Amazon is now the nation’s largest retailer, and it’s sprinting toward the world title. If you’re selling any type of physical product (assuming it’s legal), you need to be on Amazon.
The question is, how do you rise above the noise on Amazon and get your fair share?
Amazon offers two ways to reach its 100+ million monthly shoppers: Amazon Vendor and Amazon Seller. Amazon Vendor is invitation-only, though you can request an invitation, whereas Amazon Seller is open to everyone. Before you leap at the chance for the more exclusive “vendor” status, though, consider the following:
- Amazon Sellers Have Greater Control
When you’re an Amazon Seller, you’re selling via the Amazon Marketplace—Amazon is simply acting as a place for buyers and sellers to meet, and handles secure payments for a modest fee. Everything else is entirely up to you, which might mean a bit more work but gives you a whole lot more control.
As an Amazon Seller, you have complete control over your pricing, inventory, customer interactions, and more. Amazon vendors give all that up, earning a stronger alignment to the Amazon brand but giving Amazon control over the price consumers pay, the amount of product that needs to be shipped to Amazon warehouses, and even the responses your customers receive when they reach out with questions or complaints—as an Amazon Vendor, you won’t even have a way to contact your customers.
For major manufacturers that are profitable with thin margins on bulk sales, ceding control and the day to day tasks it requires may be worthwhile, but for most small and mid-sized sellers you lose a whole lot more than you gain.
- You’ll Make More Per Sale as an Amazon Seller
All of the control issues add up to a clear bottom-line truth: unless you’re moving thousands of units regularly every month, you’re almost certain to make more money as an Amazon Seller.
When Amazon handles the shipping and customer service as well as the payment processing, as they do for Amazon Vendors, they take the bulk of the profits from each sale. Due to its nature as a retail giant, Amazon is also concerned with selling more units as quickly as possible than it is with finding the most profitable markup, meaning the profit on each Amazon Vendor sale is smaller, too.
Amazon Vendor forces you to sell at wholesale prices. Amazon Seller lets you reap the substantially higher retail rewards.
- Amazon Sellers Keep Their Flexibility and Autonomy
This touches on the control issues addressed above, but the fact is Amazon Vendor doesn’t just affect your business with Amazon—it can take over your entire retail endeavor.
With Amazon Seller status, fulfillment is all up to you. You can delist a product or mark it as out of stock anytime if you’re having inventory trouble. If direct sales, brick and mortar retailers, or other sales channels provide your business with higher margins, you can put them ahead of your Amazon Customers.
Amazon Vendors who don’t meet the inventory requirements that Amazon sets can lose their ability to sell on Amazon altogether, meaning you might be forced to pass on other sales. If Amazon orders too much and your products sit on their shelves too long, you can even be charged storage fees!
Becoming an Amazon Vendor means taking a hands off approach and letting Amazon run your business—and take a majority of the profits. For most retailers and manufacturers outside the Fortune 500, it’s a move that simply doesn’t make sense. Stick with Amazon Seller, and see your sales and profits soar.