When selling on Amazon, businesses have two primary paths to reach customers: as a first-party (1P) vendor or a third-party (3P) seller. Each model opens up different opportunities, challenges, and control levels over the selling process. Whether you’re a startup brand or an established company, understanding the pros and cons of Amazon 1P vs 3P can significantly shape your e-commerce success.
What is Amazon 1P?
In the Amazon 1P model, the seller acts as a supplier to Amazon. This means you sell your products directly to Amazon via their Vendor Central platform. From that point, Amazon takes care of pricing, logistics, and customer relations. Essentially, Amazon becomes your customer and purchases your products wholesale.
Key features of 1P:
- Increased trust due to the “Ships from and sold by Amazon” label
- Amazon controls pricing, promotions, and inventory levels
- Vendor invitations are required—this path is invite-only
What is Amazon 3P?
Alternatively, as a third-party seller on Amazon, you operate through the Seller Central platform. Here, you’re responsible for managing your listings, pricing, and fulfillment methods. You can use either Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM).
Key features of 3P:
- Control over pricing, inventory, and branding
- Wider flexibility for small sellers and DTC brands
- No invitation needed—open to all businesses
Benefits of Selling on Amazon 1P
1. Simplified Operations
With Amazon handling logistics, pricing, and customer support, sellers can focus more on production and product development. This is ideal for manufacturers or vendors who prefer a hands-off e-commerce approach.
2. Brand Credibility
Products sold by Amazon typically carry more trust. The “Sold by Amazon” tag gives customers added assurance of quality and legitimacy, which can lead to increased conversion rates.
3. Larger Order Volumes
Since Amazon purchases goods wholesale in bulk, vendors may enjoy larger volume orders, ensuring consistent revenue flow.
Challenges of Amazon 1P
1. Limited Control
Vendors lose control over retail prices, promotional timing, and how listings appear. This can pose problems for brands focused on pricing consistency or specific messaging.
2. Margin Pressures
Amazon often negotiates heavily for lower prices, which can erode your profit margins over time.
3. Performance-Based Relationship
Amazon may reduce or pause orders without notice if your product underperforms—making the vendor relationship somewhat unpredictable.
Benefits of Selling on Amazon 3P
1. Full Control
From pricing to images to inventory levels, 3P sellers have autonomy over their entire storefront. This is crucial for branding, managing profit margins, and tactical marketing strategies.
2. Better Margins
By cutting out the middleman (i.e., Amazon as a buyer), 3P sellers may retain more profits per item sold, especially when using FBA to gain prime shipping benefits without losing sales traction.
3. Broader Metrics and Data
The Seller Central platform gives access to performance dashboards, customer feedback, and ad analytics that help sellers continuously optimize.
Challenges of Selling on Amazon 3P
1. Greater Responsibility
Third-party sellers must handle customer satisfaction, shipping times, and returns—especially with FBM sales. Any missteps can harm seller ratings and result in suspended privileges.
2. Increased Competition
The 3P marketplace is wide open, meaning competition is intense. Standing out requires aggressive advertising, tight operations, and a strong brand presence.
3. Platform Complexity
Navigating Seller Central effectively involves a learning curve. From logistics to ad placements to compliance, sellers need to stay constantly engaged.
Choosing the Right Model
Ultimately, choosing between Amazon 1P and 3P depends on your business goals, capabilities, and how hands-on you want to be with your operations. Many established brands even use a hybrid strategy—selling some products through 1P while retaining control over others with 3P.
If you’re looking for brand control, customer data, and pricing flexibility, 3P is likely the better route. But if you’re seeking simpler logistics and are comfortable letting go of control in exchange for convenience and scale, 1P could be your answer.
In Conclusion
Whether you’re a new entrant or an experienced online seller, understanding the distinction between Amazon’s 1P and 3P models can guide your strategy and boost long-term results. Each model offers a distinct set of tools, but success comes from using the one that aligns best with your company’s capabilities and vision.