Find Your Brand Selling Model

Updated: Nov 11, 2021




Getting Started

So you decided to sell on Amazon but don’t know where to start? It can be a daunting task trying to decide which account would be best for you. Here we’ve provided an overview for each account type to compare the benefits and drawbacks of each one.

  • Individual Seller Account - Seller Central platform (SC)

  • Professional Seller Account - Vendor Central platform (VC)


Each account comes with it’s benefits and drawbacks that vary on the needs of the brand. You can have a “hands on'' approach where you, the seller, have full control of your online store from creating listings to shipping out to customers and handling the feedback. Likewise, you can have a hands-off approach and sell your products directly to Amazon and focus on advertising, product performance, and fulfilling purchase orders!


Choosing the right account type varies by brand and their costs, operations, and product supply.


Amazon Individual Seller account

Amazon’s Individual Seller Account provides access to what is called Seller Central. This is a platform that connects merchants and brands directly with customers. In this case brands are called ‘3P’ or 3rd-party sellers and sell directly to Amazon’s customers. Seller Central allows merchants and brands to manage their selling account, create and edit product information, make scheduling updates, manage customized promotions, orders and payments, and have direct contact with the customer.

SC offers various types of promotion options not available on VC. These can be used to boost sales or to deplete your inventory if needed.

  • Create a social media promo code (Share on social media or influencer marketing)

  • Create a coupon (percentage off or money off price)

  • Buy one, Get one

  • Prime Exclusive Deals

Everything you need to run your online store can be found on Seller University through a series of free training videos created to help you learn how to sell and manage your account. Just a few lessons on seller university will help you get started in by creating product listings faster, master key tools and applications, and help you understand product rules and restrictions. Persistent issues or concerns not addressed within Seller University can be submitted through Amazon Support available through the SC platform. Even the novice user can start selling on Amazon using Seller University.

You get the tools needed to manage your business such as performance metrics, advertising tools, performance overview, growth programs, and more on the SC platform.



Fulfillment

SC gives you the flexibility to fulfill your orders through MFN (merchant fulfilled network) or FBA (Fulfilled By Amazon). MFN fulfillment means you are picking the products, packing orders, shipping the products directly to the customer while also handling the exchanges, returns, and customer service questions that arise. FBA fulfillment is available both on SC and VC sending the products directly to Amazon’s warehouse. As orders are placed, Amazon picks, packages, and ships the products and charges applicable fees.

FBA thresholds on SC accounts can start off small but with increased sales performances, this threshold can increase based on Amazon’s algorithms. It’s good to note that you don’t have to choose one fulfillment method or the other for your entire catalog. You can have smaller, more detailed products fulfilled through MFN, and larger bulky items fulfilled via FBA for efficiency and convenience.

Amazon created Seller Fulfilled Prime (SFP) program allowing 3rd party sellers to display the Amazon Prime Badge. To be eligible for possible SFP, Prime performance requirements must be met during your SFP trial period. MFN provides the seller with more consumer data, but without all the prime membership and perks for customers to take advantage of the FBA format.

Gauging your operations and determining maximized profitability is key in determining which fulfillment method would be best for your brand.

  • If you are a major retail brand that does not want to deal with the complexity of seller central, dealing with customer issues and you do more than $50M or at least capable of doing $50M on Amazon, then VC may be a better fit for you as you’re managing Amazon PO, advertising, and promotion cadence.

  • If you are a brand that does $1M to $10M, consider using the seller central FBA. This grants you full control over the brand and you may be more profitable depending on the category and product price point.

  • If you are a smaller brand less than $1M, seller central is definitely the best fit for you, but then you have to determine if FBA or MFN is a better fit. (further articles for FBA and MFN).

Amazon Pay Account Reserve

Amazon Pay is a three tier policy that requires a reserve to manage financial liability created from transaction disputes from your customers. Every merchant starts at Tier 1 by default requiring 100% off funds received for processed transactions to be held for seven days after the transaction processing date. After seven days, the funds are automatically disbursed to the bank account on file. The amount held also includes unresolved transaction disputes which are chargebacks and Amazon Pay A-to-z Guarantee claims. Tier 2 is achieved after 1-year period and the reserve is adjusted to 3% of your daily processed payments over a 28 day average or the amount of unresolved transactions, whichever is greater. Reserve Tier 2+ is slightly different from the previous tiers. Being automatically moved to Tier 2+ is achieved by maintaining an Order Defect Rate (ODR) of less than 1% over a 60-day period. Your ODR is affected by Negative Feedback Rate, A-to-z Guarantee Claim Rate, and Credit Card Chargeback Rate. You can find your current ODR rating by logging into your seller account, hover over the Performance tab, and selecting Account Health. If your account exceeds the 1% threshold, your reserve account will automatically revert back to regular Tier 2 status.


Pros

  • Controlled retail pricing

  • Flexible FBA or MFN fulfillment

  • Enhanced Brand content

  • Coupons, promotions, Prime Deals, and more

  • Address customer feedback directly for resolution

  • Selling fees, shipping fees (MFN/FBA), and $0.99 fee for each item sold. Full Amazon fee schedule available here.

  • Gaining customer trust as your products are sold by “3rd party”, not directly from Amazon.

  • Managing your own advertising campaigns that are not performing well

  • Forecast your own inventory by developing your own system for inventory management

  • Amazon Pay Account Reserve

Cons

  • Professional accounts will cost $39.99 every month with additional fees, but are not charged “per item sold fee $0.99” like individual seller accounts.

  • Amazon owns the brand listing, content, cost, etc. Brands can make “suggestions” however, Amazon has ultimate say.

  • Keeping up with Purchase orders. Vendors that struggle with maintaining stock and/or quickly fulfilling orders open themselves up to significant chargebacks


Amazon Professional account

Amazon’s professional account provides access to what is called Vendor central (VC). This platform is designed to help manufacturers and distributors interact. The brand sells the products in bulk through Purchase Orders or Born to Run requests directly to Amazon. Amazon’s retail team re-sells these products making your brand the supplier and first-party seller ‘1P’. The better the brand performs on Vendor Central, the more Amazon purchases via Purchase Orders thus increasing the brand’s revenue. The easiest way to identify a company that is selling through vendor central is the phrase “Ships from and sold by Amazon.com” on product listings.

Now that Amazon “owns” the purchased products, any feedback regarding content, titles, etc. provided by the supplier are considered “suggestions” and are therefore not obligated to reflect as the brand intends. Amazon is good about accepting most suggestions, however, they are not obligated to do so. The VC features and reports help you create a great experience for our customers. Our goal is to establish a successful business relationship with minimal supply chain costs so that together we can create the best possible experience for our customers.

If you are a major retail brand and Amazon has invited you to vendor central be aware that you have no control over customer satisfaction, customer service, or customer data. Be aware that some of these larger companies still have people working for them and they pay them a fee. They still have all the resources to work on Amazon but they take the route of least resistance. Vendor central is ideal for brands who have a good channel of distribution.


Pros

  • Customer Confidence and loyalty with “ Amazon Prime” badge

  • Customer Outreach by FBA tools including: FBA Subscribe and Save, FBA Small and Light, and FBA Export to help maximize sales.

  • Simplified Business model focused on filling POs, billing, and avoiding chargebacks

  • Amazon 24/7 customer support

  • Amazon Marketing Recommendations

  • Qualify for top placement on product detail pages

  • Professional accounts will cost $39.99 every month with additional fees, but are not charged “per item sold fee $0.99” like individual seller accounts.

  • Amazon owns the brand listing, content, cost, etc. Brands can make “suggestions” however, Amazon has ultimate say.

  • Keeping up with Purchase orders. Vendors that struggle with maintaining stock and/or quickly fulfilling orders open themselves up to significant chargebacks

Cons

  • Selling fees, shipping fees (MFN/FBA), and $0.99 fee for each item sold. Full Amazon fee schedule available here.

  • Gaining customer trust as your products are sold by “3rd party”, not directly from Amazon.

  • Managing your own advertising campaigns that are not performing well

  • Forecast your own inventory by developing your own system for inventory management

  • Amazon Pay Account Reserve

Choosing between seller and professional accounts includes many variables:

  • What are selling and how much inventory do you have?

  • Can you maintain FBA purchase orders or do you prefer to sell directly to customers?

  • Do you want to manage your own costs or are you willing to sell products “at cost” to Amazon?

[GRAPHIC SHOWING SELLER ACCOUNT VS VENDOR ACCOUNT]







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