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Amazon partners with you no matter the way you choose to grow your brand on Amazon. There are various ways by which you can sell on this platform including Amazon 1P, 2P & 3P. In this blog we are discussing the two of them; Amazon 1p Vs 3p. 1P is handling everything on single and seamless transactions with Amazon.com and it does look tempting. But most sellers prefer delivering products directly to the customers with 3P sales. The 3P model lays the groundwork for diversifying into other marketplaces, offers greater freedom, and can be much more profitable.
When it comes to Amazon 1P vs 3P, deciding between one depends on the infrastructure you establish, processes regarding how involved you want to be, and how you set up your logistics.
Vendor Central or 1P is considered the fastest as well as the most convenient way to sell on different marketplaces like Amazon or Walmart. It is also the most traditional method.
In 1P instead of creating listings on Amazon, you sell your products directly to the company. Amazon itself negotiates a wholesale price for your products, picks them up, and lists them. The platform controls the listings, sets up the price accordingly, and makes decisions regarding whether or not to make another purchase or when.
1P marketplace offers many benefits for manufacturers:
Amazon 3P or Seller Central means selling directly to customers through the Amazon marketplace. It involves taking your products to Seller Central and listing them directly so that consumers can buy them. Using 3P, you can earn more but at the same time, you'll have to expand the infrastructure to handle logistics. Manufacturers today prefer to sell directly and 3P marketplaces are extremely vast.
3P sales offer more to manufacturers:
For 3P you need a more hands-on approach which is the reason most brands avoid direct sales. Some of the challenges that manufacturers face with the 3P marketplace model are:
Amazon 1P vs. 3P widely depends on your brand or organization and how much you want to be involved in the processes. 3P sellers have to handle things like direct marketing, logistics, and customer service. It needs greater business investment and things are also complex. However; in the long run, it can result in larger profits. Here’s all you need to know regarding Transitioning from 1P to 3P.
Amazon 3P means you control being delisted and pricing. It means you can sell on other marketplaces. Diversifying across different marketplaces offers greater business security because if you face any issue regarding a marketplace or your seller account, you can still be secure on other sales channels.
Contrary to that 1P sellers are bound to a single marketplace, because there is a risk that you might get delisted elsewhere if you're selling the same products for a lower price on Amazon.
With the 3P marketplace model the time expenditure goes up per sale, but with that profit per sale also increases. On the other hand, 1P reduces your hassle but cuts into margins simultaneously. Even if you're selling via 3PL like Amazon FBA, you still need to invest resources into building your infrastructure to prepare and ready your package for FBA.
Selling via 3P means you have to handle product presentations, listing updates, or other alterations which need you to keep everything up to date, invest in merchandising, and create listings.
Contrary to that, if you sell your products directly to Amazon, you can provide marketing material. product descriptions, etc., upfront. After that, your product is in Amazon's hands. However, Amazon still charges for merchandising and you'll have no control over listing updates, product presentations, etc., even with the changes in your product.
1P focuses on seamless transactions with Amazon and there isn't any hassle as you give up almost all control of your sales to the marketplace. The 3P model needs more work to set up. However, there's freedom for expansion and you keep control of the business. Take the time to weigh the pros and cons of each model and then decide which one suits you the best.
Check our comprehensive guide on how you can easily grow your brand on Amazon with the expertise of SwiftStart.
Both Amazon 3P and 1P marketplace models have their own benefits and drawbacks, making them great options to sell on Amazon. The trick here is to evaluate each method and determine which one fits your requirements the best. You can always benefit from the new Amazon customer engagement tool to send email campaigns, keep customers engaged with your store, offer discounts & coupons, and educate customers about your brand.
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In a 1P relationship with Amazon, your brand acts as a wholesaler selling products directly to Amazon as a retailer. It is basically a "Brand-as-Supplier" relationship in which Amazon buys products from you, sells them, and owns all the communication with the consumers to complete the sale.
Whereas in a 3P relationship with Amazon, your brand directly sells the products to the customers using the Amazon marketplace. You are responsible for everything including listing products, shipping to fulfilling orders to offer excellent customer service.
Yes! sellers have the option to sell some products on Amazon and some products to Amazon. Many sellers on Amazon prefer a hybrid approach, where they benefit from both 1P and 3P features. Products that don't perform well in a 1P setup can do better under 3P. It is also an excellent way to test new products.
If you’re in search of an Amazon success partner, you have come to the right place. SwiftStart (https://swiftstart.com/) offers a team of experts behind each of your products, maximizing your success. Get in touch for a free one-to-one consultation.
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