Amazon has 3 different Third Party Seller programs:
- Merchant Fulfilled (managed via Seller Central)
- Fulfilled by Amazon (managed via Seller Central)
- Vendor Central (managed via Vendor Central)
Essentially, Fulfilled by Amazon or FBA is where you ship your inventory to Amazon and they fulfill each order as it comes in.
Merchant-fulfilled is where you fulfill each customer order yourself.
Vendor Central is where Amazon makes a wholesale purchase order for your products. Who fulfills it depends on the specific terms agreed between Amazon & you - but usually Amazon fulfills each order.
Vendor Central - Benefits
- Amazon is purchasing your inventory upfront. Essentially you have pre-sold a large quantity of inventory at one time, rather than waiting for individual sales to come in from customers.
- More customizable product listing pages. Amazon Vendors have the ability to add images, videos, and more customized buyer message on their product pages. Seller Central users can only add rudimentary HTML like bolding and bullet points to their product description
- Your products will be eligible for the “Prime” program. This is a program where users pay an annual fee to get free 2-day shipping on Prime eligible items. Many consumers will ONLY buy Prime eligible items, and they are usually willing to pay up to 20% more for an item that’s prime-eligible than one which is not. Note: the FBA program also
- Items shows as “Sold by and Shipped from Amazon”. Consumers often trust Amazon more than 3rd Party sellers so this messaging may result in higher sales & conversions.
Vendor Central - disadvantages
- Longer payment cycle. Amazon negotiates 90-day payment terms with most Vendors. This can be a challenge for companies from a cash flow perspective. The Seller Central programs, on the other hand, are on a 2-week payment cycle.
- Amazon will get deeper insight into your product’s profitability & demand. Some Sellers get nervous about giving Amazon such control over their products. The fear is that Amazon will decide to directly compete with popular products by sourcing their own product. One could argue that this is still the case with Seller Central programs, however Amazon has less insight into your actual profitability since they are not making wholesale purchase orders from you.
- Vendor Central is invite-only. Amazon only approaches high-volume sellers to invite them to Vendor Central. By comparison, Seller Central is relatively easy to get set up on depending on the category you’re selling in.
- Unable to edit your product listings on the fly. While customization options are far greater on Vendor Central, you must contact Amazon to make any changes to your listing after it’s gone live. This is different to Seller Central where you can make small edits and changes to your listing’s pictures & descriptions at will.
We always recommend that brands start out selling via FBA. Doing so give you the ability to have your items be "Prime eligible" which is a huge selling point to customers. And while Vendor Central customer may be something that your company aspires to, you must first demonstrate sufficient demand for your product to Amazon and get that special invite to the program.