The online marketplace Amazon has developed into one of the most important platforms for retailers in recent years. There are two basic models that retailers can use on Amazon to sell their goods and products: the vendor model and the seller model.
But which model is better? And why is there a trend from vendor to seller? We explain the key differences between the two Amazon programs and what options retailers have to combine the two models in a meaningful way.
The vendor model on Amazon
Amazon's vendor program is based on the classic B2B modelin which large companies buy individual products from brand manufacturers and then sell them on to end customers in their own name.
In the vendor model, the manufacturer therefore sells its products directly to Amazon and is therefore not in contact with the end consumer. Amazon in turn resells these products as a third-party provider under its own name. In this case, the manufacturer itself has little control over how its products are presented. Amazon decides on the price, marketing and storage. This means that the manufacturer only has limited opportunities to influence the further sales process of its products.
However, the vendor model also offers numerous advantages, e.g. Amazon Born to Run. This means that the retailer is not directly responsible for storing and shipping its products. Marketing and sales are also handled by Amazon. The Amazon vendor can therefore concentrate fully on the production of its products and does not have to worry about sales.
The special feature of Amazon's vendor program is that vendors can only use it for official invitation by Amazon can join.
The seller model on Amazon
In the seller model, the retailer sells its products directly to the end customer even on Amazon. In this case, Amazon merely provides the platform for B2C sales. Amazon sellers therefore retain full control over their own products, marketing and the entire sales process. Sellers on Amazon can decide for themselves how to present their goods, at what price they are sold and which shipping method is selected.
Retailers are responsible for storing and shipping their products themselves. They also have to take care of marketing and sales themselves. Amazon sellers therefore have to invest a lot of time and resources in selling their products.
If an Amazon seller decides to have the storage and shipping carried out by Amazon, they have the option of having the Amazon FBA model ("Fulfillment by Amazon"). In this model, the seller can move parts of their inventory to Amazon's warehouses. For a corresponding fee, Amazon takes over the shipping of the products for each order.
The comparison: Vendor vs. seller
Whether Amazon Vendor or Amazon Seller, both models have their advantages and disadvantages. And numerous aspects play a decisive role in the decision for the Vendor or Seller model on Amazon.
The two Amazon programs differed significantly in terms of fulfillment, pricing, marketing and planning.
Fulfillment
Fulfillment in Amazon's vendor model is relatively simple. Amazon first forecasts sales and then buys the quantity of products required for a specific order directly from the brand manufacturer. defined period can be sold to customers. Regular orders from Amazon are accepted by the manufacturer and delivered to the Amazon fulfillment centers at a specified time. However, Amazon's requirements for suppliers are very high, which means that in the event of violations, Amazon may have to deal with Vendor chargebacks must be expected.
In the FBA seller model, the responsibility for forecasting lies solely with the retailer. It is therefore advisable to only store as many products on Amazon as are certain to be sold. within 90 days can be sold. Storing large quantities can lead to high long-term storage fees, among other things, which puts many sellers in a vicious circle. In addition, orders must be created manually in Seller Central, the goods must be registered with Amazon and the pallets must be labeled accordingly.
In principle, the vendor program is more advantageous for brand manufacturers with a lot of experience in B2B business and a focus on core products. Those who want more flexibility and agility can opt for the FBA seller model, although this requires significantly more work.
Prices
As part of the Amazon Vendor Program, brand manufacturers set a so-called RRP (recommended retail price). Nevertheless, Amazon ultimately determines a specific price for the end customer, as manufacturers in a B2B relationship have a Participation in pricing not permitted is. This can lead to problems under certain circumstances, such as a downward spiral in prices.
Nevertheless, many vendors also see this as a clear advantage, as they do not have to worry about prices on Amazon themselves. Amazon's aggressive pricing strategy can also help to win the Buybox and achieve higher sales figures.
In the seller model, on the other hand, retailers have More freedom in pricingAmazon can also increasingly enforce recommendations for maximum and minimum prices here. In the event of non-compliance, the affected products can be removed from the Buybox or blocked completely.
Amazon sellers clearly benefit from significantly greater freedom of action compared to vendors.
Content
Retailers want to sell their products successfully on Amazon - whether in the B2B or B2C model. For success on Amazon, a corresponding Marketing the products using content authoritative. The creation of content on Amazon is strictly regulated, as the platform is responsible in particular for statements on the product detail pages.
For example, vendors have a Access to A+ premium contentwhich allows brand manufacturers to integrate videos and interactive elements into the content. Sellers, on the other hand, only have access to all content elements if they register their brand in the Brand Registry. In the Vendor program, Amazon is responsible for creating and maintaining the product descriptions and images. In the seller model, the retailer must create appealing content for their products themselves.
However, Amazon also offers support here - for example, through the option of creating paid A+ content.
The main difference between Vendors and Sellers is access to A+ Premium elements and creative freedom. In the future, Amazon is expected to increasingly strict guidelines for all participants whether Amazon vendor or seller.
Reviews
In addition to the content, reviews on Amazon are also a decisive factor for the success of products and brands. Negative or missing reviews can, among other things, lead to a product hardly being purchased or not being purchased at all. Conversely, good reviews paired with a clever review strategy can help products and brands quickly become successful and bestsellers.
Here the Amazon Vine Program which enables manufacturers to send their products to testers free of charge. In return, they write honest reviews of the product in question. In the past, only vendors could make use of this program. Now, however, Amazon sellers also have free access to the Amazon Vine program. In addition, there is the Early Reviewer Programwhich is a simplified version of Vine for sellers.
Another important factor on the subject of reviews is the Responding to reviews - in particular responding to negative reviews. In the Vendor program, the product reviews are managed under the name of Amazon. On the other hand, the reviews in the seller program are assigned directly to the retailer. This can have both advantages and disadvantages.
On the one hand, this gives the seller the opportunity to use reviews for their own purposes and thus gain an advantage over other sellers. On the other hand, bad reviews can have a very negative impact on the seller's Amazon business.
Advertising
In the past, Amazon vendors benefited from numerous advantages over sellers in the area of advertising. For example, they had a Wide range of advertising formats and settings while sellers had to make do with significantly fewer functions. However, since 2021, Amazon has standardized the user interface for vendors and sellers, meaning that almost all advertising formats are now available for both seller models. Only the so-called re-targeting of specific target groups is still a function that is exclusively aimed at vendors.
Nevertheless, there are clear Differences in advertising between different geographical regions. New tools and functions are often available in the USA first and are then introduced on European Amazon marketplaces with a delay. However, this period is becoming shorter and shorter. For example, audience targeting for Sponsored Display Ads was initially only available in the USA, but was soon activated for vendors and sellers on marketplaces within Europe.
It is important to know that Amazon takes over the marketing for the products of Vendors, while Amazon Sellers have to take care of the corresponding advertising for their products themselves. However, Amazon also offers various options in the Seller model Effective advertising opportunities for example through sponsored products or sponsored brands.
Data and business intelligence
Every successful business requires in-depth analysis of sales data. Some time ago, Amazon vendors had hardly any access to free performance data and sales figures. They had to pay a lot of money for the so-called ARA Premium program to get more information. This unfavorable situation changed in 2020, when Amazon Brand Analytics free of charge for all sellers and vendors offered. In the last quarter of the same year, Amazon subsequently also provided insights on historical performance, glance views and conversion rates for vendors.
Although there is significantly more data transparency for vendors today, the data provided by Amazon is not always accurate. In comparison, Amazon sellers have always benefited from a Access to numerous important datawhich gave them a clear advantage.
With the opening of ARA Premium in the form of Brand Analytics for all Amazon merchants, this advantage has been balanced out. Both sellers and vendors now have access to lots of valuable sales data free of charge.
Manufacturers should take a critical look at the data provided and use it for their own purposes in order to develop new and better sales strategies.
Planning and negotiations
Vendors are known to be brand manufacturers who offer their Renegotiate conditions with Amazon every year have to. Meanwhile, Amazon sellers only have to sign the terms and conditions with Amazon when setting up their account and generally do not have to negotiate with the company afterwards.
While negotiations can be particularly tough for vendors, sellers pay a so-called Commission fee of 15 % to Amazon. Sellers using the FBA program also face some non-negotiable fees, such as the pick-and-pack fee, which is determined based on the weight and size of the item sold.
The cooperation with Amazon in the Vendor model generally designed for the long termThis means that the contractual conditions are also more strongly defined by Amazon. In the seller model, on the other hand, the retailer can decide at any time whether they want to continue selling their products on Amazon or not. In addition Amazon sellers have significantly more negotiating options.
Vendor or Seller: Which program is better?
Whether the vendor or seller model is more suitable depends largely on the individual corporate values and goals of the retailer from. If a retailer wants to sell their products quickly and easily via Amazon without having to worry about logistics and customer service, the Vendor program may be a good choice. On the other hand, if the retailer wants to have more control over pricing, marketing and product presentation, the Seller program may offer more advantages.
When deciding between the Vendor and Seller program, merchants should always bear in mind that Amazon explicitly requires you to join the program. Vendors program invited must be made. Furthermore, switching from vendor to seller at a later date is not necessarily straightforward. For this reason, companies should carefully consider which decision is the most lucrative and sensible for their own business when being invited to join the vendor program.
Combining Vendor & Seller Central - is that possible?
Yes, Amazon merchants have the option of combining the Amazon Vendor Program with the Seller Program. More and more sellers and manufacturers are deciding to use the Combining the advantages of both sales modelsby offering some of their products in Vendor Central and others in Seller Central.
This enables retailers to benefit from the high visibility and logistical support of the vendor model as well as the control over pricing and marketing in the seller model.
What is the hybrid model?
The hybrid model is a sales model in which the retailer is both a vendor and a seller. In this way, manufacturers have the opportunity to sell their products to both Amazon and end consumers.
The manufacturer sells a part of its products as a vendor directly to Amazon, meaning that Amazon is responsible for logistics, distribution, shipping, pricing and customer service. As a seller, the retailer can also sell their goods via the Amazon marketplace, whereby the seller is responsible for all sales processes.
The hybrid model thus combines the advantages of both sales modelsHowever, this requires careful preparation and more work. In this case, the involvement of an external Amazon Agency be useful. The Non-binding initial consultation with us can give dealers initial insights into the hybrid model to ensure that this is the right sales strategy.
Advantages of the hybrid model
Probably the biggest advantage of the hybrid model is that dealers can benefit from significantly more Flexibility, security and control benefit. Since they can act as both a seller and a vendor, they have more opportunities to optimize their sales strategy and maximize their profits.
The hybrid model primarily offers the following advantages:
- Ensuring availability
- Control over pricing
- Faster product listing
- Access to analysis data in Seller Central
- Fewer problems with logistics
The hybrid model also enables manufacturers to sell their products to both Amazon and end consumers. This can potentially increase the reach of the products.
Another advantage of the hybrid model is that retailers can switch between the two models as required. This allows retailers to flexibly adapt their sales strategy and tailor it to the individual needs of their products.
Possible risks of the hybrid model
Although the hybrid model offers numerous benefits for Amazon merchants, there are also some potential risks that should be considered.
Retailers must therefore expect the following challenges, among others:
- Significantly higher workload
- Compliance with country-specific laws and regulations
- Ensuring customer satisfaction
- Increased competition with wholesale customers
A particularly big challenge with the hybrid model is that it can be significantly more complex than the vendor or seller model alone. It requires a carefully planned sales strategyto ensure that both sales models are used effectively and do not compete with each other.
FAQ
What is the difference between vendor and seller?
In contrast to vendors, Amazon sellers sell their products directly to the end customer. If you want to become an Amazon Vendor, you must first be invited to the Vendor Program by Amazon. Vendors do not sell their goods directly to the customer, but first to Amazon.
What does vendor mean at Amazon?
The term "vendor" comes from the English and means "seller". It therefore refers to a retailer or manufacturer who sells their products on Amazon. The special thing about an Amazon vendor is that they do not sell their goods to the end customer, but directly to Amazon. This means that the entire subsequent sales process is handed over to the retail giant.
What is an FBA seller?
The abbreviation FBA stands for "Fulfillment by Amazon". In the FBA program, retailers and product manufacturers have the opportunity to offer their items worldwide on Amazon.
Conclusion - From vendor to seller
Whether Amazon Vendor or Amazon Seller, both Sales models of the marketplace giantn offer their advantages and disadvantages. For example, retailers and manufacturers are offered different opportunities to successfully sell their goods and products on the online platform.
Which model is ultimately the right one for your company or whether the hybrid model is suitable for you depends entirely on your company's individual goals.
Arrange your no-obligation initial consultation with Tobias Dziuba now to find out more about the conditions and e-commerce strategies. With the right contact person, you can make your Amazon business a real success - regardless of whether you are a seller or a vendor.
