Vendor vs. Seller – How to sell on Amazon
Amazon is now not only the global market leader in e-commerce, but also one of the largest price and product search engines on the Internet. According to a study by the Ibi Research research institute from 2017 with more than 1,000 online buyers on the topic “Shopping behavior in the digital age”, 34% of those surveyed start their product search directly on Amazon and only 15% on Google. With this knowledge in the background and the constantly growing sales figures from Amazon, it is almost unavoidable for many retailers to list and sell their products on the online marketplace.
Still not sure if you want to sell your products on Amazon? We give you an overview of the advantages and disadvantages.
Profit from selling on Amazon
If you rely on Amazon as a sales channel, you can enjoy many advantages. There is already a large customer base on the marketplace platform, which is available to you immediately after connecting and which you do not have to laboriously build up over a long period of time. In addition, Amazon offers many practical services, such as payment and logistics processing, which means that you have less effort in this area. You also have the opportunity to build your own brand and compete against large, existing manufacturers.
The Downsides of Selling on Amazon
Of course, selling on Amazon also has disadvantages. There is a lot of competition in many categories, making it difficult for many sellers to get their products ranked well. In addition, Amazon is not really suitable for products that require a lot of advice or explanation, which is also the case with many other e-commerce platforms.
You have decided the advantages outweigh the disadvantages and to offer your products on Amazon? Great, then the next step is to think about how best to proceed to sell successfully on Amazon and how you can grow on the marketplace in the long term.
Vendor vs. seller – which business model suits you better?
When working with Amazon, you have the option to choose between being a vendor or a seller.
If you opt for the vendor model, you’ll send your products directly to Amazon. The marketplace acts as a retailer and sells the products under its own name. This approach is relatively straightforward as you only need to handle product delivery. However, there are a few drawbacks. Profit margins can be lower, and you have less control over your products since the marketplace sets the price and manages the sales. Vendors are typically brand manufacturers or larger intermediaries.
As a seller, you list and sell your products independently on the platform. You maintain ownership and full control over your products and pricing. However, this model requires more dedication and effort on your part to achieve successful sales.
Amazon FBA and Amazon FBM, what are the differences?
When selling on Amazon, you can choose between two options: Amazon FBA (Fulfillment by Amazon) or Amazon FBM (Fulfillment by Merchant). Each has its pros and cons. FBA offers the Prime logo, but has higher buy box rates and requires additional fees. It also limits access to customer data and lacks direct customer contact.
FBM gives you control over the entire purchase and shipping process, but requires more effort. It’s suitable for businesses with their own logistics network. Amazon has strict requirements for logistics and may block your account if services are inadequate.
Individual consideration of the sales model on Amazon
Choosing the best option for your business, whether it’s selling as a vendor or seller, or using the FBA or FBM model, depends on your company, goals, and product. Each model has its own advantages and disadvantages. We are here to assist you in the decision-making process, offer help on making your products “Retail Ready” for Amazon, and help you use the various advertising options to maximize the promotion of your products and brand.