Broker Models for Amazon: How They Work and Why Vendors in Particular Can Benefit

Do you want to sell on Amazon or are you perhaps already active as a seller on Amazon? Then you've certainly heard of the various sales models on Amazon, know the difference between seller and vendor, and know what a hybrid strategy is. If not, feel free to take another look at our other blog articles on these topics.

In this article, we want to introduce you to another model for selling on Amazon, the broker model. This is particularly suitable for manufacturers without Amazon experience or vendors who are interested in a hybrid strategy. In the following, we'll go into the circumstances under which a broker model can represent a worthwhile alternative for you.

What is a Broker Model?

In a broker model for selling on Amazon, an Amazon broker acts between your company and Amazon. This means you don't have to decide between a seller or vendor model, but rather pursue a middle path.

You thus don't sell under your own company name, but rather use the resources of another seller account. Usually, billing is done as a commission model. The seller provides the goods to the broker free of charge. Billing takes place after the sale of the goods, deducting all incurred Amazon costs. This can avoid logistical challenges that sellers on Amazon often face. On the other hand, there is no need to switch to the vendor program, which can be unattractive for sellers for various reasons. Amazon brokers are essentially a bridge between seller and buyer. They facilitate sales and ensure that more potential buyers become aware of the seller's assortment.

When is a Broker Model Advisable?

A broker model is particularly recommended when you're not quite sure about your sales strategy on Amazon. Especially if you have little Amazon sales experience, the broker model saves you some challenges in building your own seller account as well as the associated resource and personnel effort.

The vendor model also offers these advantages, but here you have little influence on essential factors such as pricing. The broker model gives you freedom at this point to negotiate the conditions with the broker yourself. However, this doesn't mean that the broker model is generally preferable. The success of your business depends essentially on the reliability and trustworthiness of your contractual partner.

On the other hand, the broker model is also a suitable alternative for Amazon-experienced people. This applies particularly to vendors who, in addition to the vendor model, also have an interest in the seller model but don't want to set up their own seller account. With the broker model, vendors can easily test a hybrid strategy. This brings a number of advantages that we'll go into in the following.

Advantages of the Broker Model for Non-Sellers

As a non-seller, Amazon brokers can help you determine the value of your company. Building a profitable seller account is not easy. To fully exploit the potential of a product niche, you need not only financial investments but also additional employees who focus on marketing and e-commerce, for example. Added to this are complicated and constantly changing regulations at Amazon that sellers must always keep in mind. Otherwise, in the worst case, offers could be deactivated.

This is where the Amazon broker comes into play. The broker acts between manufacturer and customers (or between manufacturer and Amazon in the FBA shipping model), buys the goods at agreed conditions, receives and stores the manufacturer's goods, and then takes over sales and shipping, with the broker receiving an agreed portion of the margin. Although you thus have to share the broker in your profit, this can nevertheless be significantly more advantageous for you than switching to the vendor program. Because in contrast to the vendor program, you can benefit from more transparency and better cost control when working with an Amazon broker, since conditions and selling prices can be negotiated with the broker and Amazon costs are transparently allocated.

Added to this are already existing resources of the broker that you save yourself as a manufacturer. In addition to the resources, know-how is also a decisive factor. The broker is ideally already active as a seller on Amazon for a longer time and knows the decisive levers in content creation, advertising, or account management.

The broker model for non-sellers is therefore particularly suitable when you're considering selling on Amazon in the short term and opening your own seller account is currently not an option for you for various reasons.

Advantages of the Broker Model for Vendors

For vendors who already have Amazon experience, the broker model can also bring advantages. These are particularly justified by the fact that vendors have little flexibility and room for maneuver, but must accept the conditions imposed by Amazon.

To benefit from the advantages of the seller program as a vendor, there's no way around a hybrid strategy. Those who also shy away from the organizational effort of building an additional seller account initially will find an uncomplicated addition to the vendor account with the broker model.

This way, vendors can benefit from, for example, product tests, bundling, or Amazon-exclusive products, which is significantly easier in the seller program. Vendors can thus test or bring new products to market in the broker model, while in the vendor program only products that are also officially sold can be listed. Sellers, on the other hand, can list new products much more easily with the EAN.

Advantages also arise with the costs for using Amazon Vine. Here, sellers can expect significantly lower costs. While Vine can cost vendors up to 1450 EUR, the program is significantly cheaper for sellers at 170 EUR.

Conclusion

The broker model is an interesting alternative to conventional Amazon sales programs for both non-sellers and vendors. Non-sellers benefit from a low-threshold entry into the shipping business on Amazon without having to have the corresponding resources or the necessary know-how themselves. Vendors, on the other hand, can relatively easily benefit from the advantages of the seller program compared to the rather stricter conditions in the vendor program through the broker model, without having to establish a hybrid model immediately.

At REVOIC, we offer you with our broker model, in addition to a flexible logistics offering for both FBA and FBM (including storage and packaging), also our extensive Amazon know-how. Full transparency is a matter of course for us. That's why you get access to all seller data. On our website, you'll find more details about our offering.