One of the dream outcomes for an emerging ecommerce brand is to secure wholesale partnerships with major marketplaces. This not only lends to your brand’s credibility but also increases sales significantly. With Amazon Vendor Central, brands can streamline their operations to maintain a successful relationship with the online retailer. Instead of interacting directly with customers, merchants sell to Amazon, which then takes on the role of customer service and order fulfillment.
To qualify for this partnership, however, there are a set of strict regulations and guidelines that brands must adhere to. For instance, all transactions between the vendor and Amazon must be conducted electronically. This is where EDI (Electronic Data Interchange) comes into play. You use this technology to streamline the ordering process and reduce errors.
In this article, we’ll examine the benefits of Amazon Vendor Central, why it uses EDI, how to fulfill the requirements, and the other options you have.
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What is Amazon Vendor Central?
There are now nearly 2 million businesses considered third-party sellers on Amazon, the biggest ecommerce marketplace in the world. To set yourself apart from these countless competitors, Amazon Vendor Central offers an opportunity to become a first-party seller.
This means that you sell your products to Amazon, which then takes on the responsibility of listing your products, managing customer orders and returns, and providing customer service. In other words, it’s a way to outsource these time-consuming (and often costly) tasks to Amazon.
First-party sellers also have the advantage of increased visibility on the site. Your product listings appear in search results before those of third-party sellers, and you get the opportunity to feature your products on Amazon’s home page and other high-traffic areas of the site. (Third-party sellers can use a tool like Search Insight for Amazon to understand and improve their search performance)
It’s important to note that becoming a first-party seller on Amazon is not the same as selling through Amazon Marketplace. With Vendor Central, you establish a business relationship with Amazon, whereas with Marketplace, you merely use Amazon’s platform to sell your products.
Benefits of Amazon Vendor Central
Getting a purchase order from a company like Amazon is a major coup for any ecommerce business. In addition to the increased sales, there are several other benefits of Amazon Vendor Central.
Increased Efficiency and Scalability
Perhaps the biggest benefit of Amazon Vendor Central is that it allows businesses to scale quickly and efficiently. With Amazon taking on customer service and fulfillment tasks, brands can focus on other business areas, like product development and marketing. Additionally, because all transactions are conducted electronically, there’s no need for manual data entry, which can be both time-consuming and error-prone.
Improved Cash Flow
Because you are selling your products to Amazon upfront, you’ll receive payment much sooner than if you were selling through the Marketplace. This can be a major advantage for businesses looking to scale quickly or with limited working capital.
Access to Data and Analytics
As a first-party seller on Amazon, you’ll also have access to a wealth of data and analytics about your products and customers. This information can be used to make informed decisions about product development, marketing, and other areas of your business.
Dedicated Account Manager
As a Vendor Central customer, you’ll also be assigned a dedicated account manager. This Amazon employee will be your main point of contact and can help you with any questions or issues that arise.
Improved Consumer Confidence
Amazon handles customer-facing operations like shipping and selling items, billing, and marketing. It has put a lot of time into building consumer confidence by delivering a high-quality customer experience. You get more orders when customers see the “Shipped & Sold by Amazon” badge on your product listings. You only have to worry about filling orders, billing, and avoiding chargebacks (extra fees for not meeting Amazon standards)
Better Marketing & Advertising Programs
Vendor Central gives you access to more programs that could help to sell more products and generate awareness or key placements during major and category-specific events. Some of our favorite Vendor Central programs include:
- Born to Run - Amazon buys the number of products you estimate will sell within 10 weeks.
- Bulk Buy - Special, very large orders from Amazon couple times a year.
- Vendor Certificate - Apply for certificates for packaging, sustainability, etc.
- Amazon Marketing Packages - Special ad types like banner ads, featured products, etc.
What Is EDI?
Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard format. Businesses can share purchase orders, invoices, and other documents without requiring manual data entry. As a first-party seller, you must submit all orders to Amazon electronically via EDI and also provide advance ship notices (ASNs) for every shipment. An ASN is a document that contains information about the products being shipped, the quantities, the date of shipment, and other important details. This allows Amazon to track inbound shipments and ensures that products are received promptly.
Why Use EDI?
There are some critical benefits to using EDI when dealing with a marketplace as comprehensive as Amazon.
- Reduces costs: EDI can help you save on printing, postage, and other paper-related costs.
- Improves accuracy: Data entry mistakes are eliminated, and information is transmitted directly from one computer system without requiring manual input.
- Increases efficiency: Automating repetitive tasks frees up time so you can focus on other areas of your business.
- Enhances relationships: EDI improves communication between trading partners and helps to build stronger relationships.
To take advantage of these benefits, you require a comprehensive EDI solution in place. This solution should be able to handle all of your EDI transactions, whether you’re sending or receiving documents.
Choosing an EDI provider with experience working with Amazon Vendor Central is also essential. They’ll be familiar with the specific requirements and can help you set up your system quickly and easily.
What Can and Cannot Be Transmitted over EDI?
If you are expecting to implement EDI in the future, you need to fully understand what types of documents can and cannot be sent electronically. The most common types of business documents that are exchanged via EDI for Amazon are:
- Purchase orders
- Shipping notices
- Credit memos
- Inventory reports
However, there are some types of documents that cannot be transmitted using EDI
- Product images
- Product manuals
- Marketing materials
- Anything that requires a manual signature
- Original physical document (like a passport or birth certificate)
You have to transmit such documents via email or other means outside of the EDI system.
What Are The Requirements for Amazon Vendor Integration with EDI?
So you've been invited to Amazon Vendor Central; now what? There are a few things you need to get started:
You need a UPC (Universal Product Code) or an EAN (European Article Number) for every product you plan to sell on Amazon Vendor Central. Amazon also uses its own product identifier, the Amazon Standard Identification Number (ASIN).
Providing product measurements and dimensions is crucial for Amazon to accurately list your products on their website. These measurements are also used to calculate shipping fees. You must provide the following codes for each product:
- Height (H)
- Length (L)
- Width (W)
- Weight (WT)
- Cubic (CUBE)
These codes are used to create a dimensional weight, which is necessary for calculating shipping rates. You can use a tool like Product research for Amazon to discover new product ideas for Vendor Central.
Sender and Receiver IDs
Just like the details you write on the outside of an envelope, your EDI data must have a “from” and “to” address. These are called Interchange Control Header (ISA), uniquely identifying the sender and receiver.
Amazon EDI payments are processed through an EDI 810 document, an electronic invoice. The document includes information about the products purchased, the quantities, the prices, and other important details. To streamline your operations, you can use an EDI integration solution to automate the process of creating and sending these documents.
You must provide product information such as the ASIN, title, description, price, and other relevant details. Amazon uses product information to create listings for your products on its website. This data must be accurate and up-to-date to avoid any confusion or frustration from customers.
EDI information is exchanged through the AS2 protocol which is a secure method of sending data over the internet. This protocol uses digital certificates to encrypt data and confirm the identity of the sender and receiver. With this, the sender and receiver can be
- Assured that the third parties did not tamper with the data.
- Confident that the message was sent by the claimed sender
- Certain that only the intended recipient can read the message
Setting up a reliable and secure EDI connection is the first step in integrating with Amazon Vendor Central. It’s also one of the most important as it determines how smoothly transactions go between you and your trading partner.
How Long Does It Take to Set up EDI?
According to the U.S. Department of Housing and Urban Development, it normally takes between 30-90 days, depending on the complexity of the system being implemented. This process can be expedited by working with a professional EDI service provider that is familiar with Amazon Vendor Central and can help you navigate the requirements.
How Much Does EDI Cost?
If creating an in-house EDI solution, you can expect to spend tens of thousands of dollars, depending on complexity and scale. Then, you’ll need to factor in the cost of an EDI consultant to help configure and manage the system.
Alternatively, working with an EDI service provider is a much more cost-effective solution. Providers typically charge a monthly fee that covers the cost of software, support, maintenance, and upgrades. EDI Solutions, for instance, is a hands-off platform that serves brands like Target, Walmart, and Costco.
Should You Use EDI Integration or API Integration?
Alternatively, some companies decide on API integration, which is a piece of software that allows two applications to communicate with each other. This is a common integration for companies already selling on Amazon and want to automate their operations without changing their current system.
This can offer benefits like
- Easier to connect to multiple Amazon marketplaces
- More flexibility with product information
- Can be used for other integrations like QuickBooks or Shipstation
If you’re starting from scratch, however, EDI integration is the way to go. This will ensure a smooth transition in the future and avoid any potential headaches down the road.
Amazon Vendor Central requires the use of EDI because it is a more efficient way to manage high volumes of data. Once you have been accepted as a first-party seller, it is important to gain the benefits of speed and accuracy that batch processing offers.
To decide which is right for you, consider the following:
- How much data do you need to transfer?
- What is the frequency of data transfer?
- What are your IT resources like?
- Do you need real-time data, or can it be batched?
If, for instance, you need to transfer a large amount of data regularly, EDI is probably the best solution. API might be a better option if you only need to transfer small amounts of data occasionally.
Selling on Amazon Vendor Central can be a great way to increase sales and grow your business. To do this, you need to have EDI integration set up so that you can transmit orders and other documents electronically. This saves you time and money in the long run and ensures that you are providing the best possible service to your customers.
Whether you are a small business starting, a medium-sized operation just trying to take that next step, or a large-scale enterprise ready to invest in cost-saving measures, learning how to set up EDI for Amazon is critical. The benefits of EDI greatly outweigh the time and resources necessary to get started!
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Along with EDI integration, top sellers on Amazon should also consider expanding to international markets. Read our article on how to sell internationally to learn more about how you can take your ecommerce business to new heights!