FBA vs Vendor Central Account?


#1

Hello,

I currently sell baby clothing (my own brand), I have a Pro Merchant Account with Amazon, and I have also signed up for FBA, However, I have a question regarding vendor central account.

Is it better to have a Vendor Central account (1st party seller) rather than a seller central Account (3rd party seller)?

I have tried to get in touch with Amazon via vendor central and my email keeps bouncing back. My sales are picking up and would like to sell to amazon in bulk. I also have EDI set up.

Does anyone have any experience with vendor central?

Any help or advice is greatly appreciated.

Thanks.


#2

See my response in your other thread.


#3

If you already doing all FBA already anyway, why try to sell to Amazon?

For one assume you are an amazon vendor now, that means you obviously can’t sell on amazon yourself.

I see the only benefit here is you get a bulk order but at 20%-30% less your normal selling price.

Selling to a big vendor is a LOT OF HASSLE. You need to setup EDI (not easy and relatively expensive).

You need to read their manual of regulations and rules (size tags got to be 2 inch from leg, etc.)

You might not get paid for 90 days (most vendors have defined terms about payment. Nobody paid right away. So you could extreme negative cash flow for couple months with already paid goods and no funds as vendor got 60 days terms).

And many many more.


#4

I don’t but just to note until someone who does responds …

Vendor Central is invite only and as I hear you have to be at 1M + per year to get looked at …

Have you tried contacting through here:
https://vendorcentral.amazon.com/st/vendor/public/contactusapp


#5

Listen to the others. Once you become a supplier, you give up all control.


#6

Thanks Everyone

the idea is to get my inventory moving quickly in bulk…FBA is excellent, but wholesale would be better I thought…


#7

Take heed as this is great advice you are getting from the others.
There are yet other pitfalls, too, so tread carefully.
One mistake can be the kiss of you know what.
On top of those pitfalls, don’t think another
already established manufacturer couldn’t easily come along
and “knock off” what you are selling, at far less cost to
Amazon and the consumer.


#8

The problem with becoming a supplier is you lose the ability to control market price. Very few suppliers have the volume to dictate market price to Amazon. Say you sell the item to them at $15 with an MSRP of $30. Next thing you know, they are selling it at $15.99. By doing that, your MSRP is no longer justified. Then, you will receive pressure to “cut your costs” and pass 99% of those savings on to the buyer (Amazon). I have no idea what your volume or potential volume is, but I’m 99% sure you won’t be the one with the leverage in the buyer-supplier relationship.

If you stick with FBA and control who you sell to, you are in control of the market price.

Edited by: NextGen Gamer on Sep 12, 2012 1:58 PM


#9

Other risks:

Buyer who you make a great connection with is fired and replaced by someone who doesn’t like you or your products for whatever reason.

Customer pressures you to go in a different direction than you really want. “We need lower price points, can’t you just outsource to China and use garbage materials?”

FBA is amazing because you can have your brand, control your quality, pricing and service.

I still remember when I was talking to a guy who sold to Office Depot and Office Max. He said the volume was great, but knowing that each company owed him a million dollars was very scary.

Much better to slowly build up your own brand and customer base. Amazon allows you do this in a partnership that most sales channels would never allow.


#10

Thanks everyone for such valuable advice. Truly appreciate it.


#11

Those are all salient points. All it takes is one “bump” on the road to really foul things up.


#12

I read the replies to the questions. No has said they have personal experience with the Vendor program it is all opinion. No experience whatsoever. I have bee an Amazon Pro Merchant for 10 years, yes, since 2003. I have an FBA account and a Pro Merchant. Amazon has never been dishonest. This week I was invited to become an Amazon Vendor. I will share true experience on this forum in the future.


#13

Looking forward to it! True, the opinions in this topic have nothing to do with personal experience with selling directly to Amazon. Big box stores versus tiny manufacturers, in general? That’s another story…


#14

I had a manufacturer with whom we did FBA via my storefront.
After only a couple of months of good sales, he was invited to become a Vendor.
For a while he tried it also but then he no longer wished to be a Vendor.
By that time others were interested in his products also and I stopped carrying them.


#15

Here’s my opinion after being a vendor to Amazon after doing and still doing FBA…

  1. No money for 90 days as opposed to 2 weeks in FBA

  2. Vendor pays shipping and does not get the UPS rates that you can get through FBA shipping

  3. Amazon decides what they will purchase each week. With FBA we can make the box full enough to keep the shipping cost low per item. Vendor they can choose to have you ship 1 item to 5 warehouses which raises the item’s shipping cost drastically.

  4. Amazon can decide they overstocked and return items. We have recently had a couple items returned after just 2 weeks when, this exact item in the past year, sold 20 per week. It is not a new item and they should be able to see the Sales History and/or hold onto to it for 4 weeks more weeks in order to get them sold but they opted to return as overstock instead.

I had hoped that my items would get more sales if Amazon themselves took control of the buy-box but that doesn’t appear to be happening.

So far after 5-6 weeks as vendor and FBA I would suggest sticking with FBA.


#16

We’ve been selling FBA for nearly a year and a half now and selling through Vendor Central for nearly a year. There are a lot of good points brought up here but I’m going to offer some counter points.

First, we are selling at nearly 8X the volume, same time this year compared to last, when we were exclusive FBA. I’m not 100% certain selling exclusively FBA would net us this sort of growth, to be honest. Our FBA sales at this time last year were slowing down. Although I can not attribute all the growth to being on Amazon alone, from a shopper’s perspective, they’re far more confident to buy a product sold by Amazon vs Fulfilled by Amazon. Especially for our product, a relative unknown brand in a rather niche market.

There are a lot of negatives as other have stated, I’m not going to lie. Our payment terms of 90 days nearly shut the company down at the beginning of the year due to cash flow problems. We had tremendous holiday sales, but we didn’t see a dime of that until March. Unless you’ve got plenty of operating capital to do this, I would seriously weigh the benefits vs. cost, then weigh it again before I proceed.

There are also certain programs available to Vendors rather than Sellers. For example, Amazon’s basic retail Analytics does a pretty good job at forecasting demand. So far with about 50 weeks of data, they are almost always typically within 4% of predicted demand to actual units sold. Unless there are some external forces we can’t forecast, it’s always good to know how many units you’ll likely need at any given time. We are able to keep our warehouse shelf space relatively thin for the volume we’re moving.

However, Vendor’s Analytics lacks a lot of the real-time features in Seller’s reports, and I have no visibility into visitor info unless I pony up for Premium Analytics report, which they won’t even sell me. IF you can get premium Analytics report, it has market share analysis and competitor sales info which comes in very handy.

Another good thing is Vendor accounts order en-bulk. Like several hundred units at a time. And there are no “stale units” because you don’t get charged storage fee. We have a couple of really slow moving items that was part of the initial purchase order that are still on the shelves, that would potentially be subject to long term storage cost soon. We had to request 2 cartons worth of products back from FBA because they’re not selling and we’re staring long term storage fees in the face.

Again, however. Because as Vendors you must ship Amazon’s orders to their fulfillment warehouses, you end up shipping out 20 smaller shipments all across the country. It’s time consuming, cost in-effective, and difficult to track. We’ve been dinged multiple times for sending the wrong unit to the wrong warehouse.

There are other marketing tools at your disposal through a vendor account that’s not available to Seller accounts. THAT along would make up for the difficulty of converting to Vendor account, IMO. The Vine program is a great example. You can get trusted reviews from hall of fame reviewers on your new products before they hit the shelves. And we all know what positive reviews from trusted source can make or break a product. You can also set up self serviced coupons, which has been pretty effective for us as well to move certain slow moving products by offering incentives on a specific ASIN.

In the end, if you look at strictly the 8X growth we’ve experienced year over year, it’s easy to say sure, the Vendor account is totally worth it. We probably would have done things a little differently now that we know what to expect, and it was a total shock to the system at first.

However, I would say, if you’ve got a good thing going with FBA and moving tons of inventory and near the top of your category’s top seller’s list, and is happy with FBA as is, I would definitely think twice about moving to Vendor’s side. If you have a good product but is struggling to gain sales because you don’t have a trusted name brand that stands out? If you’ve been invited to the dark side, do it.


#17

Thanks for your input

Edited by: evamor on Oct 9, 2013 10:25 AM


#18

I have first hand experience in selling directly to Amazon. Selling to Amazon Retail isn’t horrible, but it’s typically less effective than FBA for a number of reasons.

Advantages of FBA:
-Control over product listings
-Control over inventory
-Higher Margins (85% v. 40-50%)
-No additional payment fees (co-ops, damage allowances, etc.)
-Quicker payment terms (accounts settled every 14 days rather than NET 60 or NET 90)
-Can still offer customers free prime shipping on product
-No need for EDI implementation or Vendor Central order processing (complicated and time consuming)
-Use of Sponsored Product ads to attract more visibility

Disadvantages:
-No guaranteed sale to Amazon, must rely on consumer purchases
-Account requires more management (you control the listings and inventory shipments - you have to plan these rather than fulfill purchase orders)

When we sold directly to Amazon, they would routinely violate our MAP Policy and they wouldn’t stock sufficiently for our seasonality changes. Selling via FBA, we’ve put more stock in the fulfillment centers than Amazon Retail had forecasted for 4th quarter and Mother’s Day sales. We sold twice as much during those periods and our margins were much better.

There are times when selling directly to Amazon makes sense. Usually it’s when you have a heavy or large product that has high fulfillment costs. That’s still not always true. I have a client that was selling bottled water to Amazon Retail and is now selling via FBA. Their sales have increased 90%. I’ve attached a spreadsheet (txt file - open in excel) that shows the difference in selling to Amazon Retail vs. FBA for one of my businesses. These are real numbers based on our Seller Central and Vendor Central accounts. I’ve deleted any identifying information. In our case, with product that has low fulfillment costs, we need to sell 5x as much product to make more profit. Interestingly, we’ve actually sold more volume per month with FBA than directly to Amazon.


#19

“There are also certain programs available to Vendors rather than Sellers. For example, Amazon’s basic retail Analytics does a pretty good job at forecasting demand. So far with about 50 weeks of data, they are almost always typically within 4% of predicted demand to actual units sold.”

Thanks for sharing at first.

We just started to be Amazon Vendor and we found that the demand forecast from basic retial Analystics was not so accurate. We are wondering if the period that we take into consideration is not long enough, say +1 or +2 weeks. Would you please let us know how many weeks you would take?


#20

This is really great information for FBA sellers who receive a Vendor invitation and are on the fence about it. I have a couple of questions regarding your example spreadsheet:

  1. How did you arrive at your estimation of 3x increase in sales for Amazon direct?
  2. How did you arrive at your cost to Amazon? Couldn’t you just increase this figure to improve profitability or do they impose restrictions?

Also, for people wondering about the difference in inbound freight costs, for my items, I calculated about 1.5% of the selling price for FBA items using Amazon’s UPS rates. That is compared to 5% of the Amazon direct cost of the items if you choose the freight allowance terms.