Amazon is an e-commerce juggernaut which has played a major role in revolutionizing the way goods are purchased and sold around the world. Much of this success is due to the fact that Amazon has provided a wide variety of services to help companies of varying sizes sell their products on its platform.
Fulfillment by Amazon (FBA), Amazon Vendor Central, and the standard Amazon Marketplace all fall into this category, with the Amazon Vendor Express joining them later on.
Note that Amazon Vendor Express was discontinued in 2018; the purpose of this comparison is to show how businesses have adjusted to the site’s other selling options.
Let us take a detailed look into these selling options, and see which one among the Amazon Vendor Express and FBA is best suited for your business interests.
Difference Between Amazon Vendor Express vs FBA
Amazon Vendor Express
Amazon’s success can be attributed in large part to the company’s novel approach to incorporating businesses into its ecosystem. With the introduction of new sales channels, businesses of all sizes have been able to take advantage of Amazon’s massive user base and well-developed supply chain.
Amazon Vendor Express, launched in 2015, is one such platform, as it facilitates the sale of products from wholesalers and manufacturers directly to Amazon. This platform was designed to make it easier for small businesses to sell on Amazon and to reduce the burden of warehousing, packaging, and shipping large orders.
Vendor Express was essentially a wholesale relationship between vendors and Amazon, in contrast to other selling platforms where businesses sold products directly to customers. Under this plan, Amazon would source goods from third parties and distribute them to customers without going through middlemen.
However, Amazon decided to end the Vendor Express program in 2018, saying that the program’s success was a great learning experience, leading to the company’s subsequent efforts to enhance the overall shopping and selling experiences for its customers.
The discontinuation of Amazon Vendor Express shocked the majority of Amazon sellers, who sellers were forced to look elsewhere within the Amazon ecosystem, which led them to…
Fulfillment by Amazon (FBA) is Amazon’s flagship fulfillment program, allowing sellers to take advantage of its unmatched distribution network and customer services. Sellers can avoid the hassle of logistics by keeping their inventory in one of Amazon’s fulfillment centers. Amazon handles everything from inventory to shipping to customer service when an order is placed. To better serve their customers, sellers can outsource order fulfillment to Amazon and devote more time and energy to creating and marketing their products.
Related: How to ship items on Amazon Fba?
Benefits of Amazon Vendor Express
Amazon Vendor Express offered several benefits to sellers, such as:
- Integration into the Amazon catalog and search
- Automated product pricing utilizing advanced algorithms from Amazon
- Free two-day shipping for your products to Amazon Prime members
- Joining the program was cost-free.
- Around-the-clock customer service and customer returns
- Storage and handling of orders for your product
- A direct fulfillment (dropship) option allows you to ship directly to Amazon customers with prepaid shipping
- Costs of shipping to Amazon or shipping from your warehouse directly to Amazon customers
- Amazon Marketing programs, including Recommendations, Customers Who Bought This Item Also Bought, Best Sellers, and many others
- With Amazon’s global customer base, merchants could potentially reach millions of potential buyers.
- Amazon took care of everything from warehousing to shipping to customer service, making life easier for suppliers.
- Due to Amazon’s stellar reputation, sellers could rest easy knowing their payments would never be in long-term jeopardy.
Why Was Amazon Vendor Express Discontinued?
Amazon scrapped Vendor Express in 2018 despite its usefulness. The official statement from the company implied that the program was meant to be a testing ground for different ideas the company had, and sellers’ opinions and the platform’s successes and failures provided that very data, leading to the decision to discontinue it. Amazon realized it could do more for its partners if it invested in enhancing its discovery, sales, and operational efficiency programs and tools.
The difficulties and overhead of keeping the wholesale relationship model operational for smaller businesses were also likely to be a contributing factor to their decision to end the service. Amazon may have encountered operational and logistical difficulties as a result of dealing with a large number of small-scale retailers. Moreover, problems like erratic product availability, poor quality control, and price disagreements could have played a role in the choice.
Amazon also had planned to divert sellers to its fulfillment program of choice: FBA. So let us take a look into FBA and see why Amazon it enjoys the status of Amazon’s favorite fulfillment options, and how sellers can benefit from it.
Understanding Fulfillment by Amazon (FBA)
Fulfillment by Amazon (FBA) is a service offered by Amazon that provides storage, packaging, and shipping assistance to sellers. This service takes the burden of fulfillment from the sellers, allowing them to focus more on building their business rather than managing logistics.
With FBA, sellers send their products to Amazon’s fulfillment centers, and Amazon takes over from there. When a customer places an order, Amazon handles storage, packaging, and shipping, and even manages returns and refunds. Essentially, Amazon becomes the seller’s logistics department, managing all the details of order fulfillment.
Benefits of Using FBA
Using FBA offers several key benefits to sellers:
- Amazon takes care of the entire fulfillment process, including storage, packing, and shipping of your products.
- Your products become eligible for Amazon Prime’s fast and free two-day shipping, enhancing their appeal to Prime members.
- Amazon’s vast customer base exposes your products to millions of potential buyers worldwide.
- Amazon’s reputation for reliable and efficient fulfillment builds trust with customers, increasing the likelihood of sales.
- FBA allows you to fulfill orders not only from Amazon’s platform but also from your website or other e-commerce channels.
- Amazon handles customer inquiries, returns, and refunds, saving you time and effort.
- Amazon’s robust inventory system ensures accurate tracking and notifies you when it’s time to replenish stock.
- With FBA, you can leverage Amazon’s worldwide network of fulfillment centers to reach international customers easily.
- Amazon provides performance metrics and insights to help you optimize your operations and improve sales.
- By having Amazon handle your orders, you can save money and devote more time to other areas of your business product development, and advertising.
- Access to Prime Members: FBA products are automatically eligible for Amazon Prime, giving sellers access to Amazon’s most loyal customer base.
Drawbacks of FBA
While FBA provides numerous advantages, sellers should also be aware of potential drawbacks:
- FBA charges various fees, including storage fees and fulfillment fees, which can add up, especially for sellers with low-margin products.
- If sellers don’t manage their inventory well, they may incur long-term storage fees, or worse, have their products disposed of by Amazon.
- Since Amazon handles packaging and shipping, sellers have less control over these aspects, which could limit brand visibility.
- If sellers opt for stickerless, commingled inventory, their products might be mixed with the same products from other sellers, leading to potential issues with product quality or authenticity.
- Sellers must comply with FBA’s policies and guidelines, which can be complex and change frequently.
Understanding these benefits and challenges helps sellers in making an educated whether if FBA is the right choice for their business.
Related: How to sell on Amazon FBA in 2024?
Transitioning from Amazon Vendor Express to FBA
When Amazon decided to retire Vendor Express in 2018, many sellers were faced with the challenge of transitioning their businesses to another selling platform within Amazon’s ecosystem. For many, Fulfillment by Amazon (FBA) emerged as a good (if not inevitable) alternative. However, the transition wasn’t without its unique set of challenges and benefits.
The Shift Sellers Had to Make
Transitioning from Amazon Vendor Express to FBA required a significant shift in business operations. Unlike Vendor Express, where vendors sold their products wholesale directly to Amazon, FBA required vendors to assume the role of direct sellers to customers. This shift meant that vendors had to reconsider their pricing strategies, marketing efforts, and customer service capabilities.
Additionally, while Vendor Express automatically provided a large customer base and ensured payment from Amazon, selling via FBA required vendors to be more proactive in promoting their products to attract customers and manage payments through Amazon’s seller platform.
Challenges of the Transition
- Business Model Change: Transitioning from a wholesale model to a direct-to-consumer model required sellers to adapt their business strategies to the new reality.
- Pricing Strategy: With Amazon Vendor Express, retailers only had to negotiate prices with Amazon. With FBA, vendors needed to price their products competitively while ensuring they could still make a profit after FBA fees.
- Increased Responsibilities: Sellers had to take on more responsibilities such as listing creation, marketing, and customer communication.
Benefits of the Transition
Despite these challenges, the transition to FBA also came with several advantages:
- Control Over Business: Vendors gained more control over their business, including pricing, stock, and direct communication with customers.
- Potential for Greater Profit Margins: Without the need to sell products wholesale to Amazon, vendors could potentially enjoy higher profit margins on individual sales.
- Access to FBA Benefits: Vendors could leverage all the benefits of FBA, such as access to Prime customers, increased visibility, and reduced logistics burden.
While the transition from Amazon Vendor Express to FBA might have seemed daunting for many vendors, those who successfully navigated this change found new opportunities for growth and control over their business.
Comparing Amazon Vendor Express and FBA
Although both Amazon Vendor Express and Fulfillment by Amazon (FBA) offered opportunities for businesses to sell on Amazon’s platform, their models were fundamentally different. Here, we’ll compare these two services and discuss why FBA might be a better option for certain vendors.
- Amazon Vendor Express
As a vendor platform, Vendor Express allowed businesses to sell their products wholesale directly to Amazon. A head-to-head comparison of the two services would make it easier to understand their fundamental differences:
- Wholesale Model: Vendors sold in bulk to Amazon, who then sold and shipped products to consumers.
- Amazon-Controlled Pricing: Amazon decides the retail price for products.
- Vendor Payment: Vendors received payment from Amazon, not from the customers directly.
- Logistics Handled by Amazon: Amazon handled all storage, fulfillment, shipping, and customer service tasks.
- Fulfillment by Amazon (FBA)
In contrast, FBA is a fulfillment service that allows businesses to sell their products directly to consumers on Amazon’s platform. Its key features include:
- Direct-to-Customer Model: Sellers list and sell products directly to customers.
- Seller-Controlled Pricing: Sellers set their own prices for products.
- Customer Payment: Sellers receive payment from customers via Amazon’s platform.
- Logistics Handled by Amazon: Like Vendor Express, Amazon handles storage, packaging, shipping, and customer service.
Why FBA Might Be a Better Option for Certain Vendors
While the right selling platform depends largely on the individual needs and capabilities of a business, FBA might be a better option for certain vendors for the following reasons:
- Control Over Pricing: Unlike Vendor Express, FBA allows sellers to set their own prices, which can lead to higher profit margins.
- Direct Customer Interaction: FBA sellers can directly interact with their customers, allowing for better customer relationship management and direct feedback.
- Potential for Greater Visibility: FBA products often rank higher in product listings and are eligible for Amazon Prime, which can increase visibility and sales.
- Adaptable for Different Business Sizes: FBA can be a viable option for both small and large businesses due to its scalable nature.
In the end, it all boiled down to the sellers (notice the past tense) and the unique requirements of their business to choose between the two services. While some may miss the simplicity of Vendor Express, others might find that the advantages of FBA align more closely with their business objectives.
How to choose between the two?
Choosing the right selling option between FBA and Vendor Express largely depended on your specific business needs and capabilities. Sellers small or large needed to consider a variety of factors before hopping onto a particular selling option. There were some critical factors that were mainly considered:
Business Size and Capabilities
The size of your business and its operational capabilities significantly influenced the choice of a selling platform. Smaller businesses with limited resources might find FBA more suitable as it eliminates the need to handle storage, packaging, shipping, and customer service. On the other hand, larger vendors with a high-volume inventory and an established logistics system preferred a platform like Amazon Vendor Central.
The type of product being sold also guided that choice. For retailers selling niches or handcrafted products in small quantities, FBA’s direct-to-customer model might be a good fit. Those dealing in bulk or wholesale products preferred Vendor Central, even though it required an invitation.
Control Over Pricing
If maintaining control over your product’s pricing is crucial for your business, then FBA is an attractive choice. This is because, unlike the wholesale model of Vendor Express, FBA allows you to set your own prices and adjust them as per market dynamics.
Consider your capacity to handle order fulfillment. If you can efficiently store, pack, and ship your products while providing excellent customer service, you might opt for Fulfillment by Merchant (FBM), another selling option on Amazon. However, if you prefer to focus more on product development and marketing, the FBA program, which handles all logistics, could be a better fit.
If you aim to reach Amazon’s Prime customers, using FBA can provide you with that access, as FBA products are automatically eligible for Prime delivery, and Amazon’s algorithm also looks fondly over those using its favorite fulfillment service.
Each selling platform on Amazon caters to different business needs and capabilities. Therefore, understanding your business model, goals, and resources is crucial to make the right choice. By carefully evaluating each of these factors, you can select a selling option that best aligns with your business objectives, ensuring a successful selling experience on Amazon.
Again, and we can’t stress this enough, FBA is the by-default choice of Amazon sellers now that Vendor Express no longer exists.
Amazon’s plethora of selling options reflects the diverse nature of online shoppers and merchants. From Amazon Vendor Express (which has since been discontinued) to Fulfillment by Amazon (FBA), Amazon has always made it easy for businesses of all sizes to sell their wares to a massive audience.
Knowing the differences between these platforms is essential for making the best choice for your company. In order to reach Amazon’s massive customer base, vendors participated in Amazon’s wholesale program, Vendor Express. Many sellers were forced to switch to a new platform in the Amazon ecosystem as a result of its demise in 2018.
As an alternative, Fulfillment by Amazon (FBA) has gained popularity due to the many advantages it offers, including the management of logistics, enhanced product exposure, and access to Prime members. There are, however, some drawbacks to using FBA, including the aforementioned fees and the requirement to follow FBA’s policies and guidelines.
The transition from Vendor Express to FBA presented vendors with both challenges and opportunities, as they were forced to switch from a wholesale to a direct-to-customer model. This change meant taking on additional duties like marketing and customer communication, but it also provided more say over day-to-day operations and the chance to increase profits.
There are other ways to sell on Amazon besides Fulfillment by Amazon, such as using Seller Central or Vendor Central. Because of the wide variety of platforms available, it is essential for businesses to assess their individual requirements, available resources, and desired outcomes before making a final decision.
1. What was Amazon Vendor Express?
In 2015, Amazon started the Vendor Express program in 2015 to facilitate direct sales of products from manufacturers and distributors to Amazon.
Amazon launched this platform as an alternative to Amazon Vendor Central, in an effort to streamline the wholesale selling process. The goal of Vendor Express was to do away with the need for invitation-only seller programs by making it easier for smaller businesses to sell their products in bulk.
2. What is Fulfillment by Amazon (FBA)?
Fulfillment by Amazon (FBA) is a fulfillment program offered by Amazon. When a seller signs up for FBA, Amazon will take custody of the product and ship it directly to the customer. Then, Amazon handles inventory, shipping, packaging, and customer support for the vendor.
3. Why was Amazon Vendor Express discontinued?
Amazon discontinued Vendor Express to concentrate resources on Seller Central and Vendor Central and streamline their vendor programs.
4. Can I control the pricing of my products with FBA?
Yes. One of the main advantages of FBA is the freedom to determine your own selling prices. Unlike with Amazon Vendor Express, where Amazon decided on the retail price, you now have more say over how your business is run.
5. What are the major differences between Amazon Vendor Express and FBA?
The main difference is in their respective business models. With Amazon Vendor Express, suppliers could sell their wares wholesale to the company. When selling through FBA, sellers list and sell their products directly to customers through Amazon’s marketplace.
6. How do I decide the best selling option for my business on Amazon?
The sales strategy best for your company will depend on your own business goals and available resources. Consider your company’s size, the products you sell, the capacity of your warehouse, your desire for price stability and direct communication with customers, and the fulfillment options available to you. You can choose a selling strategy that helps you achieve your business goals by giving careful consideration to the aforementioned factors.