Should Sellers Use Amazon Vendor Express?

Amazon Vendor Express vs. Seller Central vs. Vendor Central

Amazon has successfully cemented itself as the dominant online marketplace, allowing both brands and sellers to offer products to an ever-growing customer base. Seller Central is the default platform for new members, but Amazon Vendor Express and Vendor Central offer a more assisted experience.

The three ways one can take advantage of Amazon sales are:

  • Amazon Seller Central: The most common platform requires either a variable fee based on sales volume or a flat monthly fee in order to become enrolled. Being a seller offers the most control and highest profit opportunities, but requires the most input and management.

 

  • Amazon Vendor Central: An invite-only platform offered to brand owners with a history of high sales performance and who practice general best business practices. It grants users the ability to sell directly to Amazon and access Amazon Marketing Services. It is largely hands-off, allowing businesses to focus on product development.

 

  • Amazon Vendor Express: A sort-of intermediary between the two—it offers some of the same features of Vendor Central but allows brand owners to opt-in, registering as an Amazon vendor without being forced to wait for an invitation.

 

With the freedom to choose, Seller Central users are able to consider which platform is best-suited to serve their business and/or specific products, and if it makes sense to pursue Vendor Express.

Realizing the Limitations of Seller Central

As mentioned, Seller Central is the default platform; it is easy to join and offers users a large amount of control over their sales operations. Still, there are notable limitations to the offerings of the Seller Central platform:

Vendor Express paper clip standoutStanding out in the crowd: With it being so easy to register for Seller Central, there is stark competition for numerous product categories. Without A+ content and limited advertising options, it can be difficult to establish brand discoverability and distinguish yourself from competition.

Competing for the buy-box: Ultimately everyone, regardless of whether you sell on Amazon as a 3P seller or vendor, will face competition for ownership of the buy-box, but generally speaking ownership favors listings sold by Amazon.

Time and resource consumption: Being successful on Seller Central requires constant maintenance of your Seller Central account. Handling pricing strategy, fulfillment options, and advertising and brand development can quickly become overwhelming and expensive.

For sellers looking to expand their Amazon sales without increasing time and resource commitments for account management, some sellers will look to Amazon Vendor Express as an opportunity to supplement their current sales strategy.

Advantages of using Amazon Vendor Express

Vendor Express allows sellers to transition to vendor accounts, selling their products to Amazon, rather than directly to consumers, without the need of an invitation. As stated directly on the service’s Amazon homepage, “You sell us [Amazon] your products and we [Amazon] take care of the rest—from shipping and promoting to customer service and returns.” Amazon Vendor Express enables users to take advantage of the following features:

Free to join: Unlike Seller Central, there is no monthly/annual or per-item referral fee to sign up

Even initial orders will be made in bulk: After a trial period proves a product’s selling potential, Amazon will respond with bulk orders, which are meant to generate larger sales volumes.

“Sold by Amazon”: As a vendor, your listing will be associated with the Amazon brand name, being “Sold by Amazon” and having increased buy-box competitiveness.

Don’t worry about fulfillment: Once a seller becomes a vendor, Amazon will handle fulfillment of sold products, making the products eligible for free 2-day shipping for prime members and free shipping for non-prime customers with orders over $49. Members of Amazon Vendor Express have two fulfillment options:Vendor Express package

  • If opting for FBA, Amazon will handle inventory and shipping cost.
  • If opting for Direct Fulfillment (drop-ship), Amazon will send business owners a prepaid and pre-filled form so that vendors may ship directly to customers.

 

Let Amazon handle your customer service: Amazon will additionally handle customer service 24 hours a day 7 days a week, freeing up business owners’ time so that they can focus on other business demands.

Get access to Amazon Marketing Service (AMS): Perhaps the most valuable offering gained by signing up for Vendor Express is being offered access to Amazon Marketing Services (AMS). A valuable feature, AMS allows users to access more robust sales reports, optimize their content, and create advertisements on Amazon. Sponsored Products presents vendors with the opportunity to pay Amazon only when their ad is clicked—similar to the PPC structure of Google AdWords—in exchange for their products being featured on “Sponsored Products” pages.

One notable difference of AMS accessibility between Vendor Central and Vendor Express is that the latter receives no regular access to A+ content, a premium feature that shows more developed and optimized vendor and product pages on the Amazon site.

(Note: Amazon is currently offering a promotion to offer A+ content to new Vendor Express users, but it is capped at 5 product pages and is limited to products that are “new” on Amazon, ie. not previously listed.)

Still, in order to take advantage of the benefits of Amazon Vendor Express, there are trade-offs that sellers must be prepared to make.

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Amazon Vendor Express Disadvantages

For any seller believing that Amazon Vendor Express will offer all of the same advantages as Vendor Central, the limitation of A+ content is a realization that there are notable differences between the two platforms.

Before being free, Amazon requires a trial period: Though Amazon advertises that Vendor Express is free to join, before an initial purchase order for any product is offered, they will very-likely request a donation of products to use for sampling the market and testing consumer demand. We are unaware of a set amount or product Amazon will request or a timeframe within which they will make their decision. Business owners are forced to treat the cost of this exchange as an investment into the Vendor Express platform.

In response to concern over this style of exchange, the Amazon website offers this:

“We understand that your products cost money, so we want you to know we are using them to build your Amazon product detail page and evaluate customer demand.”

While Amazon ensures that the transaction is for the security of both parties, there is still risk on the end of the business owner. Even after products are donated to Amazon, there is no guarantee that they will sell them and offer a purchase order, leaving the business to absorb the costs of the transaction.

Forfeiting pricing control: If Amazon chooses to move forward with a new vendor and decides to offer an initial purchase agreement, they will ask the seller to submit an offered selling price (essentially their MSRP for the product) to Amazon, to which Amazon will respond with their predetermined expected price, the price Amazon is expecting to purchase the product (in bulk) from the business.

There are generally discrepancies between the two prices, but transaction history suggests that Amazon’s expected purchase price is generally the price used in the purchase agreement. There is not typically much flexibility in purchase price agreements, though some small negotiation may be available.

Higher sales volume does not guarantee increased profit: Because sales are made in bulk but at a lower price, sales volume will increase but sellers will not necessarily realize an increase in profit, as the profit margin per product will have shrunk.

Waiting for delayed payment: For profits that have been incurred through new Vendor Express sales, Amazon exercises the right to return them to the vendor on a bi-monthly (up to 60 day pay period) schedule. This can create problems for sellers who are previously used to accessing their funds on a bi-weekly (14 day) schedule and who may not be able to or willing to wait on open Accounts Receivable for that amount of time.

Amazon Vendor Express Expert Review

One of the most attractive aspects of the Amazon Vendor Express platform is the flexibility it offers businesses by giving them the opportunity to opt-in.Nick Sandberg, Amazon Vendor Express Expert

“Amazon Vendor Express offers business the opportunity to get their feet wet and familiarize themselves with a vendor platform without the pressure of formal vendor agreements or being assigned an Amazon representative,”  Nick Sandberg, Marketplace Program Development Manager at CPC Strategy said.

For businesses unsure if whether the Vendor Central option is a good business fit, Amazon Vendor Express offers a low-commitment option to experiment.

This flexibility also allows businesses to tailor which products they choose to offer as a vendor. Due to the lack of control and lower margins associated with the program, and because it is a highly automated platform, it may be advantageous to list products which historically haven’t performed well.

The platform allows brand owners to list products on Amazon with little to no further resources committed toward selling them. Conversely, the platform assumes a large amount of control and profit potential from would-be sellers, so it is not recommended for flagship products.

Weighing the Positives and Negatives: Should Sellers Opt-In?

By becoming a vendor and selling directly to Amazon, businesses must realize that there is a considerable amount of control they are trading over in exchange for associated branding with Amazon and more-automated sales. In order to be accepted as a vendor, a brand owner must be prepared to accept a lower sales price and relinquish control over aspects of the sales funnel. In exchange, brand owners are able to list their products on a marketplace with very little resource commitment, most notably time.

Sales will be at a lower profit margin, but ideally will be at higher volumes. Amazon will handle fulfillment and customer service, which alleviates those tasks from business owners but which does serve to separate customers from the vendor.

When asked what previous client experience has been, Sandberg added the following:

“Clients who have entered their Vendor Express relationship aware of both the positives and negatives of the platform and with the right expectations have had generally good experiences with it. Generally, those unhappy with their experience typically had unrealistic or inaccurate expectations of what the platform offers.”

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