‘Selling online’ is slowly becoming synonymous with ‘selling on Amazon’.
That’s because around 800,000 people sign up for a new Amazon seller account each year.
So irrespective of whether you’re a brick-and-mortar store owner who wants to dabble in eCommerce, an entrepreneur looking to create a lucrative Amazon brand, or a large-scale manufacturer interested in partnering with a capable marketer to promote your products, now’s the perfect time to jump on board.
Before you start, you’ll need to choose the right business model, i.e., how you sell and market products on Amazon. Terms like 1p, 2p, and 3p marketplaces commonly refer to these models.
In this blog, you’ll learn all there is to know about Amazon 1p, 2p, and 3p selling (mainly Amazon 1p vs. 3p), how each method works, and the pros and cons of each model.
But first things first.
First-party, or 1P, is when you sell wholesale products to Amazon, which resells them to customers under its own label. Third-party, or 3P, is when you market and sell products to Amazon’s customers, competing with other sellers within your product niche. Most Amazon sellers are 3P, with 1P sellers (or vendors) few and far between.
Let’s explore each business model in greater detail and discuss its advantages and disadvantages.
A 1P seller is a wholesaler who sells products to Amazon, the retailer. In this 1P relationship, you – the vendor – deal exclusively with Amazon, not its customers.
Amazon 1P is an invite-only program, i.e., you need to get noticed and deemed worthy by Amazon’s vendor management team to obtain an invite. People likely to receive an invite include successful 3p Amazon sellers, offsite eCommerce sellers, and exhibitors at trade shows.
After getting into the program, Amazon will grant you access to a vendor central account and send over purchase orders (POs), your queue to ship inventory to Amazon’s warehouses. Amazon will also ask you to provide information about your product which it uses to set up product listings and determine the price.
With Amazon at the helm, 1P vendors have limited control over how their products are marketed to customers. They are, however, responsible for billing and chargebacks.
That said, 1P sellers can access the Amazon Vendor Central dashboard to run advertising campaigns, check up on the status of POs, and gain access to insights that help improve business operations.
The following are some of the pros and cons of becoming an Amazon 1p vendor:
Amazon 3P selling is accessible to everyone and allows merchants to market and sell products to Amazon’s customers.
Within the 3P dynamic, sellers retain greater control over key business aspects like pricing, listing optimization, advertising, inventory management, business report generation, order management, shipment statuses, branding building, etc.
Unlike 1P selling, your target audience is all those who visit Amazon’s marketplaces, not Amazon itself, which translates to millions of potential customers.
Here are some of the advantages and disadvantages of becoming a third-party Amazon seller:
There’s nothing stopping sellers from selling 1P and 3P on Amazon simultaneously. But you should only consider such an option if you’ve spent time selling on the platform and have the necessary experience to run both seller and vendor central accounts. If you’re new to Amazon selling, we recommend sticking to 3P or third-party selling.
The choice between Amazon 1p, 2p, and 3p depends on the nature of your business, the resources at hand, and your goals. You’ve learned how 1p and 3p works, but what does Amazon 2p mean?
Strictly speaking, Amazon has two business models, 1P and 3P. Within 3P selling, merchants can either handle logistics themselves, also known as FBM (Fulfillment by Merchant), or outsource product packaging, storage, customer service, and fulfillment to Amazon, referred to as FBA (Fulfillment by Amazon).
Some categorize the FBA model as 2P and FBM (or self-fulfillment) as 3P. But generally speaking, the 1P marketplace refers to vendors, and 3P refers to both FBA and FBM sellers.
The following are answers to some frequently asked questions.
The Amazon first-party, 1P, or Vendor central is an invite-only program, so there’s no ‘sign-up’ option. But there are ways to increase your chances of getting noticed by Amazon. These include improving your 3p seller performance (or signing up for a seller central account if you don’t own one), attending relevant trade shows, and growing your off-Amazon brand.
Seller central is 3P or third-party. Anyone can sign up for an Amazon seller central account, and once they do, become third-party or 3P sellers. 1P or first-party sellers own vendor central accounts, an invite-only program. However, if you’re considering selling on Amazon, we recommend sticking to 3P for the time being.
There are around 2 million small-to-medium-sized third-party sellers on Amazon. If you account for all Amazon marketplaces and sellers of all sizes, the figure increases to approximately 6 million. Judging by the growing online sales trend, the overall Amazon seller pool will continue to grow in the coming years.
This wraps up our Amazon 1p vs 3p comparison blog. Now that you know the critical differences between the different Amazon business models, you can start your Amazon journey on the right foot.
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Which platform takes the title of BEST all-in-on Amazon seller software? Which FBA seller toolset delivers the most value? To answer these questions once and for all, we decided to take a no-nonsense look at the strengths and weaknesses of ZonGuru and Sellics in a head-to-head comparison. Before you part with your hard-earned cash be sure to educate yourself on which software delivers the goods!