1P vs 3P on Amazon | What’s the Difference?
Choosing a 1P vs 3P selling model is integral to your Amazon business, so you must choose the best option.
With 1.9 million Amazon sellers, it’s no wonder why so many e-commerce companies choose the online shopping giant to list their products. Amazon offers flexible solutions for businesses to sell, store, and ship items.
But if you’re a new seller, choosing between 1P vs 3P on Amazon can be confusing. What do these mean? And how do they differ?
Here’s your guide to everything 1P vs 3P: the definitions, pros and cons, and choosing the right option for your store.
Amazon 1P vs 3P
1p and 3p are acronyms that mean first-party and third-party, respectively. With a 1p structure, you supply your products to the retailer, such as Amazon. With a 3p structure, you sell your products directly to customers, but you can still use the benefits of the marketplace.
To make things easier, look at 1P and 3P selling as vendors vs sellers.
Now, does Amazon 1P and 3P differ from other marketplaces, such as Walmart? Amazon has unique solutions for its 1P and 3P sellers, as we will discuss more in the next section. Both plans come with fees, so comparing those costs before signing up is a good idea.
There’s no right or wrong way to sell on Amazon. Both 1P and 3P have pros and cons, and each option works better for different businesses.
1P: Vendor Central
With 1p, you’ll have more of a wholesaler role. For example, you’ll sell your products directly to Amazon, which will then sell them to the end user. Instead of shipping your products to the customer, you’ll ship them to Amazon, who will own and resell them.
If you choose the 1p option, you will use Vendor Central. You can only access this platform if Amazon’s vendor management notices you and sends you an invite. Sellers who receive the invite include off-site e-commerce sellers, successful 3p sellers, and even exhibitors at trade shows.
On Vendor Central, you can track your purchase orders, gain product and sales insights, and even use Amazon’s advertising and marketing tools. Keep in mind that you will need to send product information, such as the description, images, and price, for Amazon to create the listings.
|• Seamless inventory management|
• Hands-off selling approachSimple fee structure
• No customer-facing roleVendor Central account
• Don’t need to invest in brand-building activities
• Your products qualify for Prime and fast shipping
• Access advertising and marketing tools
• Don’t have to create product listings
• Collecting and remitting sales tax is off your shoulders
|• Lower profit margins|
• Limited control over inventory, pricing, and product listings
• Revenue isn’t guaranteed
3P: Seller Central
As a third-party seller, you sell your products directly to consumers on Amazon. You use Seller Central to access various tools to grow your business on Amazon, such as advertising, marketing, and reports. Plus, Amazon offers different fulfillment options to simplify shipping and inventory management.
Another main difference between 1P vs 3P selling is that 3P is open to anyone. Plus, you have full control over pricing, listing creation, marketing and advertising, inventory management, order management, branding, and shipping.
Since you sell to the end consumer, you have a wider audience range than if you were to sell wholesale to Amazon. Don’t forget that Amazon attracts 310 million customers worldwide, so you have massive selling potential.
|• More control over your inventory, pricing, and marketing/advertising|
• Higher profit margins
• Have full creative controlAmazon offers different fulfillment options
• Amazon offers different fulfillment options
|• May need expertise, such as SEO|
• More overhead fees
• More quality control, such as responding to reviews and answering questions
Hybrid Model (2P)
As a seller, you don’t have to choose one method over the other. You can combine both 1P and 3P selling into your strategy. This is called 2P and is the Amazon hybrid business model.
As a 2P seller, you can list your products on Amazon and retain full control over the pricing and listing optimization. However, Amazon will take some control over your inventory–especially if you opt for fulfillment by Amazon (FBA).
That said, there are pros and cons to the hybrid model. You must run both your Vendor and Seller Central accounts, for instance. This may be a big hassle, especially if you’re new to Amazon.
1P vs 3P eCommerce: Which Option Is Right for You?
As stated previously, there is no right or wrong Amazon selling model. Sellers should choose the option that works for them.
That said, most brands won’t qualify for 1P selling unless they receive an invite. So, new sellers may have to sign up for 3P or sell on another platform before qualifying for 1P.
It’s still best to weigh your responsibilities and your control over your inventory to understand which option is right for you.
Would you rather handle your own inventory, order fulfillment, and shipping? If you would rather have full control over these areas, you’ll prefer 3P selling.
But to excel as a 3P seller, you must have an effective logistics system. You can still use other fulfillment options, such as FBA or outsourcing to a third party, but you’ll have more of a hybrid model.
Would you rather control the marketing/advertising, pricing, inventory management, and product listings? If so, you should choose 3P selling. This way, you can build your branding and attract your customers.
However, this forces businesses to be very involved in every aspect of their operation, which requires time and hands-on work. If this is a turn-off for you, try to qualify for 1P selling.
Do you have the capability to store and manage your inventory? If so, you’ll excel with 3P selling. But if not, you have other options. And if you don’t qualify for 1P selling, you can choose FBA and/or a hybrid model.
Do you still have questions about 3p vs 1p sellers? Here are common FAQs that new sellers often ask.
Is FBA 1p or 3p?
Fulfillment by Amazon (FBA) is when the marketplace handles your order fulfillment. Amazon will store your products, manage inventory, and ship your items.
FBA is part of a hybrid model. Unlike 1P, you’re not selling your products to Amazon; they don’t own them.
In fact, FBA offers the benefits of a 3P model. You still have a lot of control since you’re in charge of your branding, product listing optimization, and advertising/marketing.
However, FBA removes the responsibilities of inventory management, order fulfillment, and shipping. This will take away some of your control and comes with fees, but you won’t need to pay for a warehouse. This is why it’s important to weigh out the pros and cons.
Are There More 1p or 3p Sellers?
How Do I Sign Up for These Options?
Since 1P selling is invite-only, Amazon will reach out if you qualify for the program. To sign up as a 3P seller, visit the Seller Central website and follow the prompts to open your store.
1p vs 3p: Let Us Help You
When you first open your Amazon store, you must choose between 1P vs 3P selling. With 1P selling, you’ll sell your products to Amazon as a wholesaler.
Remember, 1P is an invite-only program, so many new businesses will choose 3P selling. As a 3P brand, you handle all aspects of your store, including product listings, marketing/advertising, branding, inventory management, and order fulfillment.
Sellers can also choose hybrid models, such as FBA, so Amazon can handle inventory, order fulfillment, and shipping.
FBA isn’t your only hybrid model option. Seeking help from a third-party company will expand your business to different audiences, such as your eCommerce expansion to Mexico.
If this is the case for you, GoAvance can help. We handle different services such as logistics, importing, and compliance to help you navigate the complexities of selling internationally in Mexico.
Click here to learn more about our services.
Stephanie Jensen has been writing e-commerce content for seven years, and her copy has helped numerous stores rank on Amazon. Follow her on LinkedIn for more insight into freelance writing and creating high-quality content.