{"id":112739,"date":"2022-09-14T04:15:00","date_gmt":"2022-09-14T04:15:00","guid":{"rendered":"https:\/\/www-dev.channeladvisor.com\/blog\/uncategorized-uk\/selling-on-amazon-the-1p-vs-3p-dilemma\/"},"modified":"2024-11-08T04:49:16","modified_gmt":"2024-11-08T09:49:16","slug":"selling-on-amazon-the-1p-vs-3p-dilemma","status":"publish","type":"post","link":"https:\/\/old.rithum.com\/uk\/blog\/selling-on-amazon-the-1p-vs-3p-dilemma\/","title":{"rendered":"Selling on Amazon – The 1P vs 3P Dilemma"},"content":{"rendered":"

Amazon wants to partner with you no matter how you choose to sell. Need access to Amazon\u2019s vast sea of customers, but want to stay in control of your own listing? Sure thing. Feel comfortable letting Amazon take the reins with your products? That\u2019s ok too.\u00a0<\/span><\/p>\n

Amazon offers both first-party (1P) and third-party (3P) seller relationships. What\u2019s the difference? It turns out there are a number of pros and cons to each arrangement.\u00a0<\/span><\/p>\n

Amazon 1P vs. 3P Selling<\/b><\/h2>\n

What is Amazon 1P selling?<\/b><\/h3>\n

In a <\/span>1P relationship<\/span><\/a> with Amazon, you (the brand) act as a wholesaler who sells directly to Amazon as the retailer. This is a traditional \u201cbrand-as-supplier\u201d relationship, with Amazon buying products, selling them and owning all communication with the consumer to complete the sale.<\/span><\/p>\n

If you want to sell on Amazon as a first-party seller, <\/span>you must first obtain an invitation from Amazon\u2019s vendor management team<\/b>. Amazon will send you a purchase order (PO) request, which you fulfil by shipping your products to them.\u00a0<\/span><\/p>\n

Need help securing a 1P invitation from Amazon vendor management? <\/span><\/i>Rithum Managed Services<\/span><\/i><\/a> can help.\u00a0<\/span><\/i><\/p>\n

What is Amazon 3P selling?<\/b><\/h3>\n

In a <\/span>3P relationship<\/span><\/a>, your brand sells directly to customers via the Amazon marketplace.\u00a0<\/span><\/p>\n

You\u2019re responsible for everything from <\/span>listing products<\/span><\/a> to <\/span>fulfilling orders<\/span><\/a> to providing customer service.\u00a0<\/span><\/p>\n

Third-party relationships are available to nearly every brand without invitation, though <\/span>certain product categories<\/span><\/a> require Amazon preapproval.\u00a0<\/span><\/p>\n

Each option offers different characteristics that may suit your business.\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
\n

1P Selling<\/b><\/h4>\n<\/td>\n

\n

3P Selling<\/b><\/h4>\n<\/td>\n<\/tr>\n

Requires invitation from Amazon vendor management.<\/span><\/td>\nNo invitation needed.\u00a0<\/span><\/td>\n<\/tr>\n
Amazon orders your products in bulk and sets the price. They take care of listing, fulfilment and customer service.<\/span><\/td>\nYou control your price, listing content, shipping to the customer (unless using a fulfilment provider) and customer interactions.<\/span><\/td>\n<\/tr>\n
Amazon takes care of optimising your product pages.<\/span><\/td>\nYou\u2019re responsible for regularly optimising your product pages.\u00a0<\/span><\/td>\n<\/tr>\n
Your products are automatically eligible for Prime benefits such as two-day shipping.<\/span><\/td>\nYou can only offer Prime benefits to customers if you use Seller Fulfilled Prime or <\/span>Fulfilment by Amazon (FBA)<\/span><\/a>.\u00a0<\/span><\/td>\n<\/tr>\n
You have access to more Amazon advertising options.<\/span><\/td>\nYou benefit from higher profit margins.\u00a0<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

What About 2P Selling?<\/i><\/b><\/h3>\n

In a second-party selling scenario, Amazon is the merchant of record, but not the manufacturer. As the retailer, Amazon buys a brand\u2019s products through a distributor or reseller. The listing still displays Amazon as the seller and shipper.\u00a0<\/span><\/p>\n

1P vs 3P: 5 Things You Need to Know<\/b><\/h2>\n

Whether you choose a 1P relationship, 3P relationship or a hybrid of the two, you\u2019ll need to tailor different parts of your Amazon strategy, including:<\/span><\/p>\n

How You Interact<\/b><\/h3>\n

First-party sellers manage their Amazon relationship via the <\/span>Vendor Central<\/span><\/a> portal or an e-commerce platform such as Rithum. As a 1P seller, Vendor Central allows you to manage orders, generate sales reports and more.\u00a0<\/span><\/p>\n

Third-party sellers manage their relationship with Amazon through <\/span>Seller Central<\/span><\/a>, a portal exclusively for third parties. Platforms like Rithum provide numerous ways to optimize 3P marketplace sales with <\/span>automated repricing<\/span><\/a> strategies, <\/span>retail media<\/span><\/a>, <\/span>fulfilment services<\/span><\/a> and more.\u00a0<\/span><\/p>\n

Managing Your Inventory<\/b><\/h3>\n

1P sellers have little control over the SKUs that Amazon chooses to sell. You\u2019re completely dependent on Amazon POs to send inventory, but you also enjoy little <\/span>inventory risk<\/span><\/a>.<\/span><\/p>\n

In 3P relationships, you maintain complete control over what products you list and when you list. You assume more risk in managing your own inventory, but you can also create listings in bulk with inventory files and <\/span>automate inventory<\/span><\/a> through feeds.<\/span><\/p>\n

Warehousing and Fulfillment<\/b><\/h3>\n

In the 1P model, Amazon purchases and controls your inventory, meaning they\u2019re completely responsible for warehousing products and shipping orders to customers.\u00a0<\/span><\/p>\n

Third-party sellers are responsible for warehousing products and fulfilling customer orders. The one exception to this is when retailers use FBA, outsourcing fulfillment to Amazon for a fee.\u00a0<\/span><\/p>\n

Payment Terms<\/b><\/h3>\n

Amazon\u2019s standard payment term for 1P brands is net 90, which may cause a cash-flow problem for smaller companies. For most 3P sellers, funds are transferred from the Amazon Seller Account to a bank account every 14 days.<\/span><\/p>\n

Marketing Services and Analytics<\/b><\/h3>\n

Amazon offers a range of powerful marketing and analytics services for both 1P and 3P sellers, including:<\/span><\/p>\n