Should You Become an Amazon Vendor?
It is now evident that competition is so stiff, and sellers are vulnerably looking for unique ways to market their products. Buying habits have also shifted from brick-and-mortar stores to online shopping.
While the transition seems to work for e-commerce stores, still the question is, how best can sellers reach potential buyers?<?p>
Talking about the availability of ready buyers and unending demand for products, Amazon seems to have all the secrets at hand. Of course, Amazon as one of the largest e-commerce platforms has millions of active users and sellers looking for where to invest. That means the company is a wellspring of opportunities and anyone joining has the possibility to succeed.<?p>
However, things might not be easy for everyone. While the online giant boasts of easy-to-navigate features, a surplus of items, ready-to-spend buyers, and favorable marketing policies, beginners may still find it challenging to tap in. That means before anyone makes their first coin on Amazon, they must ask themselves three vital questions:
- 1. Why they should choose Amazon?
- 2. Who are the consumers?
- 3. What is the best-selling method to use?
This guide, luckily, outlines everything new sellers should know about two distinct selling methods, as well as the benefits of selling on Amazon. Specifically, we will show you how to become an Amazon Vendor.
Advantages Of Selling on Amazon
1. It Is Easier for Newbies to Start
Whether they have established businesses or getting started with online marketing, new Amazon sellers can easily create accounts and start trading. The platform has easy-to-follow steps and requirements to set up selling accounts. What sellers need is to follow Amazon selling policies, authenticate their product sources, and have valid documents needed during application. Moreover, although some categories or products may ask for pre-approval before they are allowed to sell, the process is also straightforward. What is more, sellers can use Amazon approval services to unlock restricted categories, products, or brands to get started.
2. Amazon Is Ideal for Sellers with Unique Products
Business dealing with unique items such as media products like eBooks, rare books, and those that need special treatment can also benefit greatly from Amazon. Based on the selling method sellers pick like Fulfilled by Amazon (FBA), Amazon can take over the responsibilities of storing, packaging, and shipping orders to customers at a small fee. This allows businesses to focus on sourcing products, shipping them to Amazon warehouses, and marketing them online.
3. Less Competition
We all agree that competition is everywhere, starting from physical to online stores. However, sellers switching to Amazon can experience less competition with increased demand for goods and services. The hardest struggle sellers can go through is to identify a niche with less competition, learn the market, and be ready to sell.
What Is an Amazon Vendor Account?
Most people know that the only way to establish their businesses on Amazon is by selling products directly to customers. However, that is one of how sellers can reach buyers as third-party entities. The other way is where established businesses sell directly to Amazon as first parties, then Amazon sells the products to customers. Such businesses or individuals are called Amazon Vendors.
So, what is an Amazon Vendor Account and how does it work? <?p>
Amazon Vendor Account or Vendor Central is a digital portal that allows established brands, manufacturers, or individuals to sell their products directly to Amazon through a first-party selling module (1P). Amazon then sells the products to customers through its channels. This creates more of a traditional wholesaler and retailer agreement, where vendors are wholesalers and Amazon acts as a retailer (first customer).
How Does a Vendor Account Work?
One significant feature of Vendor Central is that it is an “invites-only” program, where Amazon is the only one that invites vendors. That means Amazon itself analyzes companies and sellers and invites them once it thinks they are eligible to join. Those invited include:
- Manufacturers or brands whose products have a strong demand from shoppers.
- Established sellers doing well on the platforms with their products.
- Sellers with unique and attractive products that Amazon thinks will do well or have a high demand. Such products include trade shows and research.
Once invited, vendors can accept or decline the invitation. Those who accept need to agree to the terms and conditions before accessing Vendor Central. After creating the account, they can now select items they have in stock for Amazon to initiate purchases, which is done in the “Items” tab. The next thing is to input all details, including price, and wait for Amazon to finalize the order. Orders are mostly generated automatically once a week, based on demand.
Amazon Vendors and Sellers: What Is the Difference?
Business owners looking to work with Amazon should first understand how the platform works before sealing the relationship. This includes determining who is going to buy their products. While Amazon provides almost the same dashboard and selling tools for all businesses, sometimes what brings differences is the right of ownership and room for negotiation.
Typically, Amazon Vendors sell their products directly to Amazon as first-party sellers through Amazon Vendor Central. That means, after finalizing orders, Amazon has the power to set new prices and negotiate terms with consumers. This leaves Vendors with little to no control over their products again.Amazon Sellers, on the other hand, sell their products directly to consumers as third-party sellers (3P) through Amazon Seller Central. Unlike Amazon Vendors, sellers have control over their sales and can manage their orders, inventory, and customer service. They can also join any fulfillment method depending on how they want to manage their accounts.
Pros Of Being an Amazon Vendor
Joining the Amazon Vendor model comes with various advantages, including:
- Enhanced Customer Trust. With Amazon taking control over the selling part of the business, customers can easily gain confidence in certain products, the same way they trust Amazon. For instance, when repackaging products, Amazon can add tags such as “Ships from and sold by Amazon” which can have a great impact on customer trust. Vendors can also earn the Prime badge easily, a great way to earn more loyal buyers.
- Simplified Selling Process. When selling directly to Amazon, Amazon Vendors only have to worry about fulfilling purchase orders and billing Amazon. Others tasks such as fulfilling orders from multiple buyers are transferred to Amazon.
- Exclusive Promotional Programs. Amazon Vendors also have access to exclusive promotional programs such as Amazon Vine, Subscribe and Save, A+ Content, and Amazon Transparency. These programs can boost reviews, leading to higher rankings and more sales. </ul
Cons Of Being an Amazon Vendor
- It is an “invite-only” initiative.Although this can easily work for businesses with established product sourcing and selling logistics, it can be a blow to small vendors or those switching from the seller model.
- Limited control over inventory. Amazon Vendors lack control over their sales and cannot negotiate prices when entering into a contract with Amazon. They can also see their prices falling below their Minimum Advertising Price (MAP), especially when competing for the Buy Box.
- Longer term payments. Amazon Vendors can receive payments between 60 and 90 days, which can limit their operations. Moreover, they can incur various fees such as compliance and overstock fees, which are higher than what sellers pay.
Concluding Notes On Learning How To Become an Amazon Vendor
Whether businesses pick to go with Amazon Vendor or Seller Central, it all narrows down to the specific business metrics and the level of involvement as business owners. Sellers who would like to enjoy full control of their inventory and other factors such as pricing will greatly benefit from selling directly to customers.
Contrary, established distributors, manufacturers, or wholesalers who understand the business-to-business (B2B) selling model and have no time to deal with multiple orders can choose to become Amazon Vendors. In fact, learning how to become an Amazon vendor will indeed be advantageous.
Though, the next question is, what if businesses want to pick both approaches?
There is nothing wrong with choosing a hybrid or mixed selling approach. In this case, one can sell directly to Amazon as an Amazon Vendor and at the same time to consumers as an Amazon Seller. Taking both models can help sellers easily manage their sales through Seller Central while surrendering complex order fulfillment processes to Amazon through Vendor Central.