Amazon VC Accounts: The Secret Weapon for Chinese Sellers

Amazon's Vendor Central, known as the VC account, is a specialized account for suppliers. Unlike the common Seller Central (SC) account used by third-party sellers, VC account offers more control, extensive promotional tools, and the prized Amazon endorsement, making it a sought-after asset for sellers. Its invitation-only nature adds to its desirability among many Chinese sellers.

Over the last two years, VC accounts have become incredibly popular among Chinese cross-border sellers. They are seen as a badge of success and a key measure of a seller's capabilities.

Many Chinese top sellers rely on VC accounts for a steady portion of their income. VC accounts have become a standard for premium sellers. Some have achieved remarkable success and record-breaking performances with VC accounts, even transitioning fully to VC models and increasing their revenue by billions.

Sorftime data shows that by March 2024, Amazon's U.S. site had around 210,000 third-party sellers, with Chinese sellers comprising 62%. According to Marketplace Pulse estimates based on Amazon disclosures, in 2023, sales by Amazon (also known as first-party sales) reached $220 billion, up 6% year-over-year, and third-party marketplace sales reached $480 billion, up 13% year-over-year. Total worldwide GMV was $700 billion, up 11% year-over-year. With fewer VC accounts compared to SC sellers, VC faces less competition.

The buzz around VC accounts has led to a shady market in China where people buy and sell these accounts. Service providers say VC accounts go for at least a few hundred thousand RMB, and U.S. accounts can start at least one million.

Chinese Amazon VC Sellers

Many Chinese top sellers are making great profits with VC accounts, and Vesync is a key example.

Established in Shenzhen in 2012, Vesync specializes in the design and development of small home appliances and smart home products under three core brands: Etekcity, Levoit, and Cosori. Their products cover kitchen appliances, environmental living, health monitoring, and are sold in over 100 countries and regions worldwide, with significant market presence in the US, Canada, UK, and Germany.

The first big leap for Vesync was in 2017, when they were invited to join Amazon as a VC seller. Their VC store brought in $339 million in 2021 and $405 million in 2022, with total revenue surpassing $585 million in 2023.

In their first year as a VC seller, Vesync saw VC making up just 8.4% of their revenue. But this quickly grew, hitting over 50.8% by 2019. In 2020, Vesync's VC brought in about $232.82 million, accounting for 66.73% of total revenue.

At the same time, their SC revenue dropped steadily from 91% in 2017 to 16.45% by 2021.

The next big shift came in early 2022 when Vesync decided to stop SC operations and focus entirely on VC. By 2023, they reported over $585 million in revenue and $270 million in gross profit.

Why did Vesync switch from SC to VC?

• Firstly, starting in May 2021, Amazon has seen massive account suspensions, impacting over 50,000 Chinese sellers. April 2022 saw another wave, with many top sellers losing hundreds of stores overnight, resulting in frozen funds and heavy losses. VC accounts, as part of Amazon's partner, face lower risks.
• Secondly, malicious competition like hijacking and destructive listing edits is a constant issue in China's cross-border sector. With higher edit permissions and Amazon's policy support, VC account holders can better handle such challenges.
• Third, VC accounts are, in a way, part of Amazon's Sold by Amazon ecosystem. Consequently, the entry threshold is quite high. Recently, Amazon has tightened these thresholds and is rumored to have stopped accepting new VC accounts. This means that, for the foreseeable future, no new competitors will be on the same starting line as Vesync , undoubtedly enhancingits competitiveness.
• Fourthly, Amazon's traffic support for its own brands is far better than for third-party sellers.

Over the last four years, Vesync has rapidly accelerated its brand-building efforts, with shorter timeframes, thanks to the advantages of a VC account.

Another example is Ziel Home, a leading home goods seller, has consistently increased its revenue from its VC account each year. Its revenue from Amazon's VC account was $46.2 million in 2020, $76.83 million in 2021, and $61.86 million in 2022. The revenue share from this account from 2020 to 2022 was 8.45%, 9.36%, and 8.35%, respectively.

In 2021, Ziel Home's revenue from its VC account reached $76.83 million, surpassing its revenue from all other channels outside Amazon. The company's 2023 annual report underscores their strategic focus on the Amazon VC and the creation of targeted products.

Tao Motor, known for its electric scooters and all-terrain vehicles, supplies major chains like Walmart, Target, and Best Buy, and also gains substantial revenue from its Amazon VC account. In 2021, Tao Motor's revenue from Amazon's VC account was $32.40 million.

Unlike Vesync and Ziel Home, which focus solely on branding, Tao Motor combines brand and manufacturing roles. Both types of sellers are vital partners for Amazon's VC.

An insider disclosed that VC accounts have also contributed notable revenue for Vevor, a MRO-tool seller.

Loctek, a prominent name in ergonomic products, had also experimented with an Amazon VC account. In 2020, they generated $1.07 million from Amazon's VC, which made up 0.41% of their total revenue and was a 16.47% increase from the previous year. By 2021, their revenue from Amazon VC was $1.1 million, a 2.78% increase, but its share of overall revenue dropped to 0.28%.

From 2022 onwards, both the revenue and its share from Amazon VC experienced a steady decline. By 2022, their revenue from Amazon VC had dwindled to $83,291.97, a decrease of 92.45%, making up only 0.02% of total revenue. In 2023, Loctek opted to entirely forgo Amazon VC and transitioned to SC selling.

Loctek's VC account doesn't contribute much to their revenue because they use a diverse sales approach that covers all sorts of channels, both in China and abroad, online and offline. They have a solid sales network, with traditional ODM products sold mainly through physical stores overseas, and their own brand products reaching customers mainly through their own website and online platforms.

Their DTC site, flexispot.com, stands out prominently, ranked among the leading global e-commerce sites. In 2020, the revenue from this site and from Amazon reached $38.39 million and $99.35 million, respectively, marking remarkable year-on-year increases of 580.64% and 153.95%.

In 2023, the revenue from their DTC site and Amazon totaled $92.56 million and $137.88 million, showing year-on-year increases of 16.72% and 7.78%, respectively. These revenues made up 22.93% and 34.22% of the company's total revenue. The DTC site maintains the highest per capita spending across all channels, reaching $415.55—approximately twice the per capita spending on Amazon, which stands at $233.63.

Loctek mentioned in a broker survey that their products on their own site and Amazon are different. They've got products with features like adjustable height, voice control, and scratch resistance. Plus, their DTC site offers more choices for desk sizes, specs, models, and colors than Amazon.

Crackdown on VC Accounts

Unlike the usual SC accounts, VC sellers have greater control, including the ability to modify other sellers' product listings. This capability has been exploited by some VC sellers to gain unfair competitive advantages, a problem that has worsened over recent years.

Since 2021, Amazon has ramped up efforts to tackle violations on its platform, such as counterfeit sales, copyright infringement, and review manipulation. Amazon reported that between late April and early September 2021, it shut down around 600 Chinese brands and 3,000 seller accounts for severe and repeated review abuses despite multiple warnings.

Sunvalley saw 367 accounts closed by Amazon in 2021, with frozen funds totaling around $4.44 million. Huading, Tomtop's parent company, reported revenues of $1.19 billion in 2021, down 11.36% from the previous year, with a net loss of $83.69 million, a decrease of 208.78% year-on-year. And Shenzhen YKS reported a net loss of about $230.26 million in 2021. Aukey was also hit by the crackdown, with 276 stores restricted and a 26.3% year-on-year drop in product sales revenue for 2022.

While the focus was mainly on SC accounts, VC accounts were also scrutinized.

In 2022, Amazon continued its crackdown on platform violations, suspending many non-compliant accounts, with increased oversight of VC accounts.

In March 2023, Amazon banned a batch of non-compliant or risky VC accounts, further tightening its platform oversight.

In March 2024, listings of two sellers were suspected to have been maliciously altered, causing a media storm and putting Amazon under immense pressure.

On March 20, many sellers accounts were deactivated due to "inaccurate information provided to Amazon or our customers", primarily targeting SC accounts but also affecting VC account sellers.

From May this year, Amazon has been enforcing stricter regulations on VC accounts, with many sellers receiving emails notifying them of the termination of their VC accounts in 60 days.

This time, Amazon's extensive crackdown on VC accounts has led to a reshuffling among Chinese VC sellers. Two types of VC accounts have been most affected:

1. Sellers with smaller annual GMV: These sellers have less power, and cutting them off doesn’t significantly impact Amazon. Additionally, these smaller sellers are the most likely to disregard rules because their limited strength forces them to take shortcuts to gain more profit. In contrast, VC sellers with larger GMV tend to cherish their reputation more, adhere to Amazon’s rules, and bring more benefits to Amazon. They form a relatively symbiotic relationship with Amazon, so Amazon typically does not crack down on these accounts on a large scale.
2. VC sellers without direct resources: Previously, Amazon did not strictly screen VC sellers, allowing many smaller traders to become VC sellers. Now, with increased battle with platforms like Temu and SHEIN, Amazon aims to attract two types of sellers to operate VC stores: genuine manufacturers and factories, and genuine brand owners. Real manufacturers can help Amazon lower prices, facilitating a price war against Temu and SHEIN. Genuine brand owners can create a brand effect, attracting more consumers and distinguishing Amazon from the white-label products sold by Temu. Therefore, Amazon's current crackdown aims to cut out a batch of non-factory and non-brand VC accounts.

Securing a VC account has become increasingly challenging and regulated. Only those brands with steady sales, good reviews, and high customer satisfaction on Amazon are likely to get an invitation to become a VC seller. Some brands also boost their visibility by attending trade shows to catch the attention of Amazon's brand managers and thereby secure a VC account.

But even with a VC account, there’s no guarantee of profit. VC accounts have a more complex system compared to SC accounts and are not ideal for heavy discounts. Discounts on VC accounts mean you give all the subsidies to the consumers, while Amazon still charges fees based on the original purchase price, unlike SC accounts where fees are based on the final sale price.

A lot of VC sellers don't get how VC traffic, pricing, and inventory work, and wrongly think that VC accounts can't bring high profits or scale. That's not true. VC accounts are built to drive traffic and conversions, which will lead to growth. The trick is to figure out how to get more traffic, set the right prices, and make your VC account profitable while still giving Amazon its cut.

For brands expanding globally, a VC account is a nice bonus. But first, your products need to be top-notch and sell well on Amazon and offline channels to be noticed and invited to join as a supplier.

About half of Amazon suppliers now use a mix of VC and SC sales. Last year, the number of suppliers using this hybrid approach jumped from 53% to 74%.

For brands that don't have a VC account but want to sell through Amazon, using a VC consignment model might be a good option. This involves supplying Amazon through someone else's VC account, which can boost brand visibility and increase sales by 30%-50% compared to SC.

Large, heavy products can also see better profit margins with VC sales compared to SC's FBA model.