The Amazon hybrid model – Vendor and Seller Central combined
Published on by Matthias Habel
There are two different models for companies to choose from when working with Amazon: Vendor Central and Seller Central. However, retailers and manufacturers often opt for the hybrid model, which combines both options. Since both models have their advantages and disadvantages, it is important for companies to find out which one is right for them.
Table of contents
Amazon Seller or Vendor – What are the differences?
If you decide to use Amazon as your marketplace, you have the option of selling through either Vendor Central or Seller Central. There are a few differences between the two models:
Amazon Seller Central
In the Seller model, the seller is responsible for selling the goods. They retain ownership of the products and use Amazon as a sales platform. They retain full control over inventory, prices, and shipping, and are also responsible for handling returns.
Amazon Vendor Central
An Amazon vendor transfers part of their responsibility to Amazon. They sell their products to Amazon in the B2B sector and assume the role of a supplier. Amazon becomes the owner of the goods and is responsible for shipping, sales, and returns. There is no longer any direct contact between end customers and vendors, which makes the work easier. However, pricing is in the hands of Amazon, and a vendor has no influence over it.
What is the Amazon hybrid model?
The Amazon hybrid model offers the opportunity to combine the advantages of both models. This gives both sellers and vendors more customization options, flexibility, and increased security. But how does this hybrid model work?
In short, in the Amazon hybrid model, vendors sell directly to end customers via their own seller accounts. At the same time, however, they also supply Amazon with products via their vendor accounts. The parallel use of both accounts gives vendors control over sales to end customers, while retailers and manufacturers benefit from Amazon's reach and resources as a sales platform.
Advantages of the hybrid model
The hybrid model generally offers greater flexibility and security. With a well-thought-out marketplace strategy, you can reap the benefits of this model:
Ensure product availability: As a seller, you have full control over your inventory and can make your products available at any time to avoid out-of-stock situations.
More control over pricing: In Seller Central, you have pricing authority over your products and can act more flexibly and independently when it comes to pricing.
Faster product listing: As a seller, you can make your products available on Amazon more quickly, whereas vendors often have to wait weeks for Amazon to list their products.
Specific analysis data via Seller Central: With a seller account, you receive meaningful information on important key figures such as the conversion rate, whereas vendors often only receive relative or index-based analysis data.
Logistical advantages: Some products are classified as problematic by Amazon and are refused storage. In the hybrid model, you can sell these products via your seller account, as they do not have to be stored by Amazon.
Avoiding profitability issues: Products that Amazon considers unprofitable are given CraP status and are no longer reordered. With the hybrid model, you can continue to sell these products via your seller account and avoid profitability issues.
Minimizing risk: You can easily switch to a different model later on. This gives you the flexibility to adjust your sales strategy while maintaining your revenue.
The hybrid model thus offers many opportunities to ensure product availability, control prices, list products more quickly, obtain meaningful analytical data, leverage logistical advantages, and circumvent profitability issues.
Disadvantages & risks of the hybrid model
A combined sales strategy in a hybrid model requires careful planning, as it also presents a number of challenges. Here are some pitfalls that brand manufacturers may encounter:
Increased workload: The hybrid model requires management of both Seller Central and Vendor Central. This requires a fundamental understanding of both systems and additional work, including warehouse management, inventory control, customer orders, customer support, and tax obligations.
Customer satisfaction: Amazon attaches great importance to being the most customer-friendly company in the world. Vendors benefit from Amazon's customer-friendly services, such as shipping and returns processing. As a seller, you must also ensure high customer satisfaction, as negative reviews and poor seller performance can have consequences, including the suspension of your seller account.
Country-specific laws: In the Vendor Program, Amazon is responsible for legal issues relating to international sales. However, as a seller, you must familiarize yourself with country-specific laws, such as those relating to sales tax. As a seller, you are bound by the legal requirements of the country in which you sell.
Competition with your own wholesale customers: The hybrid model leads to direct and obvious competition with your wholesale customers. Your seller account competes with these customers for the Buy Box and other ranking factors.
Although the hybrid model offers advantages, it also requires increased effort, ensuring customer satisfaction, compliance with country-specific laws, and dealing with competition from your own wholesale customers. Thorough planning and a strategic approach are crucial to successfully overcoming these challenges. An Amazon agency can provide additional support here.
Conclusion
In summary, choosing the right distribution model depends on your company's e-commerce and distribution approach and should be considered on a case-by-case basis. With the hybrid model, brand manufacturers need to be aware of the challenges and high workload involved, which is why the model is particularly worthwhile for companies with higher annual sales. Nevertheless, in certain cases, the hybrid model can offer a sensible distribution option for benefiting from the advantages of the vendor and seller programs. However, it is important to note that the differences between the two models are becoming increasingly blurred and Amazon is limiting the freedom of choice between them by dictating to suppliers whether they should sell as a seller or a vendor.
Frequently asked questions
Related Posts
Let's go into more detail.