Amazon 1P vs. 3P: Pros & Cons Brands Need to Know

Rebecca Brown

October 24, 2023

 5 minute read time
1P vs 3P

Whether you’ve been selling your products on Amazon for years or you’re just starting out, you’ve probably wondered if 1P or 3P is the best selling model for your brand. As the top ecommerce accelerator and 3P seller with deep experience on Amazon, we know there’s no “best way” to sell on Amazon—it depends on your products, long-term goals, and capabilities.

Learn more about 1P vs 3P below.

  • What is 1P vs 3P?
  • 1P Pros and Cons
  • 3P Pros and Cons
  • How Do I Become an Amazon 3P Seller?
  • 3P Partners and Other Selling Model Strategies

Watch our most recent webinar on Amazon 1P vs 3P for more information:

What is 1P vs 3P?

In a 1P, or first-party relationship, Amazon buys your product wholesale and handles most of the selling details. In a 3P, or third-party relationship, you’re an independent seller on Amazon’s marketplace, which gives you both more control over your brand and more responsibility for logistics.

Deciding between 1P and 3P requires weighing the various pros and cons for your business. Brands should consider several factors before choosing which strategy makes sense. Here’s more information about the pros and cons of both 1P and 3P so you can make the best decision for your brand.

1P Pros and Cons

Pros:

  • Amazon is a well-trusted brand—consumers may trust your brand more if your products are sold by Amazon.
  • With 1P, your products are automatically eligible for Amazon Prime and two-day shipping.
  • Amazon handles all the logistics for 1P selling: taxes, ASIN, optimization, and customer service.
  • Amazon gives exclusive benefits, such as placement priority and advanced analytics tools, to 1P sellers.
  • Selling your products through Amazon 1P could be the most price efficient option for your brand.
  • You’re basically free of inventory risk and possible listing disciplinary measures.

Cons:

  • In a 1P relationship, Amazon has the control to sell your product at any price they see fit, even if it’s below your established Minimum Advertising Price (MAP).
  • You may lose profit margins to Amazon with a 1P relationship. (Learn the true costs of Amazon 1P.)
  • Amazon will pay you less frequently than in a 3P relationship.
  • You will have little control over availability of inventory on Amazon at any given time.
  • Amazon can drop you as a 1P seller at any time.

Many brands choose to sell on Amazon in a 1P relationship so they don’t have to manage most of the logistics—they simply prefer Amazon to do it. Another big benefit is having a well-trusted brand selling and somewhat representing your products.

3P Pros and Cons

Pros:

  • Gives you more flexibility and control in every aspect of the selling process.
  • Strengthens your brand presence.
  • Helps you gain better access to data.
  • Provides more control in the selling process (pricing, inventory, and product listings).
  • Offers complete control over how much inventory to list.
  • You can share inventory across marketplaces when necessary.
  • You have creative control to develop listings with better optimized content to tell your brand story.

Cons:

  • You may face inventory risks.
  • You’re responsible for creating purchase orders and handling inventory logistics.
  • You’re responsible for your own customer service.
  • Brands are required to pay additional fees to Amazon for being a 3P seller.
  • Your brand can be subject to account suspension.

Selling on Amazon in a 3P relationship  is an increasingly popular option for brands, and it’s easy to see why. Even though becoming a 3P seller may seem like more work up front, it ultimately gives you more flexibility and control, a stronger brand presence, and better data access.

How Do I Become an Amazon 1P or 3P Seller?

You can only become a 1P seller through a direct invitation from Amazon. To become a 3P seller, the first step is setting up a Seller Central account. You’ll then provide relevant information and verifications before getting your account approved and finally listing and shipping your products.

When it comes to shipping your products as a 3P seller on Amazon, you have two options: Fulfillment by Merchant (FBM) or Fulfillment by Amazon (FBA). If you choose FBM, you are responsible for maintaining inventory, labeling, packaging, and shipping your products to each customer. If you choose FBA, your inventory is stored in Amazon’s fulfillment centers—you don’t need to worry about packaging and shipping. However, if you do choose FBA, you’ll need to meet the prep requirements.

3P Partners and Other Selling Model Strategies

While deciding between a 1P or 3P relationship is a solid start, selling model strategy is a bit more complicated than that. In fact, there are 7 common selling models brands may consider. Two of these models are the basic 1P and 3P models we’ve already discussed.

Other models include the following:

  • 3P Unmanaged: no active management of your brand
  • 2P: Fulfilled by Amazon (FBA) model
  • Hybrid: leverages both 1P and 3P strategies
  • 3P Network: you create a network of authorized sellers
  • 3P Partner: you partner with one exclusive ecommerce seller

types of sellers on Amazon

Pattern Proves the 3P Partner Model Works for Brands

In our experience, the ecommerce executives benefit most from a 3P partner model because it provides the most freedom and marketplace control on Amazon, without having to worry about complex logistics. Pattern executes a 3P exclusive seller model because it gives our partners the freedom and control unavailable through a 1P relationship while also taking on the stock, management, and risks that make 3P selling intimidating.

Pattern vs. other 3P sellers

With Pattern as your authorized wholesale partner, we buy your stock and resell the products on Amazon as an authorized seller. Once we buy your product, we’re responsible for all inventory risk and help you optimize your content and advertising while maximizing your brand protection and global strategy development. Our sophisticated inventory forecasting, fulfillment, and logistics systems help us predict and manage your inventory, and our experienced teams handle everything from taxes to customer service.

Unlike a 1P Amazon seller relationship, we’re eager to involve your brand every step of the way, including when it comes to branding, promotion, channel strategy, and new product launches. We respect your brand by following all brand pricing guidelines and committing to never drop below MAP policies.

Interested in increasing your margins by transitioning to a 3P relationship and partnering with Pattern? Get in touch today.

 

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