The Pros and Cons of Amazon Vendor Express
Amazon Vendor Express presents some great opportunities for sellers to move into the vendor space with Amazon. The Amazon platform continues to be the fastest growing ecommerce platform and offers incredible opportunities to sell you products however, as with anything, there are some pros and cons to Amazon Vendor Express. We are going to spend sometime today discussing the advantages and disadvantages of Amazon Vendor Express.
The Pros of Amazon Vendor Express
There are a few great features about Amazon Vendor Express that make it an interesting opportunity for many companies looking to transition from using Amazon Seller Central to Vendor Central. One of the best perks of this program is access to Amazon Marketing Services (AMS). AMS provides sellers unique opportunities to advertise their products. You can run ads similar to the pay-per-click (PPC) ads in Seller Central or choose to run product display ads or banner ads as a Vendor. This can give you a great leg up on competition utilizing Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). Increased product visibility is one of the great features of being a Vendor however you will not have ability to create A+ detail pages.
Another great perk is not having to worry about customer service – at all. Amazon customer service reps handle all inquiries regarding products, returns and refunds. This alone will give you more time to focus on running and growing your business. Remember, under this model you are shifting from the retail side to the wholesale side so you are only dealing with your distributors (Amazon) and not your end users (customers).
Fulfillment of your product can be handled in two ways. Amazon may want to place purchase orders for large quantities and have the inventory in house. The other option would involve Amazon drop shipping from you – so receiving an order and sending to you to be shipped out. Amazon pays the cost of product shipping and your product is automatically eligible free two-day shipping for prime members. This can help your product stand out from the FBM competition. Your product listings will also say “Shipped from and Sold by Amazon.com” which can give your listing much more credibility in the eyes of the consumer.
One last great pro of the Amazon Vendor Express program is it’s free! Yes, Vendor Express is free compared to the monthly payments for a professional seller account with Amazon. It’s a small savings on monthly basis, but everything helps!
The Cons of Vendor Express
Being a wholesale distributor to Amazon means that you will see your product margins decreased. You would be selling a higher volume to Amazon at a lower (wholesale) price. The trade-off here is being able to move more product at a lower price – however that may not mean you are making more profits. Unless you believe your product demand will increase drastically by having the additional AMS marketing benefits and Amazon branding, it may make more sense to continue selling your product yourself at retail prices.
Another negative of the Vendor Express program is that there is no guarantee that Amazon will pick up your product. Amazon may request that you send an order of inventory for free to test your product out. Amazon wants to make sure that they will actually make money from your product so this trial period is usually unavoidable. The manufacturer or seller needs to look at it as an investment into becoming an Amazon vendor. Unfortunately, if your product does not move or does not move as well as Amazon would like they will decide not to pick your product up and you are out the money for the test order.
The final negative is that Amazon vendor payments are on a Net 60 basis. This means that sellers do not have readily accessible money coming back from Amazon on a regular basis. Amazon will also take a discount if it pays the invoices before the 60 days will can also decrease the revenue coming back to you.
It is important for sellers looking to transition to being a vendor to consider all the positive and negatives involved. It may not make sense for every business and Seller Central may be the best platform for you.
Contact AMZ Advisers to learn more about growing your Amazon presence