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Amazon Seller and Amazon Vendor are the two sales options that this marketplace offers to eCommerce businesses that are looking to sell on its platform. In general, they’re characterised by the fact that in the Amazon Seller system, the eCommerce business is the owner of its products and it sells them directly to the customers through the marketplace. On the other hand, with the Amazon Vendor option, you become an Amazon supplier, which means that the eCommerce store sells its products to the American giant, which, in turn, sells them to customers. Your choice of one or the other will be determined by Amazon’s own requirements, your pricing strategy, and your business objectives. Here at Minderest, we’ll explain the main differences as well as the pros and cons of both sales options.
The differences between the Amazon Seller and Amazon Vendor systems
1. Logistics management
The eCommerce companies included in the Amazon Seller system must continue to manage their product shipments, logistics system, and customer service. Depending on the needs of the brand, you can opt for an FBA or FBM model, thus deciding whether or not to cede the logistics and delivery of your products to Amazon—but only the logistics.
With the Amazon Vendor system, the brand sells its products to Amazon periodically at an agreed-upon price and forgets about the rest. This is a BTB transaction with the marketplace where no further steps are necessary. The products become the property of Amazon, which is then responsible for selling them to users.
2. Control over product prices
While eCommerce businesses using the Amazon Seller system have greater autonomy and can change the prices of their products of demand or based on their competitors’ prices, the brands using Amazon Vendor have much more limited power. Amazon pays for the total number of items that it purchases and chooses the final selling price, which means that the eCommerce revenue will always be the same, even if inelastic demand favours a price increase.
The benefits and drawbacks of Amazon Seller and Amazon Vendor
The main benefit offered by the Amazon Seller system is that it’s easy to access and companies can subscribe and unsubscribe at any time. This is a mechanism that contributes to the growth of small businesses and helps them optimise their sales. On the other hand, to access the Amazon Vendor system, eCommerce businesses need to receive an invitation from the marketplace first, based on their prestige and sales volume as well as meeting certain minimum conditions for access.
We can also find the following pros and cons:
| Pros | Cons |
Amazon Seller | Sales in any international market operated by Amazon | The obligation to comply with Amazon’s conditions in terms of delivery times and customer service |
Advertisements targeting a greater number of potential customers | Financial costs: registration fee and commissions on sales | |
Increased revenue | The eCommerce store competes with Amazon itself | |
Amazon Vendor | Extra customer trust in product carrying the Amazon brand | The supplier’s brand image is secondary |
Access to powerful advertising tools within the marketplace | The eCommerce store must be able to respond to Amazon’s demand | |
Access to Amazon Prime subscribers | The eCommerce store has no interaction with its buyer persona |
What both systems share is that they require eCommerce stores to comply with a series of fees and commitments. Therefore, before you decide to sell through either of the two systems—whether Amazon Seller because you want to increase your sales or Amazon Vendor because Amazon considers you to be a brand with a good reputation and reach—analyse the strategies used by your competitors and set the most appropriate prices for your products within or for the marketplace. For this, you can use tools for monitoring prices on Amazon. This software is very useful given the high rate at which the prices of products change on this platform.
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