Amazon Comparison
Amazon Vendor vs. Broker – The Honest Comparison
Overview
When brands want to sell on Amazon, they face a fundamental decision: Do I sell my products to Amazon (Vendor/1P model) or have a specialized partner sell on my behalf as a broker? In the Vendor model, Amazon acts as a wholesaler – you sell your goods to Amazon, and Amazon then sells them to end customers. This sounds simple but comes with significant limitations regarding pricing control, margin management, and brand ownership. Additionally, there are CRaP risks (Can't Realize a Profit), unpredictable ordering patterns, and rigid processes. The Broker model works differently: A broker like SPACEGOATS acts as Merchant of Record (MoR) and sells your products on their own seller account in a B2B2C model. You retain control over pricing and brand presentation while the broker handles all operational complexity – marketplace compliance, FBA logistics, customer service, and advertising. Both models have their place, but for most mid-sized brands, the broker model offers decisive advantages.
Amazon Vendor (1P)
As an Amazon Vendor, you sell your products wholesale directly to Amazon. Amazon becomes the owner of the goods and sells them under the 'Ships from and sold by Amazon' label to end customers. Pricing, product placement, and customer service are entirely in Amazon's hands. Access is by invitation through Vendor Central. The model typically requires 1-2.5 full-time employees for PO management, chargebacks, content submissions, and financial reconciliation. The annual terms negotiations with Amazon are perceived by many brands as increasingly burdensome.
Pros
- +Trust advantage through 'Sold and shipped by Amazon' – products carry this label, which enjoys particularly high trust among many customers and can boost conversion rates
- +Low operational effort – you deliver your goods to Amazon, Amazon handles storage, shipping, customer service, and returns. Typically 1-2.5 FTEs sufficient
- +Preferred Buy Box position – Amazon as 1P seller almost always wins the Buy Box, ensuring high visibility and revenue
- +Potential for high volume – Amazon can purchase and distribute products at scale. For brands with mass production, this can enable rapid growth
Cons
- -No pricing control – Amazon independently determines the end customer price and regularly reduces it to undercut competitors or maintain the Buy Box. This can destroy your pricing position in other channels
- -Massive margin losses – Amazon negotiates aggressively on purchase prices and regularly demands discounts, marketing contribution fees (co-op fees), logistics surcharges, and chargebacks. Net margins of 5-15% or less are not uncommon
- -CRaP risk (Can't Realize a Profit) – products where Amazon cannot make a profit are deprioritized, receive fewer orders, or are completely delisted. Your assortment is subject to Amazon's profitability assessment
- -Unpredictable orders – Amazon orders at its own discretion. Order volumes depend on Amazon's algorithms, not your planning. Orders can fluctuate significantly or stop without warning
- -Chargebacks and penalty fees – Amazon charges back for late deliveries, incorrect carton dimensions, missing ASN numbers, and other infractions. Accounting is often non-transparent with complex deductions and offsets
- -Limited brand control – Amazon largely controls the product detail page and can independently change images, titles, or descriptions. Content updates go through Vendor Support, often slow and inconsistent
- -Low flexibility and termination – Amazon can unilaterally end the business relationship or change conditions. Switching away from the vendor model is complex and can take months
Broker Model (SPACEGOATS)
With the broker model, SPACEGOATS acts as Merchant of Record (MoR) and sells your products on their own Amazon seller account in a B2B2C model: You sell B2B to SPACEGOATS, SPACEGOATS sells B2C to end customers. You retain full control over brand and pricing while SPACEGOATS handles the complete operational Amazon processing – from EU-wide compliance and FBA logistics to customer service and PPC campaign management. Compensation is commission-based. SPACEGOATS offers two cooperation models: Auto-Pilot (broker-led, ideal without an e-commerce team) and Captain Seat (brand-controlled, for teams with their own marketing). Through the Galaxy platform, you maintain full transparency on performance, inventory, and finances.
Pros
- +Full pricing control – you determine the selling price of your products. No unannounced price reductions by Amazon, no conflicts with your pricing strategy in other sales channels
- +Higher margins – since you determine the end customer price and don't have to accept aggressive wholesale conditions, net margins are typically significantly higher than in the vendor model. No hidden surcharges or chargebacks
- +No CRaP risk – you decide on your assortment, not Amazon's profitability algorithm. No risk of products being delisted due to Amazon's margin calculation
- +Complete brand control – you control your listings, images, A+ Content, and brand presentation. SPACEGOATS implements your brand guidelines without making independent changes
- +Commission-based model – no fixed retainers or minimum purchase quantities. SPACEGOATS earns on a commission basis. Your success is their success
- +Compliance handled by the broker as MoR – SPACEGOATS handles marketplace compliance (VAT, EPR, VerpackG, WEEE, invoicing). Product safety (CE, GPSR) remains the manufacturer's responsibility but is supported by the broker with checks
- +Flexibility and predictability – unlike the vendor model with unpredictable Purchase Orders, the broker model offers predictable deliveries by agreement. You retain control over your supply chain
- +Full transparency through Galaxy – the Galaxy platform provides real-time reporting for sales, inventory, prices, and finances. Unlike the often non-transparent vendor accounting, you receive clear, consolidated B2B settlements
Cons
- -No 'Sold by Amazon' label – products are displayed as 'Sold by SPACEGOATS.' For some customers, this may make a minor trust difference, but most buyers primarily look at Prime shipping and reviews
- -Commission on revenue – the commission share reduces the margin per unit. At very high volumes with low differentiation, the vendor model can offer lower per-unit costs in individual cases – but only with fair Amazon purchasing conditions
- -Dependency on the broker partner – you rely on the broker's reliability, execution quality, and transparency. Important: choose an established partner with a proven track record, professional SOPs, and SAS Enterprise access
- -No direct access to Seller Central – performance data is available through the Galaxy platform, but you don't have direct access to Amazon dashboards like Seller Central or Brand Analytics
Comparison Table
| Criterion | Amazon Vendor (1P) | Broker Model (SPACEGOATS) |
|---|---|---|
| Pricing Control | None – Amazon determines the end customer price and can lower it at any time, often to undercut competitors or maintain the Buy Box | Complete – you determine the selling price. SPACEGOATS implements your pricing guidelines. No unannounced price changes |
| Margin / Profitability | Often low – aggressive purchase prices, co-op fees, chargebacks, and marketing contributions. Net margins of 5-15% or less. Annual renegotiations almost always to the vendor's disadvantage | Typically higher – you control the end customer price and pay a transparent commission. No hidden surcharges, chargebacks, or allowances |
| Internal Resource Requirements (FTEs) | Medium – typically 1-2.5 FTEs for PO management, chargebacks, content submissions, financial reconciliation, and terms negotiations | Low – typically 0.5-1.5 FTEs for strategy, content creation, and coordination. The broker handles all operational execution |
| Brand Control & Listings | Limited – Amazon controls the product detail page and can independently change images, titles, or descriptions. Content updates through Vendor Support are often slow | Complete – you control all aspects of your listings. SPACEGOATS implements your specifications and optimizes on request |
| CRaP Risk | High – products Amazon cannot sell profitably are deprioritized or delisted. Your assortment depends on Amazon's profitability assessment | No risk – you decide on your assortment. No dependency on Amazon's profitability algorithm |
| Order Predictability | Low – Amazon orders at its own discretion. Purchase Orders can fluctuate significantly or stop without warning | High – predictable deliveries by agreement. You retain control over your supply chain and production |
| Compliance Handling | Amazon handles marketplace compliance as the seller (VAT, invoicing). You remain responsible as supplier for product safety (CE, GPSR) and manufacturer obligations | SPACEGOATS handles marketplace compliance as MoR (VAT, EPR, VerpackG, WEEE, invoicing). Product safety remains the manufacturer's obligation but is supported with checks |
| Scalability | Dependent on Amazon – Amazon orders at its own discretion. High demand can lead to large orders, but orders can also drop without warning | Flexibly scalable – expansion to new marketplaces efficiently through the SPACEGOATS network (12+ markets across EU, UK, US, Canada). No dependency on Amazon's ordering decisions |
| Transparency & Reporting | Limited – vendor accounting is often non-transparent with complex deductions (chargebacks, shortages, promotional offsets). Limited insight into Amazon's pricing logic | High – Galaxy platform provides real-time reporting for sales, inventory, prices, and finances. Consolidated B2B settlements instead of thousands of Amazon transactions |
Our Recommendation
For most mid-sized brands and international manufacturers, the broker model offers significant advantages over the vendor model. The decisive difference: You retain control over your brand and your prices – two of the most important levers for long-term profitability. While the vendor model appears convenient at first glance (Amazon buys and sells), reality often paints a different picture: aggressive price negotiations, CRaP delistings, unpredictable orders, limited listing control, and declining margins through constantly increasing conditions. The broker model combines the best of both worlds – professional operational handling like the vendor model, but with the control and flexibility of a seller account. SPACEGOATS acts as Merchant of Record and handles all marketplace responsibility, while you only need 0.5-1.5 FTEs for strategy and coordination (vs. 1-2.5 FTEs for Vendor). Through the Galaxy platform, you maintain full transparency – unlike the often non-transparent vendor accounting. Especially for non-EU brands looking to enter the European market, compliance handling by the broker as MoR is a decisive advantage. The only situation where the vendor model may be superior is with very high-volume products with low differentiation, where Amazon's distribution power makes the difference – and Amazon offers fair purchasing conditions.
Frequently Asked Questions
What is CRaP and why does it only affect Vendors?
CRaP stands for 'Can't Realize a Profit' and is an Amazon-internal concept where Amazon identifies products it cannot sell profitably. These products are deprioritized in search results, receive fewer or no Purchase Orders, and can be completely delisted. This only affects Vendors because in the Vendor model, Amazon purchases the goods and sells them itself – if Amazon cannot make a profit, the product is removed from the assortment. With the Broker or Seller model, you set the price yourself and are not dependent on Amazon's profitability assessment.
Can I use Amazon Vendor and the broker model simultaneously?
Theoretically yes, but complicated in practice and rarely advisable. When the same ASINs are offered through both Vendor and a seller account (broker), both offers compete for the Buy Box. Amazon generally favors its own vendor offer, disadvantaging the broker listing. However, there are scenarios where a strategic split can make sense – for example, when certain products run exclusively through one channel. SPACEGOATS can handle the seller part in such a hybrid approach and provides individual consultation.
What happens to my products when I switch from Vendor to the broker model?
The switch requires careful planning. Existing ASINs, reviews, and organic rankings are preserved – they are tied to the product, not the seller. SPACEGOATS supports the transition process and ensures the switch is as smooth as possible without losing revenue. It's important to choose the timing strategically – ideally when Amazon's current POs expire. Many former vendors use the broker model to maintain their Amazon presence without building their own seller team.
What happens when Amazon stops my Vendor orders?
This is one of the biggest risks of the Vendor model. Amazon can reduce or completely stop Purchase Orders without warning – whether through CRaP assessments, internal assortment changes, or strategic priority shifts. In this situation, many brands are left without an alternative because they don't have their own seller setup. The broker model provides a safety buffer: SPACEGOATS can act as a backup channel or handle the complete transition from the vendor model. Many former vendors switched to SPACEGOATS after Amazon stopped their orders and were able to maintain their Amazon presence and revenue.
What commission does SPACEGOATS charge in the broker model?
The exact commission structure depends on product category, expected volume, complexity of compliance requirements, and desired scope of services. SPACEGOATS creates an individual offer for each brand. The commission is structured to make economic sense for both sides – no fixed retainers, no minimum purchase quantities. SPACEGOATS only earns when you sell. At very high volumes, individual terms can be negotiated.
Do I keep my Amazon reviews and rankings when I switch to SPACEGOATS?
Yes. Amazon reviews and organic rankings are tied to the ASIN (the product), not the seller. When SPACEGOATS lists your existing ASINs on their seller account, all reviews and organic ranking history are preserved. The transition should be carefully planned to minimize temporary Buy Box losses. SPACEGOATS has established migration processes for this.