In this article we will unravel the question, what is better for my brand, Vendor Central or Seller Central? And if I’m on Seller Central should I go MFN or FBA? We will help you make sense of all this new jargon and acronyms.
Often you could be on both, but we don’t recommend it.
Vendor Central is first party basis only. And in most cases, the vendors are well established brands. In other words, if your already fulfilling purchase orders with other retails and you're a massive brand, you may want to go into Vendor Central simply because it’s easier.
On the flip side, there are already a ton of big brands on the Seller Central so don’t shy away from SC just because you're a “big brand”. However, if you want to submit products to Amazon, have the purchase orders to go through pallets, or large quantities, and you want Amazon to do the majority of that leg work, then Vendor Central may be a conducive platform for you.
Some of the challenges with Vendor Central:
Amazon is not a price leader, they are a price follower. If you already sell products at other retailers such as Target or Walmart, be aware that if any of those other platforms have a lower price point on your products, then Amazon will always match those prices. For example if you are running a super promotion just at Target and Amazon detects that, the algorithm will then price match on that product for the length of that promotion.
The other complexity with Vendor Central is the pricing portion. Aside from the customer pricing, there is the cost to Amazon. Amazon has accruals, then you sell to Amazon at a certain price, and then Amazon takes those accruals. But there’s also a lot of other fees to be aware of. You need to abide by certain rules on Amazon to have an “adequate performance” so they won’t charge you additionally. But you have to watch the fees from Amazon very closely. At Trisbell, we spend a lot of time looking into invoicing from Amazon, which is a pain in the neck.
To summarize the pro’s and con’s of Vendor Central or first party basis:
As a big brand, it is advantageous to sell large amounts of product
You won’t have total control over pricing
The accounting can be a nightmare
There are more added complexities with Vendor Central but these are the biggest ones. Click here to watch our video on Vendor Central accounting where we get into the nitty gritty stuff.
Seller Central more of a sale service. You won’t have access to the Amazon Support Team unless you have a seller success executive who will “help you” with the process but usually has a limited amount of time. There are two major sectors of Seller Central. FBA and MFA.
FBA (Fulfilled By Amazon) - You allow Amazon to ship directly to the customers.
MFN (Merchant Fulfilled Network) - You ship the product directly to the customer.
FBA is amazing, you just ship the products to Amazon and they distribute them for you. It is also a nightmare because of lead time (especially in todays economy with shipping delays), and there’s a ton of complications on the logistic side to be aware of. Once you ship your product to Amazon, your looking at a wait of 2-3 week for the products to be checked into Amazon to be ready to be sold to customers. The other issue with, this is that Amazon is now doing price matching to be competitive on seller central. And they use the FBA model in order for you to do that.
What this can look like is the following: If there’s a product on Amazon you’d like to sell for $12 but another retailer has it for $8, then Amazon will request for you match or be lower than $8 to be more competitive on the Amazon eco-system. If you don’t comply, they will pause that product and and remove what we call the “buy box”. Again, Amazon is not a price leader, they are a price follower.
MFN is great because you sell the products directly to the customer and you use the Amazon platform to do so. You get to control the pricing, shipping, everything. The challenge with this is that most customers want to get their product in two days. And yes, we know it's frustrating that everyone needs to have immediate gratification… But if you cannot ship your product in a short period of time, then you’ll have a conversion issue.
To summarize the pro’s and con’s of FBA vs MFN:
If you know you already want to sell on Amazon, you now need to take look into the complexities of Vendor Central vs Seller Central. If you have any questions, please let us know. Check out the rest of our articles to learn even more about the complexities of Amazon. Send us an email email@example.com if you want to learn more about what we do, how we do it and how we can partner together.