How Vendor Central Actually Works
When Amazon invites a brand into Vendor Central, it is proposing a wholesale relationship. Amazon issues purchase orders (POs) to the brand, typically on a weekly cycle. The brand fulfills those POs into Amazon's fulfilment network. Amazon then sets the retail price and sells the product to consumers as its own inventory — "Ships from and sold by Amazon.com."
The commercial relationship is governed by a vendor agreement that sets out cost prices, payment terms (net 30, 60, or 90 days, depending on the negotiation), co-op funding obligations, and operational standards. The Joint Business Plan sits on top of this, setting annual growth targets and promotional commitments.
In EU, the structure multiplies. Each country marketplace — DE, UK, FR, IT, ES — operates its own buying function. A brand may have separate vendor agreements, separate buying contacts, and separate PO cycles for each market. Pan-European coordination does not happen automatically. It has to be built.
The trade-off: what you get, what you give
What Vendor Central gives you
- Amazon handles logistics, Prime eligibility, and customer service
- Access to Amazon's co-op media funding and promotional deal formats
- Full retail support: Amazon's algorithms favor 1P inventory in many categories
- Simpler operations: no self-managed logistics or customer service
- Brand credibility signal: "Sold by Amazon" still carries weight in EU
What Vendor Central takes from you
- Pricing control: Amazon sets and can cut the retail price at any time
- Margin certainty: the deduction stack (co-op, freight, chargebacks) compounds
- Speed: content changes, listing updates, and suppression resolutions go through Amazon systems — slowly
- Flexibility: you can't quickly add or remove SKUs; PO cycles determine availability
- Relationship with the end consumer: you don't own the customer data
The margin problem most brands discover too late
The Vendor Central economics are easier to misread than almost any commercial relationship in retail. A brand looks at its Amazon revenue — let's say €10M — and considers the account healthy. What the standard report doesn't show is the net position after the full deduction stack: co-op funding (4–8% of net revenue is common), freight allowances, damage and returns allowances, shortfall fees on unfulfilled POs, and chargebacks for operational non-compliance.
Strip all of that out, and the account that looked like €10M revenue at acceptable margin is sometimes an account losing money in the P&L no one is building. This is the problem explored in detail in the essay Your Amazon P&L is lying to you.
The fix is not to leave Vendor Central. It is to model the account properly: build a net-net P&L that captures every deduction category, and use the JBP negotiation to reduce the ones you can influence.
Vendor Central vs Seller Central: the real decision
Most CPG brands enter Amazon through Vendor Central — invited in by Amazon's buying team, which wants to carry the inventory directly. The choice to stay 1P, move 3P, or build a hybrid is one of the most consequential decisions a brand makes on Amazon, and it is rarely analyzed with the rigor it deserves.
Stay 1P: the right call if your category is one where Amazon retail dominates, your operational infrastructure can't support 3P complexity, or the co-op terms are genuinely favorable. Many large CPG brands in food and household are well-served by a strong 1P relationship — provided they negotiate the deductions properly.
Move 3P: the right call if pricing authority matters to your brand strategy, you have the operational infrastructure to manage marketplace logistics, or you want the margin and data control that Seller Central offers.
Hybrid: core portfolio in 1P, premium lines or new launches in 3P. The model more sophisticated brands are building toward. Difficult to execute — you're managing two separate commercial relationships and avoiding channel conflict — but structurally sound when done right.
Vendor Central in Amazon EU: the coordination problem
The EU amplifies every Vendor Central challenge. Five separate buying teams means five separate PO cycles, five potential sets of non-compliance chargebacks, and five different country managers with their own incentive structures. A promotional commitment negotiated pan-European in the JBP may face execution friction at the country level if country GMs haven't internalized the deal.
The brands managing this well have established a pan-EU vendor manager relationship — a single Amazon point of contact who coordinates across countries — and have built their JBPs to include explicit country-level obligations, not just pan-European targets. Without that structure, every cross-country decision becomes a multi-party negotiation. Speed is the casualty.