Migrating from Amazon’s Vendor Central (VC) to Seller Central (SC) can be a strategic move for many businesses. If you’re thinking of switching from VC to SC, you're likely looking for more control over your pricing, inventory, and branding. This blog will walk you through the step-by-step process of how to switch from Vendor Central to Seller Central, address common challenges, and provide tips on avoiding mistakes. We'll also show you how professional assistance from a company like SalesDuo can help make this transition smooth and successful.
Introduction
Are you feeling the limitations of Vendor Central? Perhaps you're dealing with strict pricing policies, lower profit margins, or delayed payments. Maybe you’re frustrated with the lack of control over your product listings and marketing strategies. Moving to Seller Central can give you greater autonomy, allowing you to manage your inventory, pricing, and customer interactions directly.
Vendor Central is often seen as a more restrictive platform because Amazon acts as the retailer, purchasing your products wholesale and reselling them. In contrast, Seller Central gives you the opportunity to act as the retailer, meaning you can sell directly to customers on Amazon's marketplace. This comes with several advantages, including better profit margins and more control over product listings.
But making the switch is not a simple flip of a switch. It involves careful planning, evaluation, and execution. Below, we’ll guide you through the essential steps for moving from Vendor Central to Seller Central, ensuring a successful transition.
Common Questions from Vendor Central Brands
Before diving into the details of transitioning from Vendor Central to Seller Central/FBA, it’s important to address the key questions brands typically ask when they're on Vendor Central. These are recurring concerns that can make or break their business model:
- How to increase the costs on Amazon Vendor Central?
- How can we have Amazon adhere to MAP (Minimum Advertised Price)?
- How can we have Amazon order all items on Vendor Central, not just the top-selling items?
- How to stop Vendor Central shortage claims and chargebacks?
Unfortunately, for most of these questions, the answer is a resounding "No." It's just not possible to control these elements when you're working within Vendor Central. To clarify further:
- Increasing costs on Vendor Central is not in your control. Amazon has tight control over how much they are willing to pay for products purchased through Vendor Central. Unlike Seller Central, you can't adjust prices freely.
- MAP enforcement on Vendor Central is a persistent challenge. While you might have agreements with retailers to follow a MAP policy, getting Amazon to adhere to it is another story. They often discount products at their discretion, undermining your pricing strategy.
- Getting Amazon to order all items listed on Vendor Central can be difficult. Amazon tends to prioritize high-demand, fast-moving products, leaving slower-selling items without purchase orders. While the "Born to Run" program once offered a way to promote new products, this has become more restrictive, making it harder to guarantee that Amazon will carry all of your items.
- Vendor Central shortage claims and chargebacks remain a common frustration for brands. These often arise from discrepancies in inventory or shipping processes and can cost your business valuable revenue. Unfortunately, they’re an inherent part of the Vendor Central model.
For many brands, the limitations and lack of flexibility in Vendor Central are driving them to consider Seller Central/FBA as a better long-term solution.
Why Seller Central/FBA Provides a Solution?
The good news is that Seller Central offers a level of control that simply isn’t available in Vendor Central. With Seller Central/FBA, you’re in charge of many key aspects of your business that would otherwise be controlled by Amazon on Vendor Central.
Here are some key advantages of switching from Vendor Central to Seller Central:
- Retail Price Control: On Seller Central, you control the retail price. You can change it whenever you like (within reasonable limits, such as not altering it more than 10% from the average price over the last 100 orders). This allows you to maintain price parity across other online retailers and your own website. This control alone can have a massive impact on profitability and brand consistency.
- Flexibility in Inventory Management: Unlike Vendor Central, where you rely on Amazon to order products, Seller Central/FBA gives you full control over inventory. You can decide which products to send to Amazon fulfillment centers, how much to send, and when to restock. This flexibility is crucial, especially for brands with large catalogs or niche products.
Now, let’s dive into the actual process of transitioning from Vendor Central to Seller Central/FBA.
Step-by-Step Guide to Moving from Vendor Central to Seller Central/FBA
If you've made the decision to switch, the transition doesn’t have to be overwhelming. By following a few key steps, you can manage the switch effectively without disrupting your sales flow.
1. Check for Profitability Between Vendor Central and Seller Central/FBA
The first step is to identify whether Seller Central/FBA will be more profitable than Vendor Central for your brand. Here's how you can break down the costs:
- Vendor Central Costs: Take the price at which you're selling your products to Amazon and subtract the CoOp fees. This will give you the net fee you're receiving for each sale.
Vendor Central Costs = Selling Price - CoOp fees
- Seller Central/FBA Costs: To calculate the costs of selling via Seller Central or FBA, you can use Amazon’s FBA Revenue Calculator. You’ll need to factor in shipping costs from your warehouse to the Amazon Fulfillment Centers (FCs). You can access the calculator here.
2. Find Out the Inventory Amazon Holds from Vendor Central
Your next step is to assess how much inventory Amazon currently holds in its fulfillment centers for your products. You can use your Vendor Central dashboard to check the inventory levels. Based on this, you can estimate how many weeks of stock Amazon has left, using the weekly sell-through rate as a guide.
3. Plan Your Seller Central/FBA Inventory
Once you've identified how much inventory Amazon has left on Vendor Central, you can start strategizing your Seller Central/FBA shipments. Keep in mind that it usually takes about a month for new shipments to arrive at Amazon’s fulfillment centers and become available for sale.
4. Stop Accepting Vendor Central Purchase Orders
When you’re ready to switch from Vendor Central to Seller Central, stop accepting Vendor Central purchase orders (POs) for the SKUs you plan to sell through Seller Central/FBA. By doing this, you’ll allow your Vendor Central inventory to deplete in a natural way, while your new Seller Central/FBA listings take over.
5. Gradually Deplete Vendor Central Inventory
As your Vendor Central inventory decreases, your Seller Central/FBA offer will start to go live. Amazon will continue to prioritize the Vendor Central offer until the inventory is depleted. But once it’s gone, your Seller Central/FBA listings will take over and win the Buy Box.
6. Managing Offers from Both Vendor Central and Seller Central/FBA
It’s quite possible to have offers from both Vendor Central and Seller Central/FBA at the same time. However, it’s crucial for sellers to understand that Amazon will always prioritize the Vendor Central offer for the Buy Box. This means that unless Amazon runs out of inventory on Vendor Central, you’ll struggle to win sales through your Seller Central/FBA offer.
For this reason, it’s important to let your Vendor Central inventory deplete before fully relying on Seller Central/FBA.
Challenges with Seller Central/FBA
While Seller Central/FBA offers many benefits, it’s not without its challenges. Brands need to be aware of these potential hurdles and how to address them:
1. Warehouse Space Allocation
When you first transition to Seller Central/FBA, Amazon will allocate a certain amount of warehouse space for your inventory. To optimize your space, it’s important to focus on sending fast-moving items first. As these products sell, you’ll be able to request more space for other items in your catalog.
2. Inventory Performance Index (IPI) Score
Your IPI score is a key metric in Seller Central/FBA. If your score dips below a certain threshold, you may face limitations on how much inventory you can send to Amazon fulfillment centers. To maintain a healthy IPI score, it’s important to manage sell-through rates and avoid excess inventory sitting in Amazon’s warehouses.
3. Accounting for the Consignment Model
Unlike Vendor Central, where you get paid for all items sent to Amazon, Seller Central/FBA operates on a consignment model. This means you only get paid when items are sold. Your accounting team will need to adjust to this model by treating the inventory in Amazon's fulfillment centers as an extension of your warehouse. Payment cycles occur every 15 days for items sold.
Why Seller Central/FBA is Worth the Transition
Despite the challenges, the advantages of Seller Central/FBA far outweigh the downsides. Here’s why it’s worth considering:
- Control Over Pricing: You can set and adjust your retail prices as needed, allowing you to maintain consistency across sales channels and protect your brand’s pricing strategy.
- Flexibility with Inventory: You decide which products to send to Amazon, ensuring that your entire catalog is represented rather than just top-selling items.
- Improved Profit Margins: For most products with a retail price above $15, Seller Central/FBA is more profitable, even when you account for shipping and fulfillment fees.
As Jeff Bezos mentioned in his 2018 shareholder letter, “Third-party sellers are kicking our first-party butt. Badly.” Seller Central/FBA is proving to be the future of retail on Amazon, allowing brands to take control of their destiny and maximize profitability.
Common Mistakes to Avoid During the Transition
1. Not Managing Vendor Terms Properly Before Exiting
Before switching, ensure that all outstanding purchase orders and contractual obligations are settled. Failure to do so can result in penalties or loss of revenue. To avoid this, work with your vendor manager to terminate vendor agreements amicably and fulfill any remaining purchase orders.
2. Underestimating the Inventory and Fulfillment Differences
As mentioned earlier, switching from Vendor Central to Seller Central gives you control over fulfillment. However, many sellers underestimate the complexity of managing inventory and shipments without Amazon’s help. Plan your logistics well in advance. Ensure that your warehouse is equipped to handle orders or that your FBA plan is in place to avoid stockouts and delays.
3. Failure to Adjust Marketing Tactics
In Vendor Central, Amazon often runs promotions for your products. In Seller Central, you’ll need to take over this responsibility, which requires a solid marketing strategy. You can invest in PPC campaigns, adjust your listing keywords, and monitor advertising performance to ensure your products remain visible to buyers.
4. Ignoring Pricing Strategies
Switching from Vendor Central to Seller Central gives you more control over pricing, but with that freedom comes responsibility. Without a clear pricing strategy, you may lose the Buy Box or face stiff competition. Keep a close eye on competitor pricing, use dynamic pricing tools if necessary, and adjust prices regularly to stay competitive without sacrificing profits.
Conclusion and Next Steps
Moving from Vendor Central to Seller Central is a transformative process that allows you to take control of your business, improve profit margins, and gain flexibility in how you sell on Amazon. While the transition from Vendor Central to Seller Central/FBA requires planning and effort, the benefits make it a smart move for many brands. By following the steps outlined here, you can manage the switch smoothly and take full advantage of the flexibility and profitability that Seller Central/FBA has to offer.
However, the process comes with challenges, and there’s potential for mistakes that could hinder your success. Partnering with a trusted eCommerce expert like SalesDuo can help you navigate these challenges. We specialize in managing Amazon account transitions, ensuring you avoid common pitfalls like mismanaging vendor terms, inventory, and marketing. With our help, you can transition seamlessly while maximizing the benefits of Seller Central.
So, are you ready to make the switch? Contact SalesDuo today to get professional support in managing your Amazon account effectively and unlock the full potential of Seller Central.
Frequently Asked Questions
About the Author
Arjun Narayan and Giridhara Prasad collaborate on this blog, with Arjun leading as the writer and Giridhara providing valuable insights. Together, they bring expertise in their respective fields of e-commerce management, combining Arjun's strategic contributions with Giri's acumen. Outside work, they share interests in travel, technology, sports, and exploring new cuisines.
