Amazon 1P vs 3P: What's the Difference for Sellers?
Quick answer: Amazon 1P (first party) means you sell your products wholesale to Amazon through Vendor Central, and Amazon sets the price and sells to shoppers. Amazon 3P (third party) means you sell directly to shoppers on Amazon’s marketplace through Seller Central, keeping control of pricing, branding and margins but taking on inventory risk, fulfillment (or FBA fees) and customer service.
| Amazon 1P (Vendor) | Amazon 3P (Seller) | |
|---|---|---|
| Portal | Vendor Central | Seller Central |
| Who you sell to | Amazon (wholesale) | End customers |
| Who sets the retail price | Amazon | You |
| How to join | By invitation | Open registration |
| Margins | Lower (wholesale) | Higher, minus Amazon fees |
| Fulfillment | Ship bulk POs to Amazon | FBA, FBM or 3PL |
| Payment | Payment terms, often monthly or longer | Regular marketplace payouts |
Whether you plan to or already do business on Amazon, Amazon 1P vs 3P, these two sales models, require you to choose from. They each have their own priorities, but all must hand over some operational control to Amazon.
You may need to consider a lot before making a decision. I believe that after reading this page, you can choose a sales model that is more suitable for you.
What is Amazon 1P?
If you are a 1P seller, it means that you are selling products to Amazon. The transaction occurs only between you and Amazon, as a wholesaler and a retailer, respectively. However, to become a 1P seller, you need to be invited directly by Amazon. The process begins with Amazon sending a purchase order, which you fulfill by shipping the product to them.
As a 1P merchant, you will lose ownership of the pricing of your product. You also have partial freedom to promote sales. When it comes to liability, manufacturers need to be responsible for their products to the end. Almost all retailers require their manufacturers to carry liability insurance. Amazon is very strict with merchants when it comes to technology and requires them to have insurance.
Pros
Amazon orders a large volume of products.
Customer confidence in 1P ASIN is significantly increased due to brand recognition.
The product detail page made by the Amazon team has been optimized.
Diversified advertising options.
Logistics issues are guaranteed.
Inventory risk is almost non-existent.
Cons
You will lose pricing power and branding power over your products.
Since you are selling wholesale, your profit margin is lower.
Payments are made at more distant intervals, usually once a month, sometimes at longer intervals.
Non-compliance with purchase orders may result in the rejection of payment.
Your inventory is completely dependent on the purchase order.
What is Amazon 3P?
Amazon 3P sellers will get the platform provided by Amazon to let their products get noticed. At the same time, you can freely choose the delivery order, such as FBA, FBM, or SFP.
1P sellers deal with Amazon through Vendor Central, while 3P sellers own Seller Central. 3P Amazon sellers can choose between two seller accounts: Personal and Professional. With a more comprehensive feature set, most sellers choose the latter. You can set up multiple accounts to grow your business within legitimacy.
Pros
You take control of your pricing.
You have the freedom to define how your brand is presented.
Better profit margins.
You can get better protection through brand registration.
You can use the data to better position your products.
Cons
You will bear all the inventory risk.
You are responsible for your own order fulfillment and product promotion.
Using the seller central portal requires a larger expense.
You need to cover some of the extra costs yourself.
You need to have your own team of professional customer service professionals.
Amazon 1P VS 3P: What Is The Difference?
1
Brand Identity
1P sellers do not have the autonomy to build your brands. You can provide your ideas and resources before Amazon makes a decision. You will have no control over your product listings or prices.
The opposite is true for 3P sellers. All product marketing is in their hands. You are responsible for your entire Amazon strategy, considering all aspects of your branding, product optimization, etc.
2
Diversification
1P sellers can grow their business in other markets. However, if another store sells your product for less than Amazon, Amazon may push for lower costs or stop ordering. In practice, this makes it harder for 1P sellers to compete on price in other e-commerce stores, which reduces the opportunity to increase profits.
3P sellers control their pricing. Therefore, they won’t risk delisting because they offer cheaper deals on another site. In addition, they are free to enter new markets.
3
Time and Money
1P sellers save time: Amazon handles listings, retail pricing, fulfillment and customer service. They don’t have that hassle, but relying too much on Amazon can reduce profit margins.
3P sellers still need to do a lot of work by themselves, even with the assistance of FBA: inventory management, marketing, and customer service. It sounds complicated, but the extra work usually brings a higher profit margin.
How to Move from 1P to 3P on Amazon?
You should give a list of your plans, which should include photos of your products and reviews, etc.
Budgeting for your own marketing will help you solve potential sales declines and drive your sales business forward.
When you plan to grow your business to other online shopping malls, you can still choose FBA, which will make your logistics business more convenient and affordable.
This will reduce your workload. The packaging, labeling, inspection, and picking of your products will be handled by the partner center, so you can enjoy the convenience without reducing your profit margin.
Have the right software and resources to better track inventory, allowing you to adjust fulfillment strategies in real-time to better meet sales needs.
You need to have a professional customer service team to handle returns and customer complaints. Doing so will give the product a more three-dimensional positive image.
Conclusion
In short, 1P is more dependent on Amazon to fulfill its business. That is, you give up almost all control over marketing and sales. 3P will deal with pricing, logistics, operations, and customers. But you have control of the business and the freedom to scale.
We have now compared the Amazon 1p and 3p sales models. There are pros and cons to both, and ultimately you will have to choose the business model that best suits your needs. If you want to learn more information, you can contact us.
FAQ
What is the difference between Amazon 1P and 3P?
In 1P (first party) you sell your products wholesale to Amazon, and Amazon resells them to customers. In 3P (third party) you sell directly to customers on Amazon's marketplace, keep control of pricing and branding, and pay Amazon selling fees instead.
What is Amazon 1P?
Amazon 1P is the first-party vendor model. Brands and manufacturers receive purchase orders from Amazon through Vendor Central, ship the stock to Amazon, and Amazon sets the retail price and sells the products as 'Ships from and sold by Amazon'. Joining is by invitation.
What is an Amazon 3P seller?
An Amazon 3P seller is an independent business that lists and sells its own products on Amazon through Seller Central. 3P sellers set their own prices and choose to fulfill orders themselves (FBM) or through Fulfillment by Amazon (FBA).
What does 1P vs 2P vs 3P mean?
1P is selling to Amazon as a vendor and 3P is selling directly to shoppers as a marketplace seller. 2P is a less common term usually used for selling through a distributor or wholesaler who then sells the products on Amazon.
Can you move from Amazon 1P to 3P?
Yes. Many brands move from 1P to 3P to regain control of pricing and margins. You need a Seller Central account, a budget for advertising, a fulfillment plan (FBA, FBM or a 3PL), and a customer service process.
Can you sell both 1P and 3P on Amazon?
Yes. Some brands run a hybrid model, selling certain products to Amazon as a vendor and others on Seller Central as a 3P seller. It needs careful price and catalog management so the two channels do not compete with each other.