor Central or Amazon Seller Central?
The program that you choose usually depends on your product, your fulfillment ability, business goals, profit goals, and other variables.
Merchants who choose to sell to Amazon avoid the headache of managing their own marketplace but have to give up their control over the products. On the other hand, the sellers who decide to sell as third-party sellers are given more exposure but have to go through all the trouble of maintaining their store while also paying Amazon to use their service.
Can you make the switch between the two options?
Yes, it is possible to switch smoothly from Amazon Vendor Central to Amazon Seller Central. In fact, over the last few quarters, many sellers have chosen to make the switch from selling TO Amazon to selling ON Amazon.
If you are also thinking about making the switch, make sure you understand the pricing protocols for Amazon sellers. As a new seller, your profit margin may initially shrink until you master the new processes. It will also take some time and effort to set up the new storefront, market your brand identity, and fulfill all the requirements of the buyer.
Additionally, we suggest making the switch when your inventory with Amazon is the lowest or at the point of running out. This way you won’t have to buy any products back from Amazon and will give you a clean break from their platform.
We also suggest testing the demand of your product through various means. It is often assumed that the product that succeeds on Amazon Vendor Central will automatically be accepted through individual selling. However, this is not the case for every product and a new individual product will require new research and targeting methods.
If your product is a seasonal item like winter clothing and accessories, wait until your peak season is over to make the switch. This way you will not break your revenue cycle and will be more prepared for the next season.
Regardless of the option you choose, remember, selling on Amazon is a profitable way to earn passive income. Get started today and let us know your experience.