How to Use an Amazon Hybrid Model
Setting up an Amazon hybrid model is something both sellers and vendors should look into.
The Amazon seller experience looks different for everyone, and one of the main things to choose is what selling model you want to adopt. You can sell directly to Amazon through Vendor Central, or sell directly to customers using Amazon Seller Central.
Let’s talk about both vendor central and seller central, and how to choose between them, and the idea of combining them into a hybrid model for business.
What is Amazon Vendor Central?
In Amazon Vendor Central, 1P (first-party) brands act as suppliers to Amazon itself. They sell their products directly to the retail giant, which then handles inventory management, pricing, shipping logistics and sales.
Vendors benefit from Amazon’s extensive distribution network and fulfillment capabilities, which can streamline operations and reduce the burden of warehousing and logistics. This makes Vendor Central particularly attractive for businesses focused on large-scale wholesale transactions, or those aiming for stable order volumes.
However, Vendor Central comes with some trade-offs. Sellers have limited control over pricing, inventory levels, and promotional strategies. They are also subject to Amazon’s purchasing policies and terms, which can change and impact their operations unexpectedly
How does Amazon Vendor Central work
To become a vendor, you typically need an invitation from Amazon itself. They usually reach out to established brands and manufacturers who have a strong product offering and a good track record of sales.
If you receive an invitation, you can register and set up your Vendor Central account. Once your account is set up, you can start supplying products. Amazon sends you purchase orders specifying the quantities, delivery locations, and prices for the products they want to buy.
Vendor Central is much more hands-off than Seller Central. You are responsible for shipping the products to Amazon’s fulfillment centers, ensuring they are packaged according to Amazon’s guidelines and delivered on time.
After receiving your products, Amazon manages the inventory, including storing the products, keeping track of stock levels, and handling logistics.
Combining these features with the advantages of Seller Central will help your business develop a great hybrid Vendor Central and Seller Central strategy.
Amazon Vendor Central’s Pros and Cons
First, let’s talk about some of the advantages sellers have when working with Amazon Vendor Central:
Amazon handles inventory, pricing, and shipping.
Your products can benefit from Amazon’s promotions and recommendations.
You’ll get stable order volumes, which is ideal if you focus on wholesale or B2B sales.
Payments are predictable, with fewer disputes.
There’s a lot of room to build partnerships and collaborations.
When it comes to the problems or issues that can come around, you have to consider:
You have less say in pricing and inventory management.
You depend a lot on Amazon’s terms.
Fees and marketing contributions can affect your margins.
Amazon has a lot of negotiating power.
Access to customer insights may be restricted.
Who uses Amazon Vendor Central?
Large brands, manufacturers, and wholesalers who can handle large orders and high-volume production favor Vendor Central. These businesses include well-known consumer brands, established manufacturers and large-scale distributors.
Large brands benefit from the increased visibility and credibility that come with being an Amazon vendor. Their products get more exposure and reach Amazon’s huge customer base.
Manufacturers use Vendor Central to sell large quantities directly to Amazon, which then handles logistics and retail. Wholesalers find Vendor Central helpful because it allows them to sell inventory in bulk, simplifying their distribution process.
Selling 1P gives shoppers increased confidence, provides additional advertising opportunities and simplifies management. These features will become incredibly helpful in the Amazon hybrid model.
Your products will automatically be slapped with the “Shipped and Sold by Amazon” label. This provides much more confidence to consumers that your product is legitimate. Consumers want to trust that they are buying a real product now more than ever.
What is Amazon Seller Central?
As for Amazon Seller Central, 3P (third-party) sellers can list and offer products directly to customers. Brands l manage their own inventory, pricing, fulfillment, and customer service.
This model offers greater flexibility and control over branding, pricing strategies, and customer relationships. Sellers can directly engage with buyers, customize product listings, and adjust pricing and promotions in response to market demand and trends.
How does Amazon Seller Central work
To get started, you need to create an Amazon Seller Central account. You can choose between an individual account for small-scale sellers or a professional account for larger businesses.
Once your account is set up, you can create product listings by providing detailed information such as product titles, descriptions, images, and prices. Amazon Seller Central offers tools to help you manage your inventory, track stock levels, and monitor sales performance.
Amazon Seller Central Pros and cons
The pros of opting for Amazon Seller Central include:
Build relationships and enhance customer loyalty.
Prices and inventory levels are on you.
Reach a large customer base and use services like Amazon FBA.
Set prices to improve profits.
Expand your product offerings and operations as needed.
Now, let’s go to all the details that are not ideal:
More responsibilities, including handling logistics and customer service.
The need for an effective marketing strategy to stand out.
Consider fees for services like FBA, which can impact profitability.
Payments are less predictable.
Compliance with Amazon’s policies to avoid penalties.
Who uses Amazon Seller Central?
It’s popular among individual entrepreneurs like artists and part-time sellers because it’s easy to manage and it lets them start selling without a big investment.
Small and medium-sized businesses also like it because they can reach customers worldwide and manage their products and customer service efficiently.
3P sellers have access to better quality analytics and simplified product control. Such perks make this platform attractive to businesses that are looking to be more involved with their Amazon sales.
Seller Central provides some incredibly high-quality analytics for no-cost to 3P sellers. The data is much easier to organize and utilize, and does not come with the high costs of Amazon Retail Analytics Premium.
The marketing features are much more simplified and intuitive than in Vendor Central. Utilizing the marketing features such as promotions and coupons are a powerful way to generate additional sales.
Differences Between Amazon Vendor Central and Amazon Seller Central
Vendor Central
Seller Central
Sell products directly to Amazon.
Sell directly to customers on Amazon.
Amazon manages pricing, shipping and customer service
Flexibility to set prices, manage inventory, and handle customer service.
Pays every 30 to 90 days, which is best suited for larger wholesale transactions.
Pays every two weeks, ensuring a quicker cash flow, which is advantageous for small businesses.
Includes co-op fees and marketing costs, while
Monthly subscription for Professional accounts, and per-item fees for Individual accounts.
Access to programs like Amazon Vine and A+ Content for enhanced visibility, but Amazon makes final decisions on listings and marketing.
Autonomy over product listings, descriptions, and promotions, including tools like Sponsored Products and Lightning Deals to boost visibility and sales.
Handing inventory management to Amazon after shipping
Manage your own inventory. This demands closer monitoring of stock levels and logistics but enables quicker responses to market demands.
How to Create an Amazon Hybrid Model
Both platforms serve a purpose for growing your overall Amazon sales. Most sellers choose one of these options and stick to it, but there’s another option: combining both.
An Amazon hybrid model allows retailers two options to sell. The first one is about selling directly to Amazon through Vendor Central. Brands can also sell directly to customers through Amazon Seller Central.
The hybrid Amazon model also has certain techniques you can use to optimize, manage and track your products’ performances on the Amazon platform.
A hybrid model is not always ideal, however. It can be tricky to manage, but it also offers a few benefits worth considering.
Diversifying Product Strategy
Using Vendor Central for popular products means Amazon handles large orders and shipping, which is great for efficiency.
Seller Central, on the other hand, lets you manage niche or customized products directly, so you can control pricing and customer interactions better.
Maximizing Market Reach
A hybrid model allows you to cover more ground. Vendor Central gets your products in front of a big audience through Amazon’s channels, like Prime.
On the other hand, Seller Central allows you to run ads and promotions and interact directly with customers, targeting specific groups effectively.
Strategic Brand Management
Vendor Central lets you maintain brand consistency and use Amazon’s tools for better visibility. Seller Central helps you gather feedback, adjust offerings quickly, and try out different marketing strategies to build and strengthen your brand.
Optimizing Sales and Fulfillment Efficiencies
Vendor Central handles inventory and shipping logistics for bulk orders, saving you time and money. Seller Central gives flexibility with inventory management and FBA services for fast delivery, improving customer satisfaction.
Utilizing Comprehensive Data Insights
Both platforms offer different analytics tools to track sales, understand customer behavior, and manage inventory effectively.
By combining data from Vendor Central and Seller Central, you get a complete picture of your business performance, helping you make smart decisions and grow your sales.
Product Launches
One way you can use both platforms for hybrid selling on Amazon is to launch new products in your Vendor Central account.
Getting initial purchase orders on Vendor Central can be an extremely frustrating process. The Amazon algorithm is looking for sales history on your product, but your product can’t get any sales because Amazon does not have any inventory.
The Amazon hybrid model works great here because you can list the product on your Seller Central account to try to drive the initial sales that you need.
Create a great looking and SEO optimized listing on Vendor Central and then add that product to your Seller Central account. We then would recommend sending some inventory into FBA, and using the marketing features in Seller Central to get the product moving.
After your product has enough sales history Amazon should start sending purchase orders to your Vendor Central account for the product.
Price Management
As a vendor you have almost no control of where Amazon initially lists your product. You put your cost into the pricing template and can even suggest a MSRP, but that does not guarantee that Amazon will adhere to it.
Pricing has a direct effect on how your product performs. High pricing can kill your conversion rates, which creates a negative feedback loop for your product performance. The hybrid Amazon model can help you here.
Amazon will always try to compete for the buy box when they are a seller of a product. You can use this to your advantage by manipulating your pricing on Seller Central.
If you are selling at a lower price than Amazon, they will adjust their pricing downward to win the buy box back from you. Utilizing this technique, you can essentially reverse the feedback loop we described above – leading to increased conversions, relevancy, appearance in search results and traffic.
Adjusting your price upwards on Seller Central after Amazon has lowered their pricing does not necessarily mean that they will likewise adjust upwards. They may leave their price the same or gradually make increases overtime.
Inventory Management
The inventory order algorithm that Amazon uses on the 1P side is not the most accurate. If you’ve ever checked the weekly forecasted quantities against what they actually order you would be quite surprised to see the differences. This can cause stock-out issues for brands that are growing quickly on the Amazon platform.
One fix for this is to utilize the hybrid model strategy by adding your Vendor Central products to Seller Central and then stocking inventory at Amazon Fulfillment Centers. In the event that your Vendor Central offer runs out of inventory, your Seller Central listings will be able to handle the demand until Amazon can place more purchase orders.
Marketing & Advertising
The Vendor Central platform gives you access to a powerful advertising platform in Amazon DSP. You can actually use this platform to market any product on Amazon – including products that are not yours.
This allows you to use the Seller Central platform to generate your sales and utilize advertising features like display ads and video ads that are only available to Amazon vendors.
Hybrid selling on Amazon also allows you to build the demand when you are launching a new product on Vendor Central. You can utilize coupons and promotions in Seller Central to increase your conversion rates, average order units and build your sales history.
Optimization and Split Testing
Vendor Central has a wide variety of reports and data points available, but two of the most important metrics are missing.
Vendor Central does not allow you to see your listings traffic numbers or conversion rates. The Amazon hybrid model can help you capture this data and take advantage of it.
You can list your products in Amazon Seller Central and utilize the business reports section to see listing traffic. Amazon aggregates the total listing traffic for all sellers on a specific product which can allow you to see exactly how many people are making it to your listing.
Because Amazon always tries to win the buy box you can assume that any sales on that listing can be attributed to your Vendor Central account, and then estimate a conversion rate based on the number of sessions visible on Seller Central.
You can then take that data and use it to split test how changing images, product titles or details affect your traffic and conversion rates.
The hybrid model strategy can allow you to systematically improve your Amazon Vendor Central account and lead to long-term growth on the Amazon platform.
How to know if you should adopt an Amazon Hybrid Model
Amazon Vendor Central and Seller Central can be combined to create a powerful Amazon business model. However, there are some challenges that you will need to overcome with using a hybrid model strategy.
Think About Your Goals
If you want your products to reach more people, using both Amazon 1P and Amazon 3P can help. An Amazon hybrid model gets your products in front of more customers by selling to Amazon and directly to buyers.
Check Your Available Resources
Managing both Amazon Vendor Central and Amazon Seller Central takes time and effort. If you have a team that can handle the extra work, then a hybrid model might be a good fit.
Look at Your Products
Popular items that sell quickly might do well on 1P since Amazon buys them in bulk. Unique or niche products might do better on 3P, where you control the price and promotions. This 1P vs 3P ecommerce strategy can help boost your sales.
Think About the Money
Amazon Vendor Central can bring in steady income with big orders but usually with lower profits. Amazon Seller Central offers higher profits but needs more effort to manage.
Managing a New Platform
Learning how to use a new platform is a challenge within itself, and it requires a more hands-on approach. It also creates additional liabilities for your business, so it’s important to consider every aspect when going down the hybrid model selling route.
Seller Central is particularly much more in-depth for inventory management and reporting, and also uses terms that you may not have heard before on the Vendor Central side.
Time Commitment
Along with a different layout comes much more time required to manage your account. Selling 3P on Amazon means that you now need to manage your own inventory, prepare your own forecasts, and handle customer service inquiries, among other things.
It will take time or help to understand how to utilize different features strategically to grow your Amazon sales. There are some different marketing tools in Seller Central than Vendor Central – and even some differences between tools that are on both platforms.
Sales Tax Collection
Hybrid selling can create additional liabilities for your business. Selling 3P on Amazon means that you are responsible for collecting and remitting sales tax on your products.
This can be difficult and we recommend that you reach out to your accountant to better understand what your liabilities can be under the Amazon hybrid model.
Final Thoughts
Understanding the Amazon 1P vs 3P marketplace can help balance your income and maximize profits. The features on both platforms provide powerful tools for your business to continually grow.
Starting with a hybrid Vendor Central and Seller Central strategy is a good way for current vendors to hedge their dependency on Amazon or slowly start to transition to Amazon Seller Central.
As with any hybrid model, combining both Amazon vendor central and Amazon seller central will require a lot of work, so you need to be patient and do a lot of research. Utilizing an amazon consulting firm can help you begin the transition successfully.
The techniques discussed here will help you get the most out of the strategy. Remember that there’s value in utilizing each for your business today. Continuing with a hybrid Amazon model will help protect and grow your business against any obstacle you face on Amazon.
Author
Antonella Fleitas is highly adept at creating fact-based, evergreen content about science, language learning, and culture. Her main goal is to build a strong content foundation for her clients, based on meaningful stories that people can learn from.
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