Selling on Amazon opens doors for your small business you might not have otherwise. The online e-commerce marketplace is one of the biggest in the world, reaching customers from all over the world. Amazon offers two options, becoming a vendor or a seller.
Amazon Vendor or Seller: Which Is Right For You?
Amazon reached a massive $575 billion in sales globally in 2023, with an estimated net income of $30.4 billion. Whatever format you decide to sell in, you’ll have a wide reach by getting on the digital retail giant’s space.
Figuring out whether vendor or seller status is best requires considering the benefits and differences between the two roles.
Differences Between Amazon Vendor vs. Seller
Amazon vendors sell to Amazon wholesale and the platform marks up the products and resells them. With this relationship, Amazon:
- Buy your products
- Sells directly to the consumer
- Set the prices
- Fulfills orders
Once you ship your items to Amazon, your part of the equation is finished, and you won’t have to deal with additional buyers.
Amazon sellers sell under their business or personal name directly to the public. Sellers get to:
- Choose their pricing structure
- Advertise when and where within their budgets
- Offer customer service
- Process cancellations and returns
Amazon sellers have a close relationship with their users and don’t have to follow as many guidelines and responsibilities as vendors.
Vendors must meet more rigid logical requirements involving pricing, managing inventory and packaging and shipping products. For example, they must get certified in Amazon’s Frustration-Free Packaging for anything weighing more than 20 pounds or otherwise get a small penalty on each package sent, which can significantly cut into profits over time.
Payment Terms and Profits
Although payment terms can vary, vendors typically have to wait longer to receive their funds. An average of 60 to 90 days is stated on multiple websites and in online forums. Sellers get paid every two weeks. However, vendors are sometimes offered early payment if they agree to discounting items. Offers can be highly personalized to each small business owner.
Amazon has more control over vendor pricing and the result can impact profit margins. With sellers, they set their own price and can control if profits fall within a certain margin after costs. Don’t forget the expense of sending your products to Amazon as a vendor and also if you are using Fulfilled By Amazon (FBA) as a seller.
You’re likely to run into returns with either role, but vendors may receive unsold product back unexpectedly when cash flow is in crisis mode. More stringent shipping requirements for vendors can also eat into profits.
Benefits of Being an Amazon Vendor or Seller
Each role has some distinct benefits for small business owners. Vendors and sellers benefit from Amazon’s significant customer base, driving more sales than the company might otherwise manage on their own.
Benefits of being a vendor include:
- Consistent sales volume
- Better product descriptions and control over presentation with A+ content
- More insights into Amazon’s analytics
- Faster logistics
Benefits of being a seller include:
- List more products than vendors do
- Go through fewer requirements to get approved
- Choose between fulfilling orders or allowing Amazon to do so for you
- Change listings and tweak them to improve SEO
- Close relationship with customers
Vendor or Seller: Which Is Most Beneficial for E-Commerce?
Whether being a vendor or seller is best for your business depends a lot on the product you’re selling and your goals. Sellers tend to have a lot more control than vendors. They can adjust pricing, descriptions, images, customer service and marketing.
Most e-commerce companies benefit more from being sellers. Startups, in particular, may need closer control of listings. Well-established brands selling at high volume may prefer the vendor-based hands-off model Amazon offers.
Amazon’s reviews may also offer the input consumers need to make an informed decision. Around 63% of consumers research online before buying, including through reviews.
Amazon Vendor, Seller or Both?
There are advantages to both vendor and seller accounts on Amazon. Figuring out which is best for your e-commerce business requires knowing how many items you sell and if allowing Amazon to handle orders would free up your time enough to make it profitable.
Fortunately, you don’t have to choose between the two. Amazon will allow you to have a vendor and seller account. Pay attention to the details of each, and you’ll reach more customers than you ever dreamed of.
