[Must-See for New Managers] What is Vendor Central? Thorough Explanation of Amazon 1P Model Basics and Mechanism

When considering or being assigned to sales on Amazon, the word you surely hear is "Vendor Central". This is a management platform dedicated to the "1P (First Party) Model" that conducts direct transactions with Amazon. Understanding the difference from Seller Central and the operational flow unique to the wholesale model is extremely important for the success of EC business. In this article, we comprehensively explain the basic knowledge that new managers should first grasp.

1. Definition of Vendor Central (1P Model)

Vendor Central is a management screen for manufacturers and wholesalers to wholesale products to Amazon (B2B). Amazon becomes the "Seller (Sold by Amazon)" and Amazon bears the inventory risk, which is called the "1P (First Party) Model". Generally, it is an "invitation-only" system from Amazon, and national brands and companies with a certain sales track record are eligible.

2. Decisive Difference from Seller Central (3P)

Seller Central (3P Model) is "Marketplace Listing", where companies rent Amazon's place and sell directly to consumers (B2C). On the other hand, since Vendor Central is wholesale, the right to determine the selling price lies with Amazon. Also, the range of strategies differs, such as access to powerful ad slots using "Amazon Advertising" and utilization of vendor-exclusive promotion slots.

3. Role of Amazon Flywheel in 1P Model

In "Flywheel", Amazon's growth principle, Vendor Central becomes the engine for "expansion of selection" and "lower prices". By Amazon purchasing directly, Prime-eligible products with free shipping become stable, and customer experience improves. This increases traffic, maximizing vendor sales as a result.

4. Basic Operational Flow: From PO to Payment

The center of operation is processing PO (Purchase Order). Orders arrive automatically from Amazon regularly every week, and vendors check inventory and send Advance Shipment Notice (ASN). Unlike Seller Central where you "wait for end-user orders", SCM thinking of "replenishing Amazon's inventory" is required.

5. Benefits of Vendor Central Seen in Data

By introducing Vendor Central, in many cases, the reliability of product detail pages (A+ content etc.) improves, and improvement in conversion rate (CVR) is expected. The following is an image of index changes before and after general introduction.