Seller or Vendor? Understanding the difference in the world of Amazon

If you’re thinking about getting your products onto Amazon, maybe you’re about to launch a new product range or you think it’s about time to make the most of the many and increasingly lucrative opportunities on the platform, then you’d probably like to know how to go about it. Despite a plethora of content in the online world, it can still be a tad bit daunting for CEOs, Founders and Marketers to decide how best to get set up on Amazon.

Here we run through some advice on the types of accounts you can have on Amazon so you can work out what works best for your business.

Brands who sell on the Amazon marketplace fall into one of two groups. If they market directly to consumers (B2C), they’re a Seller. And if they sell directly to Amazon (B2B), they’re a Vendor. But the biggest difference between the two is how they sell their products on Amazon.

If you’re a Seller, you’re in complete control; from listing your products, pricing and marketing to customer feedback and everything in-between. All of the hard work is on you. Vendors on the other hand, have a slightly easier life. They sell their products to Amazon at an agreed wholesale price, who in turn set the pricing for shoppers to purchase. Job done. The downside however is that Vendors have no control over their product pricing or customer feedback. These two important brand factors are handled by Amazon.

New to Amazon? Here’s how to sign up.

Sellers have two sign up options available to them. You can choose a Free Account, by far the most popular choice for small-scale Sellers as you’re simply charged for every item you sell. Or you can opt for a Professional Account for a single monthly fee; more suited to medium/large scale Sellers.

Sellers also have access to a wide range of fulfilment options:

  • Fulfilled by Merchant (FBM) is the default fulfilment option you’ll be given when you first create your listings. Similar to other online sales platforms, it requires you to pick, pack and ship every product you sell
  • Fulfilled by Amazon (FBA) is the most common form of Prime-eligible delivery available to Sellers. For an additional fee, Sellers can ship direct to Amazon’s own fulfilment centres. Amazon then take care of all levels of the fulfilment process including customer service (order tracking, item returns etc.)
  • Seller Fulfilled Prime (SFP) is a somewhat less popular but still beneficial form of fulfilment. To qualify, Sellers need to demonstrate a high-level of shipping and customer service (on par with Amazon’s own service). Once qualified, Sellers are then eligible to designate their products as Prime-eligible without the additional fees involved with FBA

Becoming an Amazon Vendor however is a completely different story. You can’t opt in or choose to be a Vendor, you’re invited. Amazon selects reputable brands to become a Vendor or looks for Sellers with a proven high-sales volume. Match either of those criteria, and you could receive an invitation followed by a PO for a shipment of your products.

You’re in the marketplace, but how do you market?

Being on Amazon is one thing. Marketing your products is another. To help you sell, both Amazon Sellers and Vendors have access to marketing tools via the Amazon Advertising network. Now called Sponsored Ads, the tools were originally known as Amazon Marketing Services.

The ads are a form of pay-per-click advertising and appear on the search results page of Amazon. There are three forms of Sponsored Ads in total, Sponsored Product, Sponsored Brand and Sponsored Display. Sellers who have registered their brand and have more than 3 SKUs listed on Amazon can use all three. However, using them and understanding them don’t always go hand in hand, which is why Sellers and Vendors often use specialist Amazon Agencies.  Their in-depth knowledge of the services means they can use their expertise to who are experts to achieve the best possible return on advertising spend.

Product reviews are another way to help ensure your SKUs stand out from the competition. So, there are two programs that can help you get noticed. They’re perfect if you’ve just created new listings on Amazon. The Early Reviewer Program and Vine Program are both relatively low-cost options that can help you achieve some early recognition in an otherwise crowded marketplace.

Which Seller account or Fulfilment option is best for me?

If you’re just starting out on your Amazon journey, you need to decide which account option is the best for you. You can narrow down your choice by first deciding how much of your margin you are willing to commit in terms of fees for the additional convenience that Amazon offers.

If you need to maintain tight control of your pricing and have the capability to pack and fulfil product orders yourself, then an Amazon Seller Free Account is likely to be the right choice. But if your sales start to exceed 40 units per month, or if you want to fulfil your orders through Amazons FBA service, you can always upgrade to the Amazon Seller Professional account at a later stage. For further guidance, Amazon offer some very useful fee calculators to help gauge how profitable each account and fulfilment option is. It’s a great way to weigh up your brand and business goals before you make any firm decisions.

Where do I get some expert support to get set up and get some great results?

Melody is a global Amazon specialist agency, an appointed Amazon Solution Provider Network agency. In short, this means the team of account management, advertising and SEO experts can give you the best advice to help you in your Amazon journey.

Drop the team at Melody an email or fill in one of our contact forms. We can give you insight into your category and market opportunities on the platform and help you get a gauge of likely returns.

This article was written by Matt Howes, Ecommerce Director at Melody agency.

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