The Ins & Outs of Becoming a Vendor on Amazon
Article by: Orca Pacific
Businesses have the option of working with Amazon in one of two ways– as either a 3P seller or a 1P vendor. Sellers are retailers who use the Amazon marketplace to sell products directly to consumers. Vendors, on the other hand, are invited to sell to Amazon through wholesale and they handle the selling process to the customer.
How to Become a Vendor on Amazon?
Amazon Vendor Central is the web interface that gives you access to your vendor account with Amazon. These manufacturers are called first-party or 1P vendor. The program is invite-only, so it can take time and effort to establish your company and build enough brand awareness for Amazon to take notice.
No matter what product category you sell within on Amazon, that category has a team of people behind it known as Vendor Manager. These individuals are tasked with handling relationships and orders within their category. They’re also the people who are responsible for inviting brands and companies into the Vendor Program. This is based on the profitability of the product and how they feel it will sell. If you’re a well-recognized brand and making significant or growing sales within your category, you can expect an invitation from a Vendor Manager to join the program.
Those using the FBA (Fulfilled by Amazon) or FBM (Fulfilled by Merchant) models with products that are selling well within a category may also be contacted by Amazon with an invitation to wholesale. This may happen online, but Amazon buyers also attend trade shows on the hunt for new products and sellers that they might be interested in adding to their vendor program.
A proactive approach you can take is to ask an Amazon buyer for an invitation to the Vendor Program. Requests for invitations are reviewed by Amazon buyers and, on occasion, are granted. This isn’t a method to bank on– but it’s been known to work for sellers with proven sales potential and excellent account health on Amazon in the past.
The Benefits of Becoming an Amazon Vendor
If your company and products fit well with a wholesale model, then becoming an Amazon Vendor can be a fantastic opportunity to grow your business and drive sales.
Increased Consumer Confidence
Many consumers are growing weary of questionable listings on Amazon. Products that take forever to arrive, have odd reviews, or are sold by random third-parties tend to raise an eyebrow. When you sell through the Amazon Vendor Program, though, all consumers see is that your product is being “sold by Amazon.” This instills comfort in wary online shoppers who aren’t sure where to place their trust. Nobody is in doubt of Amazon’s reliability as a business.
A+ Content and Other Marketing Tools
Vendor Central offers vendors the ability to create enhanced content through the use of Amazon A+ Content. A+ Content enhances your product pages through the integration of visuals and other marketing content to help drive better conversion rates. You also gain the opportunity to participate in optional promotions programs run by Amazon, including Amazon’s subscription service– Subscribe & Save– and Amazon Vine.
Vine Review Program
As mentioned above, Amazon Vine is a great opportunity and marketing tool for vendors to take advantage of. Through this program, your product will be sent to top reviewers before it ever appears for sale. We’re all consumers– we all know that when we want to buy something, we trust what other consumers have to say. Getting reviews ready for an upcoming product can make a drastic difference in how well it sells.
Selling Directly to Amazon Means a Simplified Business Model
Becoming an Amazon vendor means you’re not responsible for processing every order of your product that’s made. Vendors are primarily concerned with billing, avoiding chargebacks, and filling purchase orders. That’s a lot less on your plate than you’ll deal with as a seller. Sellers have to worry about sales reconciliation, lost inventory, customer service, etcetera.
Considerations Before Becoming an Amazon Vendor
While the benefits of becoming an Amazon vendor are clear, it’s important to keep in mind the age-old adage– there are two sides to every coin. Any business on the lookout for their vendor invite should take a few things into consideration before making the decision.
Lack of Price Control
Amazon does not adhere strictly to the Minimum Advertising Pricing (MAP) rules that run the retail world. Instead, they can and do adjust retail pricing at any given time based on internal data. Amazon continually monitors the pricing of your products at other retailers and makes adjustments to ensure they have the lowest prices.
Amazon has strict logistical requirements for delivering your goods safely and optimized for entry into their fulfillment centers. Amazon’s fulfillment centers are very busy and must follow a standardized workflow to process the volume of shipments coming in and out. Pallets must be packaged and labeled according to their specifications or the vendor runs the risk of accruing chargebacks. Amazon also expects vendors to be able to keep up with inventory demands in a timely manner.
Even a minor oversight on your company’s part can mean a chargeback from Amazon. A missing label or mis-wrapped item could easily wind up costing you time, money, and patience. Vendors who fail to keep enough stock moving and inventory in place will also likely deal with chargeback struggles.
As with anything, there are upsides and less fortunate aspects to becoming an Amazon vendor. Getting in is half the battle, though, so taking the time to aggressively market and sell your products through Seller Central can be one of the determining factor in your future as an Amazon Vendor. There are several facets to consider, like the profitability of your products and whether you can handle higher order volumes. But the opportunity is something that anybody well-equipped to handle wholesale should consider.
Are you interested in becoming an Amazon vendor? Orca Pacific is an Amazon vendor consulting firm that can partner with you to maximize your potential on Vendor Central. We have over a decade of experience working with Amazon Vendor Managers and can be your representative in vendor negotiations with Amazon. Contact us to learn more about our services.