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Amazon 1P vs. 3P is like the difference between selling a car via a dealership or as a private seller—there are pros and cons to each. It depends on what you want to achieve.
Most businesses start as third-party sellers (3P) on Amazon’s marketplace. Nearly 59% of Amazon sales came from this group in Q2 2022. So what are the main differences between 1P and 3P?
Read this quick Merch Jar guide to get all the answers you need.
Amazon allows you to opt for either a first-party relationship (1P) or a third-party relationship (3P) if you want to be an online trader. With 1P, you’re a wholesaler who supplies Amazon directly. The store then manages all the logistics.
On the other hand, an Amazon 3P is an independent seller on its marketplace. You have control over your e-commerce store brand and are responsible for logistics. Also, 3P can help you differentiate your products from those of your competitors.
Each business method has its strengths and weaknesses.
And if you deal with large volumes of multiple products, you must have an arsenal that can triple your sales. Thanks to Merch Jar’s Promotions, which is a powerful feature to improve your revenue and drive down your Amazon ACoS (advertising cost of sales). See how the tool works.
Here are more details about 1P and 3P so you can make the best decision for your brand.
As already mentioned, a 1P relationship means Amazon sells products on your behalf. You supply the online store as a wholesale supplier through Vendor Control. And Amazon handles the rest.
But there’s a catch.
You can only become a 1P seller when Amazon sends you an invitation to participate in this program. Once you accept the invitation, the store sends you a purchase order (PO). You must complete it and ship the requested products back to Amazon.
This product says “ships from Amazon” and “sold by Amazon,” indicating that it’s supplied by a 1P seller.
An Amazon 3P is a trader who sells products directly to customers on the online store’s marketplace via Seller Central. You must list your items on Amazon and arrange shipping logistics through FBA or fulfillment-by-merchant (FBM).
Amazon provides you with the following features:
But you’re responsible for:
This item says it's sold by “Chubbiestech,” showing that it’s supplied by an Amazon 3P seller who uses FBA for logistics.
Knowing the major differences between Amazon 1 P and 3 P helps you decide the ideal business approach that meets your goals.
The number one difference between 1P and 3P boils down to control. Want to sell products directly to customers via the Amazon marketplace? You can do this through Seller Central to manage your business as an Amazon 3P seller.
On the other hand, apply to be an Amazon 1P vendor (wholesaler) if you want to sell directly to Amazon through the retailer’s Vendor Central. Make sense?
So let’s explore the differences in-depth below.
Look at the image closely. You can see that an Amazon 1P vendor sells directly to Amazon via Vendor Central. The e-commerce store then sells your products to buyers. And your primary role is ensuring you satisfy purchase orders (PO) that you receive from Amazon.
Amazon is responsible for shipping the products to customers. But you can’t control the following issues:
However, a third-party (3P) seller sells directly to buyers on Amazon’s marketplace through Seller Central. It means you’re responsible for the following marketing activities:
Selling through Amazon 3P requires more time and effort, such as creating product listings, tracking stock, and handling shipping.
But it can also significantly increase profits because you have total control over pricing and marketing.
On the other hand, selling directly to Amazon (1P) needs fewer resources and is faster. However, it can reduce profits due to paying for shipping and other fees. Plus, you can’t tweak your marketing to increase sales since Amazon controls your products.
While 1P sellers can diversify their clientele by selling in other marketplaces, they risk delisting if one shop supplies goods at lower prices than another. So there are some restrictions when it comes to exploring other e-commerce channels to grow your business.
For these reasons, the opportunities to make more money become slimmer.
With 3P sellers, it’s possible to sell your products on other marketplaces, like eBay for instance, etc. There’s no risk of delisting and no limit to the number of e-commerce platforms you can deal with. In this way, you can double your sales.
It’s advisable to apply as a 3P seller if you want 100% control. But if you want Amazon to handle everything for you and are a wholesaler, take the 1P route. Some businesses blend 1P and 3P to take advantage of the two business models.
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