How does Amazon Vendor work?

What are you going to read about?

1. Amazon Vendor or Seller? Learn the differences
2. How does Amazon Vendor work? Advantages and requirements
3. What is Amazon Vendor and how to become one?
4. Vendor and Seller Hybrid Model
5. Conclusions

 

Amazon Amazon Vendor or Seller? Learn the differences

  The Amazon platform offers 2 sales models – Amazon Seller Central and Amazon Central Vendor. How does Amazon Vendor work and what actually is Amazon Seller?

Amazon Seller – Who is your customer?

The basic model for new sellers is the Seller model, in which you sell directly to the end customer (consumer) as a third party on the platform. As a Seller, you can choose between 2 sales models:

• Amazon FBM (you are responsible for the entire sales process)
• Amazon FBA (with shipment from Amazon’s logistics centres)

We extensively explored these models in our previous article. FBA or FBM – Which Amazon logistics model to choose?

Amazon Vendor – Who is your customer?

So how does Amazon Vendor work exactly? Vendor transactions are done in a B2B model, not a B2C model. You sell goods directly to Amazon, which then distributes them further. Sales are wholesale, with Amazon handling all the customer service, returns, and also pricing. Interesting fact: Amazon usually places orders for Vendor goods twice a week – on Mondays and Wednesdays. 

How does Amazon Vendor work? – Advantages and requirements

  Receiving an invitation to join the Vendor Programme can spark many questions. The many benefits of operating in this model come with certain requirements and challenges.

Advantages of Vendor model

The benefits of joining the program are provided below.

• Constant sales channel – orders are regular (usually twice a week, sometimes more often), giving you more certainty of cash flow. It allows you to better plan your orders, production and logistics.
• Optimised shipping time and costs – instead of multiple small shipments, you send goods collectively to Amazon’s warehouse. Orders are usually forwarded to the logistics centres relevant to the marketplace. For Vendor DE, these are warehouses located in Poland, the Czech Republic, and Germany.
• Prestige and better brand perception – products are marked as Prime, and it is much easier to receive an Amazon’s Choice badge. This has a positive impact on their perception by potential customers. Selling directly through Amazon increases credibility and improves brand positioning.
• No end-customer service – Amazon takes over all parcel packing and customer service issues, including returns and complaints of goods.
• Ability to join Born2Run – a special programme where you can dedicate products to Amazon. This gives you the opportunity to get products onto the platform faster and fill their stock.
• Selling at net prices in accordance with the rules on intra-community delivery of goods.
• Amazon Vine is a programme within Vendor that lets you collect Vine credits. Vine credits can be used to send goods to Amazon reviewers. This makes it possible to obtain highly positioned product reviews.

 

Requirements and challenges of Amazon Vendor

There are certain requirements for selling through the Vendor (B2B) model on Amazon.

• Amazon discount – when discussing joining the programme, Amazon asks for a special discount, which is calculated based on an algorithm.

However, you are not required to immediately agree to the proposed terms. If you decide to work with Gonito, our team will take care of the discussions regarding joining Amazon Central Vendor and help you negotiate favourable terms.

• Account optimisation –  invitation generation process is handled by a Vendor Manager, who is the dedicated contact person on Amazon’s side. On the Vendor side, it is necessary to prepare the relevant documents to set up the account, as well as to send the product listing and price list.

The efficient execution of the process is crucial in order to achieve the first sale and realise the full product potential. Gonito customers can rely on us to take over discussions with the Vendor Manager to ensure a smooth entry into Amazon Vendor Central.

• Regional programme – the invitation is only valid for a specific marketplace. If sales are progressing well and Amazon is satisfied with the cooperation, it is likely to send an invitation to more markets. Consider the case where you have distributors in other countries. If a product under the same ASIN is added to different marketplaces, then as the owner of the product, Amazon can transfer sales to other marketplaces without sending an invitation.

This also applies to the German marketplace, i.e. Vendor Amazon de (Vendor Central Amazon DE).

What is Amazon Vendor and how to become one?

  Not everyone can be a Vendor. It is a closed platform that requires special invitation to access. It is not possible to apply to join or speak to Amazon support. Amazon’s recruitment team sends an invitation to the programme to brands offering products which are popular, attractive and sell well. It is also important to maintain a high level of consumer service. Interesting fact: Companies that show great potential but are not yet operating on Amazon can also be invited to the Vendor programme. No one can guarantee that your company will receive such an invitation. However, working with us, you can increase the likelihood that your offer and products are what Amazon is interested in. Why? Because we will thoroughly take care of every aspect of your sale by providing a high level of service to your customer and ensuring proper positioning and presentation of your offer. We understand which account metrics are most important and how to maintain them at the appropriate level. Do you have any questions regarding how does Amazon Vendor work? Contact us!

Vendor and Seller Hybrid Model

  You don’t have to give up on Seller if you join Amazon Central Vendor. The hybrid model is a compromise that allows you to use two different accounts simultaneously. This way, you will enjoy the convenience and prestige of an Amazon Vendor account. At the same time, you’ll continue to sell B2C on an Amazon Seller account. As such, you maximise your revenue by skilfully balancing the two models.

• In the Vendor model, Amazon often only places orders for products with the highest potential, which are easier to sell. New, untested products are not immediately selected.
• Having a Seller account allows you to list goods that have not yet been successful, but are generating interest. This paves the way for them to be listed on a Vendor account.

Having a Seller account in parallel allows you to protect your sales in case all the Vendor merchandise is sold out. If Amazon orders too few goods and they disappear from search, the brand’s position deteriorates. The second account ensures continuity of product availability without having to wait for the goods to reach Amazon’s warehouse. Read on synergy of Amazon Seller and Amazon Vendor models >

Conclusions

  The Amazon Vendor Programme is not available to all sellers. However, everyone can try to get such an invitation by presenting their offer properly and maintaining the right account metrics (which mainly relate to customer service). Amazon is a consumer-oriented platform. If consumers are provided with a good product, which is  well described and delivered efficiently, there is a chance that we will be able to earn a special invitation to the Vendor programme. But the final decision is always made by Amazon itself.