What is the Amazon Vendor Program and who is it suitable for?
At Amazon, you can generally sell in two different ways: through the Amazon Vendor Program or as a Seller. This blog will discuss how the program works, what it can offer you, and what disadvantages it has.
Amazon Vendors are in a B2B relationship with the online giant
In contrast to the Seller program, as a Vendor you sell to Amazon and not through Amazon to the end consumers. Thus, you enter into a completely normal business relationship with the e-commerce giant. This then sells your products further to the consumers.
Amazon Vendors deliver their goods in large quantities to the online giant, and this takes care of sales, revenue monitoring, customer contact, and last but not least, pricing. Interested parties negotiate terms with Amazon in advance and provide price lists. Amazon compares these with competitor offers and creates an offer based on this.
If you accept this offer, the first delivery can take place about a month later. Then, as a Vendor, you must upload product tables in your Amazon account because these are needed to create the product detail pages. You can add these tables in Amazon Vendor Central after logging in under the Inventory tab.
The advantages of the Amazon Vendors program
Those who do not actively participate in marketplace activities as a Seller also have their advantages. In addition to the ease of work – for example, because Amazon takes over tasks such as customer support, returns management, and revenue monitoring – there are additional benefits:
Support from the professionals: The Amazon Vendor Manager
The Amazon Vendor Services program supports you as a Vendor on Amazon.de to ensure and strengthen your success in the long term. This is the promise of the marketplace operator.
As mentioned above, Amazon Vendors essentially act as suppliers to the online giant. Therefore, you will likely work a lot with a Vendor Manager at Amazon. This person represents the company side and will negotiate the contract terms with you, among other things.
Other tasks include managing marketing activities and customer satisfaction as well as ensuring profitability and achieving sales targets. However, since managing Amazon Vendors is a time-intensive and thus costly task for Amazon, it may be that smaller Vendors receive less support than larger ones.
Customer trust bonus
One argument that is often made is that customers trust the online giant. Amazon Vendors supply the marketplace operator, which then acts as the seller to the end customers. Sellers, on the other hand, sell directly to the customers and therefore have to earn their trust first. The question with this argument, however, is how often buyers really question whether they are buying directly from Amazon itself or just on its marketplace.
The disadvantages of operating an Amazon Vendor Account
Of course, the Amazon Vendors program also has its limitations, which can negatively affect the needs of the merchants.
Dependency
On one hand, there is a certain dependency that you enter into as an Amazon Vendor. Experiences of some Vendors show that the contract terms of the online giant have become quite strict. In the end, you have to decide whether you want to play by the rules of the e-commerce giant or not.
In addition, Amazon Vendors are dependent on the online giant placing further orders with them. For various reasons, such as declining demand or insufficient profitability, it can happen that Amazon orders fewer or not enough goods from you anymore.
Also regarding the product detail pages and their publication, you as an Amazon Vendor in Germany are dependent on Amazon.de. It is suspected that the listings of Vendors are scrutinized more critically. Therefore, it takes several weeks for your items to be published.
No influence on price and margin
Like any supplier, Amazon Vendors also have no influence on pricing, as this is the responsibility of Amazon. Some Amazon Vendors have had the experience that low prices, for example after a special promotion, did not return to the level before these offers.
Another disadvantage that some Vendors see at Amazon is that customers may get the impression of an inconsistent pricing strategy. The online giant is increasingly relying on an algorithm that adjusts its own prices to those of other offers. This can lead to price discrepancies between the marketplace and the own online shop.
Since Amazon Vendors cannot influence pricing, you also lose the ability to control your margins. Whether the items are more frequently in the Buy Box due to an aggressive pricing policy from Amazon in the long term and thus increase sales figures, or whether the price is so low that the sales figures can no longer compensate, can vary from case to case.
Anything else?
Of course, there are not only advantages and disadvantages to the Amazon Vendors program. Here are a few more interesting facts:
You must be invited to the Amazon Vendor Program
While you can register relatively easily for the Amazon Seller program, it takes quite a bit more to join the ranks of Amazon Vendors. You cannot apply for this; instead, you must wait for an invitation from Amazon. What criteria the e-commerce giant uses for this remains, as often, behind closed doors. However, it is clear that it primarily targets companies that operate in compliance and fairness while achieving high sales. Admittedly, these are also the minimum requirements that every merchant should have for their suppliers.
It also seems that the Amazon Vendors program primarily targets large companies. “Amazon Vendor Express” was a program that attracted smaller and younger businesses that had not yet qualified for Vendor Central. However, it was discontinued in 2018.
Until a few years ago, Amazon Vendors had more advertising options than Sellers
For a long time, tools like A+ Content or Amazon Vine were reserved for Vendors. However, this has changed significantly, as Amazon has recognized the revenue potential of its advertising division.
Nowadays, there is hardly any difference in terms of advertising between an Amazon Vendor and a Seller. A+ and Vine have long been made available to Sellers as well, and industry experts, such as Ronny Marx, believe that the two variants of Seller and Vendor will merge in the long term.
The convergence of Sellers and Amazon Vendors is also evident in the area of data. For a long time, Sellers had a significant advantage here, as they had access to much more insight regarding their performance, which was either completely inaccessible to Vendors or only available at very high costs. This area has also changed dramatically recently. Nowadays, both Amazon Vendors and Sellers have access to a wide range of data free of charge.
Amazon Vendor vs. Seller
Which model you should choose, or whether you should even cancel your access to the Amazon Vendor Portal, of course depends on your own needs and preferences.
If you do not want to deal with topics such as winning the Buy Box, but would rather negotiate a supplier contract with Amazon and can possibly forgo margin and control for that, the Amazon Vendors program could be just right for you.
However, if you want to manage the marketplace yourself and retain control over marketing campaigns, pricing, etc., you are definitely better off with the Seller program. Here, it is advisable to take a closer look at tools that can support you, as only with intelligent automation can you sell successfully on Amazon in the long term. Starting from tools that assist you with inventory management and accounting to those that make you more competitive. A good repricer, for example, can help you win the Buy Box against Amazon yourself!
If you cannot decide because you see a future in both models, you might also consider being both an Amazon Vendor and a Seller at the same time. However, keep in mind that this hybrid model needs to be well thought out. If you do not have extensive know-how of both models yourself, we advise you to consult a corresponding agency.
Frequently Asked Questions
Amazon Vendors are merchants who supply their goods to Amazon. Amazon then sells these to the end customers through its online platform.
Through Vendor Central, Amazon vendors can manage their business. For example, product tables can be uploaded there.
Image credits in the order of the images: © elenabsl – stock.adobe.com /© Visual Generation – stock.adobe.com /© Brad Pict – stock.adobe.com
