Selling on Amazon: 2 (+1) business models
Who can sell on Amazon? Brands? Retailers? Both? And in what ways?
First of all, to sell on Amazon it is necessary to create a seller account. The procedure is simple, free, and takes a few minutes.
Amazon offers the possibility to choose between two profiles on the marketplace: Amazon Vendor and Amazon Seller.
Using the Vendor program, a brand or manufacturer sells products directly to Amazon, which in turn resells them to end customers.
Users see these items with the badge “Sold and shipped by Amazon.” With the Vendor model, products are therefore sold on Amazon Retail.
Amazon Seller (Amazon Retail)
With the Amazon Seller profile, the brand or distributor sells their products on Amazon to end users.
The Seller selling mode is also known as Amazon Marketplace.
Amazon Seller (Amazon Marketplace)
Amazon Vendor vs Amazon Seller: main differences between the two accounts
If you want to sell on Amazon, it is important to know that there are two possibilities: being a Seller or being a Vendor. However, it should be noted that the only way to become a Vendor is through a direct invitation from Amazon, addressed to distributors and manufacturers with exclusivity. On the other hand, a Seller Central account can be opened by any seller.
So, who is the Vendor? A direct supplier of Amazon, who orders goods at a wholesale price, directly from the production line, and commits to distributing them on the marketplace, through order and shipping management. In the case of the Vendor, the wording “sold and shipped by Amazon” is present.
And the Seller? They can choose whether to handle shipping independently or rely on Amazon’s logistics. In the first case, the Seller directly manages orders and inventory; in the second case, they systematically replenish products and prepare them for logistics.
Being a Vendor or a Seller: pros and cons
Let’s now discover the advantages of each selling model.
The table below highlights some important differences between Vendor (Amazon Retail) and Seller (Amazon Marketplace).
|
|
AMAZON VENDOR |
AMAZON SELLER |
|
Who sells the product to the end user |
Amazon |
Seller (Brand, Distributor, Partner) |
|
Access to the program |
Invitation-only |
Open to all |
|
Price control |
Amazon sets the prices |
The Seller sets the prices |
|
Margins |
Reduced. The Vendor sells the products to Amazon at the wholesale price |
The Seller is free to set their own prices and margins |
|
Choice of products to sell |
Amazon chooses the products to purchase from the Vendor (Brand) |
It is the Seller who chooses the products to sell on Amazon |
|
Quality content control |
Amazon handles the product listings. The Brand “loses” control over the content |
The Seller has full control over the listings and brand content |
|
Catalog creation |
At Amazon’s expense |
At the Seller’s expense |
|
“Sold by Amazon” badge |
Yes |
No, the product appears as “Sold by [seller name]” |
|
Logistics |
The product is stored and distributed by Amazon’s FBA logistics |
The Seller can use their own logistics (FBM – Fulfilled by Merchant) or FBA. In this case, the product is shipped by Amazon |
|
Customer Service |
At Amazon’s expense |
At the Seller’s expense, who must have a multi-language, 24/7 customer service |
|
Invoicing |
At Amazon’s expense |
At the Seller’s expense |
|
Returns management |
At Amazon’s expense |
At the Seller’s expense |
|
Possible cash-flow risks |
Yes, Amazon pays Vendors within 60-90 days |
No, the Seller receives payment within 2-4 weeks of the sale |
|
Need for repricing systems |
No |
Yes, to win the Buy Box it is important to manage price competition effectively to optimize sales and margins |
|
Marketing tools |
The Vendor has access to a wide range of marketing tools (Sponsored Display, Sponsored Brand, etc.) |
Sellers have more limited marketing tools unless they have Brand Registry |
|
Amazon Brand Store |
Yes |
Only if the Seller has Brand Registry |
|
A+ content that enriches product listings |
Yes |
Only if the Seller has Brand Registry |
Amazon Vendor vs Amazon Seller: what are the costs?
An individual Seller account has no opening costs and allows you to sell up to 40 products at a selling cost of €1.00 per sale. A Seller Pro plan, on the other hand, costs €39/month with no sales limit.
For this category of account, Amazon commission fees on sales must also be considered, which are around 15%. To these costs, shipping expenses must be added if managed independently, or the cost of Amazon logistics if orders, shipping, and returns are handled by Amazon.
For the Vendor category, there are no costs related directly to logistics or sales, but rather a margin on the products. Amazon offers a contract to purchase products at a wholesale price, together with certain conditions, including the guaranteed margin on the merchandise.
In conclusion, both Amazon selling models have their pros and cons.
There is no perfect solution for everyone: the choice between the two models depends on the peculiarities and resources of each company.
To continue to delve into the topic, you can download the Free Guide “Selling on Amazon: How to Choose the Best Strategy.”
Is there a third option?
There is, however, a third selling strategy in addition to the Vendor and Seller programs: relying on a Specialized Seller who possesses the technology, skills, tax requirements, and experiences necessary to maximize penetration on the world’s most important marketplace.
In this way, brands derive the maximum benefit from the Seller profile without having to equip themselves with organizational structure and know-how. The RefrigiWear brand’s story explains well how this third selling model works and what the real advantages are.
The growth of RefrigiWear on Amazon