Amazon, the world leader in e-commerce, offers two main selling methods for businesses: the Vendor Program (1P - Amazon Supplier - First Party) and the Seller Program (3P - Third-Party Vendors - Third Party).
Each has distinct characteristics that influence the turnover generated on the platform.
1. Definition of Amazon Vendor and Amazon Seller Models
- Amazon Vendor : This model works on a B2B basis, where manufacturers and distributors wholesale their products directly to Amazon. Amazon then becomes the reseller, managing pricing, marketing, and logistics. Enrollment in this program is by invitation only.
- Amazon Seller : Here, third-party sellers (3P) use the Amazon marketplace to sell directly to consumers. They control prices, product listings and choose between managing logistics themselves or using the Fulfillment by Amazon (FBA) service. This program is open to all, without the need for an invitation.
2. The Strengths of the Amazon Vendor Model
- Access to Major Brands : Major brands often prefer the Vendor model, benefiting from the reputation and trust associated with “Sold by Amazon” products.
- Logistics and Marketing Managed by Amazon : Amazon takes care of storage, shipping, and customer service, reducing the operational burden on suppliers.
- Increased visibility : Vendor products often benefit from a better position in search results and during promotions, increasing their exposure to buyers.
- Significant Sales Volumes : Thanks to Amazon's global reach, Vendor products can reach a large audience, driving sales.
3. Amazon Seller Limits
- Intense competition : Millions of sellers are present on the marketplace, making differentiation difficult.
- Autonomous Management : Sellers are responsible for logistics, customer service, and returns, which can be complex and expensive.
- Addiction to advertising : To stand out, salespeople often have to invest in advertising campaigns, increasing operational costs.
- Limited Control over Amazon Policies : Changes in Amazon policies or algorithms may impact sales from third-party sellers without notice.
4. Why Amazon Vendor Generates More Revenue for Amazon
- Higher Profit Margins : By buying in bulk at negotiated prices, Amazon can apply its own margins when reselling, thus optimizing its profits.
- Stable Contractual Relationships : Agreements with vendors ensure predictability of supplies and revenues for Amazon.
- Scale effect : Major brands provide significant volumes of products, increasing overall sales.
- Control over Prices and Promotions : Amazon can adjust pricing and promotional strategies to maximize sales and profits.
5. Future Prospects for Amazon Vendor and Seller
- Current trends : The Vendor model remains an essential pillar, especially for big brands looking for a stronger presence on the platform.
- Growth of Independent Vendors : Third-party sellers are diversifying the product offering, attracting a diverse customer base and contributing to Amazon's dynamic ecosystem.
- Amazon strategy : The company aims to balance the two models, taking advantage of the advantages of each to maintain its dominant position in the market.
Conclusion
The Amazon Vendor and Seller programs offer distinct opportunities for businesses looking to sell on the platform. The Vendor model, with its direct integration and logistical advantages, contributes significantly to Amazon's turnover, in particular thanks to partnerships with major brands. However, the Seller model also plays a crucial role in diversifying the supply and meeting a growing demand for specialty products. For businesses, choosing between these two models will depend on their strategy, resources, and business goals.
FAQS
- What Brands Use Amazon Vendor?
Many major international brands, especially in the electronics, fashion, and consumer goods sectors, collaborate with Amazon through the Vendor program.
- Can a Seller Switch from Seller to Vendor?
Yes, but access to the Vendor program is generally by invitation from Amazon. Interested sellers may express interest, but the final decision is up to Amazon.
- What are the costs associated with each model?
In the Vendor model, suppliers sell to Amazon in bulk at negotiated prices, often lower than retail prices. In the Seller model, sellers can set their own prices, but must take into account selling costs, logistics costs, and advertising expenses.
