Vendor Central (VC) vs. Seller Central (SC) is an evergreen question we get on Amazon. It's a complex question because not only does the right answer vary by brand, but the two platforms are constantly changing.
Most emerging brands only have the choice of VC if they were invited to the platform pre-2020. Nowadays, Amazon generally requires $5-10mm in sales on SC in order to get an invite on VC.
We think the only right answer is to run the numbers and make the call based upon your margins and strategic priorities.
Anyone who says one channel or the other is much better simply isn't right: there are thousands of large and successful brands on both channels.
Below, we've outlined the major attributes and differences between the two channels for Vendor Central Fulfillment and Seller Central Fulfillment by Amazon (FBA). At the end of this article we've illustrated a few different side-by-side margin waterfalls of the two channels to illustrate some common cases when brands might go one way or the other.
- Amazon's 'first party', or 'wholesale' channel. You set an invoice cost or cost price, and Amazon orders bulk Purchase Orders (POs), typically stocking to 8-10 weeks of inventory.
- Amazon pays for the product up front and owns it within their warehouses.
- How Amazon makes money: Retail markup and program terms (e.g., marketing coop).
Advantages
- Working capital. Being paid upfront for 2+ months of inventory. No need to wait for the sale to occur. This can be meaningful for larger brands.
- Limited sales tax compliance requirements, as well as customer support for the brand, due to Amazon owning the inventory and sale.
- Low cost dropship rates. Amazon is generally cheaper than standard FedEx/UPS rates.
- Amazon's 'third party' (3P) or 'marketplace' channel. You list your products on Amazon, set the price, send in product, and begin selling.
- Brands ship products into FBA warehouses where Amazon stores the product on consignment. Brands are paid upon sale of the product on 14-day terms.
- How Amazon makes money: Fixed referral fee (8-15% for most CPG), plus FBA fulfillment fees.
Advantages
- Price Matching and Price Control Challenges. Brands can change pricing dynamically to take additional margin and test elasticities. *Note: Both channels have price matching and control challenges.
- Inventory management and inventory control. Can be useful for new launches, seasonal, or short dated product.
Ultimately, brands should pick their channel based upon margin. The margin structure of the channels are quite different, and the channel with the better margin picture depends upon product type.
A margin side-by-side of the two channels usually reveals a clear leader. In the absence of a clear leader, the advantages above should be considered.
You might be thinking our list above is incomplete. Amazon has made significant changes in the last few years to close the gap between the two platforms, and much “conventional wisdom” of years past is no longer valid.
Common misconceptions – virtually identical features of both platforms
The channels have nearly identical features as long as you are brand-registered.
- Analytics and Reporting – It's arguable that Seller Central has more unit-level traffic and conversion data since Vendor moved to Retail Analytics in Q4 2022. Both platforms have equal access to Brand Analytics, assuming you are brand registered. Common frustrations for the Vendor channel are anchored in marrying Purchase Orders to the sell-through data, whereas Seller Central users seek more visibility into inventory movement and availability.
- Controlling Price - A well set up Vendor catalog and thoughtful omnichannel pricing strategy with things like MAP pricing means price control is entirely doable on both channels. • Note: Regardless of channel, if your products are for sale on other major retailer eCommerce platforms (Walmart, Target, Kroger, or Thrive)for cheaper, you will likely experience issues from either price suppressions or reseller competition.
- Advertising and Promotional Options - There are only a couple very minor differences between the platforms, now mostly pertaining to promotions (Deals and Coupons). With all ads now managed through Amazon Advertising, there is virtually no difference as long as you are brand registered. On occasion, the Vendor channel gets to test beta features first.
- Amazon Direct Support - Both platforms have support (or lack thereof) depending upon size of brand and category, so experiences vary widely. There are premium and preferred support options for both channels.
- Content Precedence - Formerly a VC edge, this can be controlled from Brand Registry which is available to all brands.
- Buy Box Preference - This is purely determined by performance of the offer –which offer shoppers click and convert on more.
Quick Reference: Common CPG product types/descriptions that favor either VC or SC
The VC vs. SC debate is by no means settled and one that we expect to continue to evolve. Amazon has suggested that they plan on merging the two channels, and their efforts in aligning the two platforms support that intention.
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