Amazon FBA vs. Vendor Central – What you need to know!
So, you have a Vendor Central account but aren’t sure whether it is actually right for you? Or maybe, you have been running Amazon successfully using FBA and have now been invited to Vendor Central and you’re not sure what the best option is? Well, here we will detail the ins and outs of both to try and help make your decision a little easier!
Firstly, what’s the difference?
Vendor Central is an invite-only platform which allows brands to sell their products directly to Amazon, FBA (Fulfilled by Amazon) is an optional service within Seller Central whereby the brand sends stock into an Amazon fulfilment centre and Amazon will then handle packing, delivery and customer service.
FBA on Seller Central
FBA is an optional service which sellers on the Amazon marketplace can utilise to ease fulfilment and also try and increase conversions and ultimately sales. Listings which have been enrolled in FBA become eligible for Prime, meaning free next day delivery for Prime subscribers. This is the major driver in terms of increasing conversion. FBA products are stored in one or more of Amazon’s fulfilment centres with picking, packing and delivery all handled by Amazon when a customer orders the product. After sales customer service related to deliveries etc. are also all handled by Amazon. There are costs associated with using FBA and these will depend on the size and weight of the products that you are selling, you also need to be mindful that there are storage charges associated with any listings in Amazon’s fulfilment centres.
What are the FBA fees?
Amazon detail all of their FBA fees here. However, as a brief overview the following can be used as a guide:
Small and Light
Suitable only for small products that are less than £9.
- £0.60 for items weighing less than 92g and dimensions less than 23 x 15.5 x 0.4cm
- £0.80 for items weighing less than 225g and dimensions less than 30 x 22 x 2.4 cm
Suitable for any products, regardless of price with dimensions less than or equal to 45 x 34 x 26 cm and weighing less than 11.9kg.
- £1.34 for items weighing less than 80g and dimensions less than 20 x 15 x 1 cm
- £4.00 for items weighing between 10,901 – 11,900g and dimensions less than 45 x 34 x 26 cm
Image CC: Quote Catalog
Suitable for any products, regardless of price with dimensions and weights that are above those outlined for the standard FBA above.
- £3.66 for items weighing less than 760g and dimensions less than 61 x 46 x 46 cm
- £8.32 for items weighing less than 29,760g and dimensions less than 120 x 60 x 60 cm
The FBA storage fees are calculated based on the daily average volume in cubic feet per month and vary according to the time of year.
- £0.65 per cubic feet between January – September
- £0.91 per cubic feet between October – December
Other important aspects with FBA
FBA isn’t just a UK-based service (except Small and Light). Any FBA listings that are also available in other European marketplaces can be eligible for FBA and Prime delivery there too. There are 3 different options:
- EFN (European Fulfilment Network) – which means sending stock into a UK fulfilment centre and any European orders will be fulfilled from here
- MCI (Multi-country Inventory) – choosing which international locations to send stock to, with items held in local fulfilment centres in the European countries
- Pan-EU (Pan European) – sending stock to Amazon who will then move this around Europe to different fulfilment centres based on demand and forecasts
Perhaps one of the most important aspects with using Seller Central and FBA is that you remain in control of the pricing structure. If you want to lower or raise your price you can do so within a matter of minutes. This is particularly useful if another seller is trying to undercut you, or if you need to make slightly more margin on each item sold due to an increase in production costs for example. Of course, there are other costs which you should be aware of with Seller Central (not just FBA) including referral fees (typically 15% but do vary according to product category).
Vendor Central should be viewed in a similar way to any other retail customer. Essentially, with Vendor Central Amazon becomes your customer, not the end user searching on the site. You will agree cost prices for your items with Amazon and it will send POs (purchase orders) on a weekly basis for the products that it wants to stock.
Advantages of Vendor Central
- Access to advanced advertising options such as Vine (review program)
- Consumer confidence, seeing your listing as “sold and dispatched by Amazon”
- A+ content and ability to add video to listings
Disadvantages of Vendor Central
- Payment terms are less favourable than Seller, typically Vendor is Net 30 or 60 days with a 2% discount to Amazon for 30
- Pricing is dictated by Amazon, you can suggest RRPs but ultimately Amazon is in control of what it sells the items for
So, after all of that you want the answer to your question… Amazon FBA vs. Vendor Central?
For large businesses who are au fait with fulfilling POs, have a good logistics understanding and are able to regularly ship products to Amazon then Vendor Central could be a good option. These businesses will just need to consider pricing (and be prepared for Amazon to ask for reductions to the cost price…), payment terms are likely to be similar to many other customers so this isn’t likely to cause too much concern.
However, for smaller business who have been successful on Seller or have a Vendor account but are not happy with payment terms etc. the FBA on Seller Central would seem like an obvious choice. The 7-14 day payments terms can solve any cashflow issues, the pricing is dictated by the seller and not Amazon, allowing for flexibility and ensuring that an existing pricing structure outside of Amazon isn’t sabotaged by cheaper Amazon prices all whilst still offering Prime customers free next day delivery.
Lots to think about and we can help!