As our first Amazon and the Nordics article stated, Amazon opened its first site in Sweden. The news triggered uncertainty, which now requires business leaders in Sweden, Finland, and Norway to evaluate Amazon’s potential impact.
In Part 2, we analyse the opportunities and limitations of Amazon. In particular, we examine the pros and cons of using an Amazon Seller Central Account or an Amazon Vendor Central Account. Will the smile on Amazon’s logo reflect your experience?
Ecommerce ≠ Amazon
From books to cat-carrier dresses (buy here), it feels like all eCommerce transactions go through Amazon.
However, Amazon represents only one of many sales platforms for your products. In a report from eCommerceFuel, 70% of respondents listed their storefront as their largest sales channel. Amazon, on the other hand, contributed 6.2% to their overall revenue. Therefore, merchants still need multiple sales channels, and the situation is more complicated than Amazon will force every merchant in the Nordics to use their platform.
What are Amazon Marketing Services?
It is Amazon’s pay-per-click service where you post banner ads, product display ads, and compete against winning the buy now button.
Amazon’s shoppers often bypass the awareness phase and search for particular products to purchase immediately. Since Amazon attracts high-intent buyers, you access a stream of purchase-ready customers. In this way, Amazon gets more serious leads than Google.
To get started on Amazon, you have two options: an Amazon Seller Central Account or an Amazon Vendor Central Account.
The Benefits of Vendor Central and Seller Central Accounts
Many benefits come from selling on Amazon: trust, customers, and fulfilment. Let’s learn more about the accounts’ particular benefits.
The Benefits of an Amazon Vendor Central Account
Vendor Central Accounts are an invite-only account where various brands and retailers sell to Amazon. They possess various strengths:
If you accept the Vendor Central Account option, Amazon becomes your buyer. You then follow Amazon’s shipping criteria and provide purchased products in accordance with Amazon’s guidelines. But remember: you must meet Amazon’s policies to benefit (learn more in the cons section).
Amazon vendors access marketing and product page features. For example, you can add product videos, pictures, and use the Amazon Vine service. In addition, Amazon gives the product to professional reviewers who purchase, use, and review the content for you. This addition of social proof adds legitimacy to your brand.
You join Amazon’s subscription service: subscribe and save (Amazon Prime). Under Amazon Prime, your product gets same-day shipping through Amazon’s fulfilment centres. As a result, your customers get the experience they deserve.
The Vendor Central account gives privileged access. Typically, invites go to well-known brands and manufacturers whose products are at the top of product categories with high sales and revenue. The Vendor Central Account separates you from other Amazon sellers, giving you an elevated stage to showcase your products.
Multiple Advertising Options
Amazon offers various marketing options in a self-service format. To quote Amazon, “Self-service ads can help you scale sales and growth on Amazon. You control how much you invest, giving you the flexibility to choose what works best for your business. You can also change your daily budget at any time.”
Vendor Central Accounts can use quality marketing features:
Sponsored products highlight individual listings and target specific searches or product types. They appear in search results and on product detail pages.
Sponsored brands promote specific products and come with a custom headline and logo. Shoppers find sponsored brands at the top of search results, driving users to custom landing pages or stores.
Amazon stores give vendors a multiple-page hub, featuring every available product at no additional cost.
Are you struggling to understand the benefits of a Vendor Central Account compared to a Seller Central Account? Let’s transition into the pros of a Seller Central Account.
The benefits of an Amazon Seller Central Account
The Amazon Seller Central Account doesn’t come with a special invitation, but you still receive benefits.
Open to anyone for immediate use
You avoid barriers to entry on Amazon’s marketplace and connect to your customer immediately. From a practical standpoint, it’s easy to start selling on Amazon—taking 24 hours if you have the relevant information ready.
Access Amazon’s Customers
Access to traffic is a huge benefit, particularly for young businesses with a tiny audience. After all, Amazon attracts customers with high purchasing intent and relieves you from spending time on lead acquisition. Another core strength lies in Amazon’s brand: customers trust Amazon and sprint through the payment process. By selling through Amazon, your business benefits from customer trust.
More flexible logistical options
The Seller Central Account accesses Amazon’s shipping options. After selling on Amazon, you can fulfil customers’ orders with multiple options. The Amazon selling experience allows you to compare their services and fees against other third-party providers. After a test run, you can consider how to get your product to your customer in the fastest and most affordable way possible.
Brand controls retail pricing
Of course, price plays a significant role in any purchasing decision. Under the Amazon Seller Central Account, the seller decides how much customers pay for their product.
In a nutshell, Fulfilment by Amazon (FBA) means Amazon’s fulfilment centres pick, pack, ship, and provide customer service for these products. With Amazon doing the lifting, you save time and resources.
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The Cons of vendor central and seller central accounts
While clear benefits exist for choosing either a vendor central or seller central account, a few drawbacks emerge from both Amazon accounts.
The Cons of an Amazon Seller Central Account
Amazon’s strengths are also its weaknesses. Yes, millions of loyal customers shop on Amazon. But they love Amazon’s marketplace—not you.
Restricts Your Brand
Amazon weakens your ability to stand out. You can only display your logo, name, and a few images. But, you also lose control over linking to your website or social media accounts.
Your eCommerce store beats Amazon in brand building. For example, a customer searching for headphones only sees the immediate results. When unsatisfied, they might then filter by price or average customer rating. Sponsored products also appear at the top of the page, distracting them from your items. Amazon customers ignore your brand and instead choose a product based on images, reviews, and price.
If you’re a manufacturer selling only on Amazon, then you risk losing customers based on your page listing. Nonetheless, some customers will come to Amazon for their favourite brand. However, only global brands merit such a following.
Limited Marketing Capability
Since Amazon withholds customer data, you lose the chance to perform email marketing campaigns, targeted promotions, and personalised shopping experiences. You cannot perform these critical marketing activities without knowing your customers.
No Control of Inventory
If you join FBA, you lose control over your inventory. When Amazon transports your merchandise to different warehouses, your products are unsellable while in transit. By letting Amazon take control of your inventory management, you also lose control of your logistics chain. And with concepts like Last-Mile Logistics, Amazon delivers to and interacts with your customers instead of you.
Must Rely on Multiple Ecommerce Platforms
One risk is that your product is successful. Amazon could find a manufacturer and make the same item at speed and scale before you adjust. With control of product placement, they could list their product before yours. Amazon’s control over Seller Central Accounts is dangerous if you only use their platform.
Lastly, Amazon takes a fee and puts a dent in your revenue. Consider costs before an FBA agreement.
The Cons of an Amazon Vendor Central Account
Amazon Vendor Central Accounts have a few drawbacks. Let’s learn more about how important they are to your future with Amazon.
Amazon Helps Your Competitors
If you’re a global company with high brand recognition, then Amazon could represent yet another sales channel. For instance, Nike developed an Amazon brand store. However, even with a brand store, competitors (including Amazon) still vie for your customer.
No Control Over Retail Pricing
A Vendor Central Account loses control over its product’s price, as Amazon lowers prices at their discretion. Thus, manufacturers risk their image when their items appear next to lesser-known rivals in the price column.
While fulfilment remains a crucial part of Amazon’s allure, they also charge stiff fees for non-compliance. Amazon’s rapid shipments require fast delivery times and push you to fulfil Amazon’s standards or face repercussions: a non-compliance fee or refusal of your products.
Amazon fulfilment centres have limited space for products. If your product goes unsold for six months, Amazon charges a long-term storage fee.
No Control Over Logistics
In the case of FBA, your company’s maturity and success matter. For established brands with their distribution centres, a tighter grip on logistics is more important than meeting Amazon’s requirements. However, new brands can test FBA to see how it impacts their costs.
Selling on Amazon has pros and cons and requires analysis of your company’s goals and future.
A Double-Edged Sword
Selling on Amazon means losing complete control. On the other hand, an eCommerce store provides freedom and flexibility: you control design, logistics, inventory, branding, content marketing, and advertising. You also create the customer experience you want. From education to storytelling and layouts to navigation, you wave the conductor’s baton in helping your customers.
Apocalyptic thinking on Amazon in the Nordics is everywhere, especially the idea that all Nordic eCommerce and physical stores are under threat from Amazon. To look on the bright side, you can access Amazon’s power (marketing, data, branding) and global customer base.
Amazon is here—embrace its arrival.
Check out Part 3 of Amazon and the Nordics as we discuss how you can create an Amazon store that has the ingredients for success.