Selling on Amazon, which was named the world’s sixth largest company by Forbes Global 2000, is a great way to achieve your financial goals and expand your current business.
Interested in getting started? Read on for an overview of the differences between Amazon third-person (3P) and first-person (1P) selling models, insights into each option’s pros and cons, and tips on how to decide which model is the right fit for you.
If you want to sell products directly to buyers through Amazon’s online marketplace and manage your business through Seller Central, you can apply to become an Amazon 3P seller.
If you’d rather sell directly to Amazon as a vendor with access to the retailer’s Vendor Central, you can apply to become an Amazon 1P seller.
Let’s do a deep dive into how 3P and 1P work.
When you’re accepted to be an Amazon 3P seller, you’ll get access to Seller Central, where you can:
You can choose to sell your own products — or find popular existing products and offer them on your Amazon store.
You get to decide if you want to fulfill your products through Fulfillment by Amazon (FBA), Fulfillment by Merchant (FBM), or Seller Fulfilled Prime (SFP).
Amazon 1P sellers operate as wholesale suppliers to Amazon, which acts as a retailer.
They sell products through Vendor Central — a portal used to facilitate business between Amazon and 1P vendors.
When Amazon invites you to become a 1P seller, they’ll send you a purchase order (PO). You fulfill the PO and ship products back to Amazon.
Product ownership then transfers to Amazon, and they’ll control product pricing on the marketplace. Every product sold will have a “Ships from and sold by Amazon.com” clause on its product detail page.
Both Amazon 3P and 1P have advantages and disadvantages.
With Amazon 3P, you’ll gain more control over product listings, pricing, brand presence, and promotions.
You’ll also have the flexibility to update product detail page (PDP) content — and optimize it to increase conversions.
Using insights into customer data around a consumer’s previous shopping activities, you’ll be able to better cater to your target audience.
You’ll also have access to the Amazon Selling Partner API, which will help you create consistent and engaging experiences for your customers.
Additionally, you’ll gain access to the Amazon Seller mobile app, which allows you to:
However, you’ll also be responsible for order fulfillment — unless the retailer offers a retailer fulfillment program.
Monitoring and replenishing inventory, customer service responsibilities, and returns-related tasks will also fall to you.
With Amazon 1P, you’ll be able to save money on resources, as Amazon handles most customer service issues and marketing activities.
You’ll also be able to create high-converting enhanced product pages with Amazon A+ Content.
However, you’ll have limited control over pricing and product listings. It may also be difficult to launch new products because you’ll be relying on Amazon's strategies and goals rather than your own.
According to Jungle Scout's 2022 “The State of the Amazon Seller” report, Amazon 3P sellers are primarily seeking a change in their work and/or income, or they’re managing a brand and selling on Amazon as part of their job.
An Amazon 3P seller can also be someone who is simply curious about selling on Amazon.
Most sellers focus on tangible, consumer-friendly product categories like home and kitchen, beauty and personal care, and toys and games. If you fall into these categories, then the Amazon 3P selling model could be your ideal choice.
But if you have a wholesale background and a solid distribution strategy, and you’re interested in selling to retailers, you could be an ideal candidate for 1P.
Once you determine whether you should go with the Amazon 3P or 1P model, it’s time to develop your organization’s unique selling strategy on this platform.
Regardless of which model you choose, Amazon provides a great opportunity to reach your financial goals while expanding your customer base.