It is very tempting to sell your products on Amazon if you’ve a business. Amazon gives you instant access to the main European markets to promote your products and facilitates the buying process. It will surely help you to reach new potential customers and satisfy your existing ones who may also be Amazon buyers. You can sell on Amazon as a “Seller” or as a “Vendor”. The a main difference is who is actually selling the products. Here we’ll describe the pros and cons of these two Amazon selling options.
To sell on Amazon as a Seller
This option is open to any seller. Amazon charges sellers a monthly fee and commission on sales according to the product category. This option gives the seller more control as he or she remains in charge of product pricing and to markets them directly on the platform using the enhanced brand content options. If the seller doesn’t pay for FBA (Fulfillment By Amazon), he or she will be in charge of all complete logistics (shipments and returns) as well as direct communication with the customers which could be a great advantage when trying to satisfy unhappy customers.
The Seller mode will also give your company access to analytics data via the Amazon platform. With access to this data, you can work to reduce return rates, compare your pricing with your direct competitors, setup specific offers and discounts, etc. On the other hand, having control of your products’ marketing implies an important additional workload for your company.
With the Seller mode, your products won’t benefit form the “Sold by Amazon” label which significantly increases conversion.
To sell on Amazon as a Vendor
The Vendor mode is not open to every company. It is only available to those who have received an invitation (generally after being a seller for a while). Vendors sell their products directly to Amazon which then is in charge of listing and selling them. Vendors are only responsible for the back-end of the chain (inventory, shipment to warehouses and billing). They don’t have to manage the customer relationship.
Amazon Vendors benefit from the “Sold by Amazon” label and its higher conversion rate. Vendors also have access to AMS (Amazon Marketing Services) which provide opportunities to promote their products and increase traffic. Vendors are only charged a flat monthly fee and no commission on sales. They can sell an unlimited numbers of products and this includes the FBA (Fulfillment by Amazon) service.
There are some advantages to being an Amazon Vendor, as we’ve seen, but this mode implies some drawbacks, the main one being the margin: as Vendors are not in charge of pricing and cannot set a minimum price, they can experience a price drop. Vendors also have to be prepared and reactive to Amazon’s requests when dealing with logistics. Amazon is very demanding when it comes to maintaining an optimized stock level. Another drawback appears when your company launches a new product: Amazon has no sales historical data and won’t commit itself and buying it from you necessarily.
Although the final goal is the same, selling on Amazon as a Vendor or as a Seller is very different. If you are not invited by Amazon to sell as a Vendor, you only can access the Seller option. In the case that you get invited to become a Vendor, you should evaluate carefully both options as Amazon can quickly become a strategic partner with important sales volume. Your choice will mostly depend on your resources, the fees you’re willing to pay and the level of control you expect.
Do you want to make the most of your products on Amazon by improving their rankings or by launching advertising campaigns? Please get in touch with our Amazon experts! We are happy to help you to reach your sales objectives.
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