Did you know that third-party sellers now generate over 60% of Amazon’s total sales?
For my money, Amazon Seller wins for its flexibility and profit punch—ideal if you’re hungry to grow your own empire. But if you’re a heavy hitter craving ease, Amazon Vendor delivers. Weigh your setup, goals, and grit, then charge toward the option that lights your fire.
With such impressive numbers, deciding between becoming an Amazon Seller or Vendor can dramatically shape your business’s success.
Let’s dive into both options and uncover which model best aligns with your goals.
Brief Overview of Amazon Seller and Amazon Vendor
Amazon Seller
As an Amazon Seller, you operate under Amazon’s Seller Central. This platform allows you to list your products directly on Amazon and sell them to consumers. You retain control over your pricing, inventory, and marketing strategies. Amazon Seller offers two main fulfillment options:
- Fulfillment by Amazon (FBA): Amazon handles the storage, packaging, and shipping of your products.
- Fulfillment by Merchant (FBM): You manage the storage, packaging, and shipping.
Amazon Vendor
Becoming an Amazon Vendor means selling your products directly to Amazon in bulk. Amazon then sells these products to consumers as their inventory. Vendors operate through Amazon Vendor Central, which is by invitation only. As a vendor, you receive purchase orders from Amazon and ship the products to them, and Amazon takes care of the rest, including pricing and fulfillment.
Key Differences Between Amazon Seller and Amazon Vendor
Here’s a comparison table that outlines the key differences between Amazon Seller and Amazon Vendor:
Here’s the revised comparison table in text format without emojis:
| Aspect | Amazon Seller | Amazon Vendor |
|---|---|---|
| Platform | Seller Central | Vendor Central (invitation only) |
| Control Over Pricing | Full control | Limited control (Amazon sets the prices) |
| Inventory Management | Managed by the seller (FBM) or Amazon (FBA) | Managed by Amazon |
| Fulfillment Options | FBA or FBM | Amazon handles all fulfillment |
| Marketing Tools | Sponsored Products, Sponsored Brands, Amazon Stores | A+ Content, Amazon Vine |
| Payment Terms | Immediate payment from customers | Longer payment terms from Amazon |
| Brand Presence | Brand Registry, A+ Content, Amazon Stores | A+ Content, managed by Amazon |
| Operational Complexity | Requires active management of inventory, shipping, and customer service | Simplified operations (Amazon handles logistics and customer service) |
| Profit Margins | Potentially higher margins (dynamic pricing) | Lower margins (wholesale pricing) |
| Customer Trust | Moderate (dependent on seller reputation) | High (sold by Amazon) |
| Access to Purchase Orders | Not applicable | Regular bulk purchase orders from Amazon |
| Scalability | High (especially with FBA) | High (Amazon’s logistics) |
| Competitiveness | Highly competitive | Less competitive due to limited vendor invitations |
Inventory Management
- Seller Central: Managed by sellers. Sellers are responsible for maintaining stock levels and ensuring product availability.
- Vendor Central: Managed by Amazon. Vendors ship products to Amazon’s warehouses, and Amazon takes over inventory management.
Fulfillment and Logistics
- Amazon Seller (FBA): Amazon handles logistics, which can enhance delivery speed and customer satisfaction but incurs FBA fees.
- Amazon Seller (FBM): Sellers handle their logistics, which can reduce costs but require robust infrastructure.
- Amazon Vendor: Amazon manages all logistics, providing a seamless experience for the vendor but potentially higher costs due to bulk orders and vendor agreements.
Marketing and Promotions
- Amazon Seller: Sellers can leverage Amazon’s advertising tools like Sponsored Products, Sponsored Brands, and Amazon Stores to enhance visibility and drive sales.
- Amazon Vendor: Vendors have access to additional marketing options like A+ Content and Amazon Vine, which can boost product credibility and conversion rates.
Pricing and Profit Margins
- Amazon Seller: Sellers set their prices, allowing for dynamic pricing strategies to respond to market changes. Profit margins can be higher but are influenced by Amazon fees.
- Amazon Vendor: Amazon sets the prices, which can lead to competitive pricing but may result in lower margins due to wholesale pricing and vendor agreements.
Sales Model
- Seller Central: Third-party sellers list and sell products directly to customers. Sellers manage their own listings, inventory, and pricing.
- Vendor Central: Amazon buys products from vendors and resells them to customers. Amazon handles listings, inventory, and pricing.
Payment Structure
- Seller Central: Payments are made directly to the seller per sale, providing quicker access to funds.
- Vendor Central: Amazon pays vendors directly, usually on a net-60 basis, which can delay cash flow.
Fees
- Seller Central: Sellers incur per-sale fees, including referral fees and variable closing fees. Additional fees apply for FBA services.
- Vendor Central: No selling fees for vendors. Amazon handles inventory costs, but this is reflected in the wholesale pricing offered to vendors.
Fulfillment
- Seller Central: Sellers can choose between Fulfillment by Merchant (FBM) and Fulfillment by Amazon (FBA).
- Vendor Central: Fulfillment is handled entirely by Amazon, simplifying logistics for vendors.
Customer Interaction
- Seller Central: Direct interaction with customers allows sellers to handle customer service and build relationships.
- Vendor Central: Limited interaction, as Amazon handles most customer service and returns.
Marketing Tools
- Seller Central: Access to a wide range of advertising tools, including Sponsored Products, Sponsored Brands, and Amazon Stores.
- Vendor Central: Access to A+ Content and Amazon Vine, providing enhanced marketing support.
Eligibility
- Seller Central: Open to all sellers meeting Amazon’s criteria.
- Vendor Central: Invitation-only, typically for established brands and manufacturers.
Which Model is Right for Your Business?
The choice between Amazon Seller and Amazon Vendor depends on your business goals, resources, and market strategy. Consider the following factors:
- Control: If maintaining control over pricing and inventory is critical, Amazon Seller might be the better choice.
- Scalability: If you seek to scale quickly without significant investment in logistics, FBA under Amazon Seller can be advantageous.
- Operational Simplicity: For businesses looking to simplify operations and leverage Amazon’s logistics, Amazon Vendor offers a compelling solution.
- Brand Presence: Sellers who want to build and maintain a strong brand presence may find Amazon Seller more beneficial.
- Bulk Orders: Manufacturers and large suppliers who can handle bulk orders and prefer consistent purchase orders may prefer Amazon Vendor.
Advantages of Being an Amazon Seller
Greater Control Over Pricing and Inventory
As an Amazon Seller, you have the flexibility to adjust prices based on market trends, competitor pricing, and promotional strategies. This control can lead to higher profit margins and better inventory management.
Access to Detailed Sales Analytics
Amazon Seller Central provides comprehensive analytics and reporting tools that offer insights into sales performance, customer behavior, and inventory levels. These insights are crucial for making informed business decisions.
Enhanced Brand Presence
Sellers can create their brand presence through the Amazon Brand Registry, which provides access to enhanced content options like A+ Content and Amazon Stores. This helps in building a recognizable and trusted brand on Amazon.
Scalability
The FBA program enables sellers to scale their operations without the need for significant investment in logistics infrastructure. Amazon’s vast network ensures that products are delivered swiftly to customers.
Advantages of Being an Amazon Vendor
Simplified Operations
Amazon handles most of the operational aspects, including logistics, customer service, and returns. This can free up resources and time for vendors to focus on other business areas.
Increased Trust and Credibility
Products sold directly by Amazon often carry more credibility with consumers. This trust can translate into higher sales and customer loyalty.
Access to Enhanced Marketing Tools
Vendors have access to exclusive marketing tools like A+ Content and Amazon Vine, which can significantly enhance product visibility and attractiveness. These tools help in creating rich product descriptions and gathering early product reviews.
Bulk Orders and Consistent Purchase Orders
Vendors benefit from bulk purchase orders from Amazon, which can lead to consistent and predictable revenue streams. This can be particularly advantageous for manufacturers and large-scale suppliers.
Challenges of Each Model
Challenges for Amazon Sellers
- Competition: The seller marketplace is highly competitive, and standing out requires strategic marketing and pricing.
- Fees: Amazon charges various fees, including referral fees, FBA fees, and storage fees, which can impact profit margins.
- Inventory Management: Effective inventory management is crucial to avoid stockouts or overstocking, which can incur additional costs.
Challenges for Amazon Vendors
- Reduced Control: Vendors have limited control over pricing and product presentation, which can impact brand perception.
- Invitation Only: Vendor Central is an invite-only platform, limiting access to many businesses.
- Payment Terms: Vendors may experience longer payment terms, which can affect cash flow.
Quick Comparison: Seller vs. Vendor
- Sales Volume: Sellers sold 4.5 billion items (U.S., 2023); Vendors fuel Amazon’s own retail engine (harder to quantify but massive).
- Market Share: Sellers own 61% of units sold; Vendors hold 39%.
- Accessibility: Sellers: open to all. Vendors: invite-only.
- Control: Sellers tweak prices and listings; Vendors hand that power to Amazon.
- Profit: Sellers keep more per sale (e.g., $42.50 on $50 after fees); Vendors take a wholesale hit (e.g., $20 on $50).
Why Choose the Amazon Seller Model?
Going the seller route means you’re in the driver’s seat. You maintain complete control over pricing, branding, and customer interactions. This flexibility allows you to adapt quickly to market shifts and consumer demands, potentially leading to higher profit margins.
Sellers manage their inventory directly or through Fulfillment by Amazon (FBA), which streamlines logistics while maintaining autonomy1. If building a strong brand identity and engaging directly with your customers matter most, this model is your best bet.
Why Choose the Amazon Vendor Model?
If you’re an established brand looking for simplicity and scale, becoming an Amazon Vendor could be appealing. Vendors sell products wholesale directly to Amazon, which then handles everything from pricing and fulfilment to customer service.
Although profit margins might shrink due to wholesale pricing, this model offers steady bulk orders and reduces operational headaches. Your products will be labeled “Sold by Amazon,” boosting customer trust and credibility instantly.
