Amazon Vendor Central: Tour for Vendors

February 16, 2024
By The Badger

Ever wondered how to sell straight to Amazon and get your products in front of millions? This guide is your roadmap. It’s simpler than you think to get invited, figure out the pricing, and make the most of what Amazon offers. So, what’s your move to turn Amazon Vendor Central into your growth engine?

In this article, Ad Badger introduces Amazon Vendor Central , highlighting its key features, tax implications, reports, plus its pros and cons.

The most important thing you should know about Amazon Vendor Central

Amazon Vendor Central is a special platform where sellers can only join if invited. They sell their products to Amazon, and then Amazon sells these to the customers. This way, sellers can make more money and don’t have to worry as much about delivering products or dealing with customers.
It’s important to understand the costs involved, like a commission fee that Amazon takes, fees for placing products and advertising, and other charges for things like returns and shipping, which can impact how much money you make.
Sellers have less control over things like prices and stock compared to those using Seller Central. However, Vendor Central comes with big advantages, such as enhanced content options, special sales programs, and better processes for fulfilling orders.

How Does Amazon Vendor Central Work

Amazon Vendor Central is a special system for businesses to sell their products straight to Amazon.

Instead of selling directly to customers, companies provide their items to Amazon, which then sells them on their website. This setup is by invitation only, meaning Amazon has to invite you to join. Once you’re in, Amazon buys your products at a set price, takes care of selling them, and deals with customers for you.

This way, you get to reach Amazon’s huge number of customers without worrying about the selling process.

What Can You Achieve by Starting with Amazon Vendor Central

Amazon is a big player in U.S. online shopping, so being on their platform can help your business grow. The idea here is that suppliers and manufacturers sell their products in large quantities to Amazon. Then, Amazon sells these products to its customers. But how do you get to be part of this platform? Let’s dive deeper into that.

What Are the First Steps in Amazon Vendor Central

Getting into Amazon Vendor Central is a select process, adding a touch of exclusivity to the platform. It’s by invitation only, meaning Amazon picks which businesses can join.

So, who gets these coveted invites?

They’re usually given out by Amazon’s vendor recruitment team to successful sellers from Seller Central, marketplace sellers with in-demand products, and exhibitors from trade shows who offer something special.

This selectiveness shows that Amazon Vendor Central doesn’t just open its doors to any business. It carefully chooses businesses that have shown they can succeed or have potential.

This way, Amazon keeps the quality of its platform high, ensuring that customers only see the best products.

What Is the Primary Benefit of Selling on Amazon Vendor

One of the primary benefits of Amazon Vendor Central is the ability to sell directly to Amazon. This direct selling approach allows vendors to:

Use Amazon’s big customer base and strong delivery system to sell more and reach more people.
Let Amazon take care of talking to customers, handling returns, and sending out products.
Concentrate on making great products.

This direct selling model is a boon for manufacturers and distributors, who predominantly use Amazon Vendor Central to sell products in bulk to Amazon, streamlining the sales process.

Moreover, products listed with the ‘Sold by Amazon’ badge can lead to increased conversion rates, as it signifies added trust and is covered by Amazon’s customer service and return policies.

If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunity on the table.

Jeff Bezos

What Are the Fees on Amazon Vendor Central

Joining Amazon Vendor Central comes with clear benefits, but have you looked into how its costs work? Let’s break it down.

Amazon Retail Service Fee

At the heart of it is the Amazon Retail Service Fee, a key part of their fee structure. What is it, exactly? It’s a commission that Amazon takes from each sale, and it changes depending on what kind of product you’re selling. But there’s more to it. Amazon Vendor Central also applies a fee, usually ranging from 4% to 10% of your product’s wholesale price, which covers the costs of getting your product listed (slotting) and marketed. Sounds interesting, right?

Co-Op Fees and additional operational fees

Cooperative marketing activities with Amazon may involve Co-Op Fees, and vendors might also pay Marketing Development Fund (MDF) fees to fund specific marketing initiatives. Vendors also encounter additional operational fees, which can include:

Purchase order (PO) chargebacks
Returns fees
Various costs associated with stock, campaign execution, internal support
Premium Vendor Services

Moreover, vendors need to factor in various additional costs, including shipping to Amazon’s fulfillment centers, international return and shipping costs, conversion costs for being paid in home currency, customer support costs, taxes including VAT in Europe, and translation costs for listing products.

We’ll examine these costs more closely.

How Does Wholesale Pricing Work in Amazon Vendor Central

Amazon Vendor Central is all about buying and selling in large quantities.

Vendors sell their products to Amazon in bulk, and then Amazon sells these products to its customers. But, getting the right price isn’t always easy. Amazon works hard to get the lowest possible prices from vendors to keep its profits high, which means vendors need to be good at negotiating.

Payments to vendors are based on these bulk sales terms, and as sales increase, Amazon might push for even better deals. Within Vendor Central, vendors have to agree on these bulk prices and also pay between 4% and 10% for additional costs like product placement and advertising. This negotiation over prices and fees is a crucial part of their strategy for doing business on Amazon Vendor Central.

How Do Marketing and Slotting Costs Affect Vendors on Amazon Vendor Central

Besides wholesale pricing, vendors on Amazon Vendor Central must also factor in marketing and slotting costs. These costs are integral to using the platform and may vary based on different factors such as sales performance.

Slotting fees are charged as a part of the overall percentage to cover marketing initiatives and ensure product placement within the Amazon platform.

Additionally, vendors often pay fees from their sales into a Marketing Development Fund (MDF), which is used to help make their products more visible and fund advertising on Amazon. Vendors might also have to spend extra for perks like better customer service or improved content for their product listings, adding to their total marketing and placement costs.

Vendor Central vs. Seller Central

Amazon Vendor Central and Seller Central offer different levels of control to vendors and sellers.

In Vendor Central, vendors find they have less control over how their products are priced. This is because Amazon decides the sale prices after purchasing the products in bulk from the vendors, which can impact the vendors’ profit margins.

Furthermore, vendors using Vendor Central might also notice they have limited control over how visible their products are on Amazon and the marketing strategies used. This limited control is due to Amazon’s significant involvement in these areas on the Vendor Central platform.

In contrast, a Seller Central account provides third-party sellers with:

More control over analytical data and customer interactions
A better understanding of market trends and logistics
Multiple fulfillment options—FBA, SFP, or MFN—grant them diverse ways to manage fulfillment according to their preferences.

So, Amazon Vendor Central is great for vendors focused on big orders for Amazon, offering a simple setup. On the other hand, Seller Central gives more control over pricing and sales across different channels.

What Are the Benefits of Using Amazon Vendor

Using Amazon Vendor Central brings notable advantages. It allows vendors to enhance their product listings with A+ Content, adding extra images, videos, and comparison charts. This, combined with the credibility of Amazon’s brand, often leads to increased sales.

Ever noticed how A+ Content affects your sales? In this PPC Den Podcast issue, you’ll discover how to effectively utilize A+ Content to boost your product listings and sales on Amazon.

Returning to selling through Amazon Vendor Central. This platform can offer several benefits, including:

Bolstering consumer trust, thanks to the perceived endorsement that comes from products being listed and shipped by Amazon
Joining exclusive promotional programs like Subscribe & Save and Amazon Vine, which help increase customer retention and accumulate valuable product reviews
Gaining access to Amazon’s operational efficiencies such as Fulfillment by Amazon (FBA) and comprehensive customer support services

These advantages can help vendors maximize their sales and success on the platform.

What Challenges Do Vendors Face on Amazon Vendor Central

Though the benefits are numerous, understanding the challenges associated with Amazon Vendor Central is also vital. One of the most significant challenges is the limited control over product pricing. Since pricing is determined by Amazon’s algorithms, vendors may occasionally find prices that violate minimum advertised price (MAP) policies or affect their margins.

Inventory management can also pose challenges, including:

Amazon dictating stock levels, which can lead to issues with stockouts or returns
Longer payment cycles, which can cause financial challenges
Potential for chargebacks due to fulfillment errors
Unexpected costs, such as those related to forwarding stock, reduce overall profit margins.

Furthermore, strict logistical guidelines imposed by Vendor Central can affect profits if not followed, and vendors may lose some degree of brand control as products are shipped in Amazon boxes, impacting the customer experience.

How can we optimize an Amazon product listing in Amazon Vendor Central

Optimizing product listings on Amazon Vendor Central involves enhancing:

Ensure your titles are approximately 60-80 characters long, start with the product’s brand name, and maintain readability and customer interest.
Include up to five concise bullet points, highlighting essential features, and maintaining a consistent order across product listings.
Provide detailed and accurate information about the product, including its benefits and unique selling points.
Use high-quality images that showcase the product from different angles and provide zoom functionality.

By optimizing these elements, you can improve visibility and sales on Amazon Vendor Central.

What types of reports are available in Amazon Vendor Central

Effectively managing retail analytics is key to achieving success on Amazon Vendor Central. Amazon Retail Analytics (ARA) serves as the analytics platform provided by Amazon to its vendors, offering comprehensive insights into sales, traffic, and forecasts, among other metrics.

Here’s an overview of the main types of reports available, which can vary based on your access level to Amazon Retail Analytics (ARA Basic or ARA Premium).

Amazon Search Terms Report. This report assists in identifying which products receive the most clicks and conversions based on customer search terms.

Repeat Purchase Behavior Report. This report differentiates between orders made by new versus returning customers, offering insights into the customer repeat purchase rate over a specific period.

Market Basket Analysis. Identify products frequently purchased together with yours, uncovering opportunities for product bundling, cross-selling, or marketing strategies to enhance sales.

Item Comparison and Alternate Purchase Behavior. Gain competitive intelligence by understanding which products are viewed or bought instead of yours, helping to identify direct competitors and alternative products chosen by customers.

Alternate Purchase Report. Discover which products customers buy instead of yours on the same day they viewed your item, including the top alternatives and their purchase frequency.

Demographics Report. This report offers insights into your target audience, including age, income, education, gender, and marital status, to tailor product offerings more effectively.

Customer Reviews. Monitoring reviews and ratings is essential for optimizing customer experience, as these serve as significant indicators of product reception and quality.

Sales Diagnostics. Part of the Sales and Traffic dashboard, this tool identifies sales opportunities, allowing comparison of metrics over time to gauge performance.

Sales Performance Trends. This report tracks key performance indicators like glance views, revenue, and conversion rates, helping identify trends affecting sales.

Geographic Sales Insights. Provides geographic insights into where products are being shipped, aiding in identifying and responding to regional sales trends.

Net Pure Product Margin (PPM) identifies profitable products by calculating the margin after deducting costs of goods sold and other expenses.

Pre-orders. Assess the performance of newly launched products, helping understand customer demand for new items.

Traffic Diagnostic. Analyzes changes in views and conversion rates against industry benchmarks, offering insights into traffic and customer engagement.

Real-time Sales. Offers sales data in real-time for specific ASINs over the last 24 hours, aiding in immediate sales tracking.

Forecast and Inventory Planning. Facilitates inventory planning with forecast reports estimating customer demand, helping avoid stock issues and maintain sales momentum.

Inventory Health. Monitors inventory health, providing weekly updates on critical product and inventory trends to manage stock levels effectively.

Operational Performance. Tracks vendor shipment metrics to Amazon, identifying any operational issues during transit or fulfillment, with potential chargebacks for poor performance.

What Does the Future Hold for Amazon Vendor Central

Just as the digital marketplace continues to evolve, Amazon Vendor Central also adapts and evolves.

In the future, vendors should be prepared for changes in Amazon Vendor Central’s pricing, fees, or platform capabilities that may impact their cost structure and operations.

Amazon is adjusting referral fees for specific product categories such as apparel, with reductions for items under $15 and increasing fees for standard and Large Bulky-sized products.

New fees are also being implemented to cover specific logistical challenges and costs:

Inbound placement service fee
Inbound defect fee
Low-inventory-level fee
Returns processing fee

While these changes may present new challenges, they also represent opportunities for vendors to adapt and thrive in an ever-evolving marketplace.

The bottom line

Amazon Vendor Central is a special chance for invited vendors to sell directly to Amazon and use its huge customer base and logistics. But, you need to know about its pricing, fees, and how you might have less control over prices and stock.

Despite these issues, the platform’s benefits, like making better product listings and using Amazon’s special programs and efficiencies, are big. By improving your listings, using Amazon Marketing Services, and handling retail analytics well, you can do well on Vendor Central.

Frequently Asked Questions

What is vendor Central Amazon?

Vendor Central Amazon is an online platform for manufacturers and distributors to sell their products to Amazon in large quantities, serving as a wholesale supplier.

How much does Amazon vendor services cost?

The cost of Amazon vendor services depends on the size of your business, annual revenue, number of marketplaces covered, and level of support, typically ranging from 2 to 6 percent of cost of goods sold (COGS). Prices are subject to negotiation.

What is the difference between vendor and FBA?

The main difference between Vendor Central and FBA is that Vendor Central is for brands selling directly to Amazon, while FBA is a service for brands to store their products in Amazon’s fulfillment centers and have Amazon handle the logistics and customer service.

How does the pricing work on Amazon Vendor?

On Amazon Vendor Central, pricing is negotiated wholesale with Amazon, and vendors pay a percentage fee covering slotting and marketing costs. This helps vendors understand the pricing structure for their products on the platform.

What are some of the challenges of using Amazon Vendor Central?

Using Amazon Vendor Central comes with challenges such as limited control over pricing and stock, potential stockouts, and navigating Amazon’s strict logistical guidelines. Be aware of these challenges to effectively manage your operations.