How to Become an Amazon 3P Seller

Bryant Garvin

March 12, 2019

These days, more than 50% of Amazon’s sales come from third-party sellers. If you’re one of those brands who stopped receiving purchase orders from Amazon recently or are simply hoping to become an Amazon Third-party (3P) seller, this post is for you.

The good news? If you’ve got some determination, good products and work ethic, you can build a scalable business as an Amazon seller.

Become a 3P Seller

Before you get started, it’s important to understand a few things about Amazon and Amazon sellers. Amazon directly sells products from a variety of brands like Nike, and also has its own private label goods. Less than half of all sales are by Amazon, and the remaining transactions are all done by third-party sellers.

Amazon’s goal is to offer the best possible prices and the widest range of products online. That’s why existing retailers and entrepreneurs can list their own products for sale. 3P sellers can do extremely well by offering competitive pricing and top-notch products.

Here’s how to become an Amazon 3P seller:

Set up an Amazon 3P seller account

Before you can start selling on Amazon, you need to set up an account. To do this, you’ll have to prep a few things:

- Individual Seller or Pro Account

- Make sure you understand Amazon’s selling policies & seller code of conduct

- Gather your business details

If you’ll be selling fewer than 40 items a month, you can choose to be an Amazon Individual Seller. This means you’ll pay 99 cents per sale plus transaction fees.

Amazon Seller Central

For businesses planning to sell more than 40 items, you’ll need to sign up for an Amazon Pro Seller Account. This means that you’ll pay a subscription fee of $39.00 and transaction fees.

And if you’re manufacturing your own products, you can choose to have an Amazon Vendor account and become an Amazon wholesaler if you meet certain requirements. It is invite only for those brands that are considered nationally distributed brands currently. There are pros and cons with Vendor Central for manufacturers and brands. Recently Amazon quit sending purchase orders to thousands of those selling through the Vendor Central platform causing many to question the long term viability of choosing this route.

When you set up your Seller Central account, you’ll also need to choose where you’ll ship from and to, and include your bank and contact information, along with your legal name and address.

Set up a seller profile

Once you have an active account, you can complete your seller profile. This is where customers can see information about your company, review feedback from past customers, and see your return and shipping policies.

This is also where you can tell customers all about your business, share your mission or company philosophy, and create an emotional connection with your potential customer.

List your products

Now you can list the products that you’d like to sell in the marketplace. If your product is already for sale on Amazon, you can use the descriptions and stock images on the site. You just have to describe the products and list how many you have available.

If you are moving from Vendor Central to Seller Central all of the product (ASINs) you were already selling will make this process simpler. All of the content and images you created for your products in Vendor Central should stay.

If you are a manufacturer or brand you want to make sure you take advantage of Amazon’s Brand Registry.

If you have a new product, you’ll have less competition but you’ll need to provide a UPC/EAN Number, SKU, product title, description, bullet points, and images.

Choose your fulfillment method

You have two options when it comes to shipment and fulfillment. The first is Fulfillment by Merchant (FBM). That means that it’s your responsibility to maintain inventory, label, package, and ship your products to each customer.

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The second option is Fulfillment by Amazon (FBA) this means that your inventory is stored in Amazon’s fulfillment centers, and you don’t need to worry about packaging and shipping. However, if you do choose FBA, you’ll need to meet the prep requirements. These include correct labeling, removing any other scannable barcodes, and packaging each unit within one secure package.

Poly bags must have warnings to prevent suffocation, and expiration dates must be clearly marked in the correct format. There are also a number of other prep requirements that you must follow in order for your products to be accepted.

Additional considerations for running your own 3P account

Tax Nexus Creation:

Before deciding to go the FBA delivery option as a seller it could create tax consequences because you still own the inventory until it is sold. The Supreme Court ruled in June 2018 that marketplace sellers, holding product in marketplace distribution centers (Amazon Fulfillment Centers) create a Tax Nexus for each state the distribution centers were located.

3P Forecasting:

You are completely responsible for maintaining stock inventory levels that are consistent with demand.  Both FBM and FBA will require you to retain enough inventory in your warehouse or in the FBA warehouses and regularly restock inventory to ensure that you are in stock on all products.  

Out of Stocks:

If Amazon runs out of inventory of your product, it will be marked “Out of Stock” and the BuyBox will defer to another seller who will win the BuyBox in the place of your seller account.  If all sellers are out of stock – the product detail page will no longer be searchable other than through an amazon.com/dp/ASIN url direct search for the product.

Out of Stock issues will affect your ability to leverage Amazon to grow sales more than any other thing. I refer to this as the “Amazon Death Spiral” - where because you are out of stock, your advertising is shut off, your sales rank drops, and you quickly lose any organic keyword ranking.

This will also open you up to unauthorized sellers jumping in to sell your product and fulfill the demand that is there, but you are not capturing because of inventory issues.

3P Customer Service:

As a seller of a product, you will be responsible to respond to customer inquiries and process returns.  Amazon Seller Central mandates that customers receive a response no later than 24 hours after they submit a question including weekends and holidays.  If you fail to respond within the proper time, you may have your account suspended.

3P Payment Terms:

Amazon will pay you twice a month and notify you after each payment.  There are several costs and deductions that are taken out of your Amazon payments similar to accruals.  These costs include:

- FBA Shipping Costs - Aggregated costs of all shipping FBA costs

- Seller Commission Fees - % of total retail value of the product based on category

- Long Term Storage Fees - Additional fees for products held in Amazon’s fulfillment centers over 6 months.
- Promo Rebates - for any discounts or concessions provided to customers

- Advertising Costs

- Premium Account Monthly Cost

3P authorized wholesale partner - the Pattern model

Another option available to brands and manufacturers is selecting to use a 3P authorized seller. This is where Pattern traditionally partners with brands. Pattern buys inventory from a brand and resells the inventory on the Amazon marketplace, (and others like eBay, Jet, Alibaba etc) as an authorized seller.

Pattern takes inventory risk and assists by reinvesting margins in to brand growth via content & advertising, brand protection, and brand global distribution.

The seller (Pattern) under this model will list on their own seller central account & select the fulfillment method based on margin economics and how to best represent the brand and enable sales on the Amazon platform.  

Pattern always buys inventory directly from a brand and provides a prime eligible offer whether it be through FBA, Seller Fulfilled Prime, or FBA On-Site.  

By using the above steps, you’ll be able to set yourself up as an Amazon 3P seller. Of course, there are a number of other things to consider along the way, and we can help with any questions or concerns. Get in touch to learn more.

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Slowing Inflation is Music to Consumers’ Ears
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Slowing Inflation is Music to Consumers’ Ears

**Instrument Pricing Changes Tune Amid Record Inflation** Compared to 2022, consumers should expect to pay more for musical instruments, but the rate of inflation shows signs of slowing. **The backstory:** America’s most popular musical instruments saw a notable price increase in 2022 compared to 2021, but the rate of inflation eased in Q4 ’22. **Why it matters:** Slowing inflation within this product category could indicate economic pressures like increased demand, rising labor costs, and supply chain disruptions are easing across the consumer landscape. **What we’re seeing:** The average cost of musical instruments increased 7.5% from 2021 – 2022; however, when analyzing individual increases year over year, some instruments saw price increases as high as 21%. <iframe title="YOY Price Change for Instruments — 2022 vs. 2021" aria-label="Bar Chart" id="datawrapper-chart-02Lwk" src="https://datawrapper.dwcdn.net/02Lwk/2/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="379" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> * Trombones experienced a 21.73% increase compared to 2021 * Trumpets +20.08% * Flutes +18.6% * Recorders +16.13% * Saxophones +13.63% * Clarinets +10.55% * Drums +5.41% * Ukuleles +5.17% **However:** Inflation among these same instruments was significantly less in Q4 ’22 compared to Q4 ’21. In some cases, prices decreased from Q4 ’21 – Q4 ‘22: <iframe title="Price Change for Instruments — Q4 2022 vs. Q4 2021" aria-label="Bar Chart" id="datawrapper-chart-6X6GZ" src="https://datawrapper.dwcdn.net/6X6GZ/2/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="379" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> * Trombones +11.23% * Flutes +10.41% * Saxophones +5.94% * Clarinets +5.59% * Trumpets +3.10% * Recorders +2.85% * Drums -2.59% * Ukuleles -8.46% **Moreover:** Certain instruments saw inflation reverse in 2022. On average, prices for melodicas, guitars, and violas saw their prices decrease by 4.41%, 3.19%, and 0.97%, respectively. <iframe title="YOY Price Change for Instruments — 2022 vs. 2021" aria-label="Bar Chart" id="datawrapper-chart-0Tefk" src="https://datawrapper.dwcdn.net/0Tefk/3/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="259" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> **Diving Deeper:** Inflation was more significant when comparing Q4 ’21 to Q4 ’20 than when comparing Q4 ’22 to Q4 ’21, indicating a slowing down of price increases for consumers. <iframe title="YOY Q4 Price Change for Instruments — 2020 – 2022" aria-label="Stacked Bars" id="datawrapper-chart-p6iqt" src="https://datawrapper.dwcdn.net/p6iqt/1/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="206" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> * In Q4 ’21, average prices for all instruments were up 8.89% compared to Q4 ’20. * When comparing Q4 ’22 to Q4 ’21, the average price for all instruments only increased by 2.65%. **The takeaway:** While consumers should expect to pay higher prices for instruments this year, overall inflation impact within this product category appears to be slowing down. With National Ukulele Day coming up on February 2, now is a great time for ecommerce brands to take advantage of slowing economic worries and reach new consumers. * Want Pattern’s data science team to power your brand with consumer insights like these? Contact us to [request more information](https://pattern.com/contact-us/) today.

Slowing Inflation? What Musical Instrument Pricing Tells Us
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Slowing Inflation? What Musical Instrument Pricing Tells Us

It’s safe to say consumers and brands alike are eager for a change to the pattern of rising inflation, steadily increasing in many ecommerce categories . Pattern’s internal team’s data scientists analysis of instrument pricing shows a glimmer of hope that inflation may be slowing, which would be great news for brands selling online.

At Pattern, we’re interested in and monitoring trends and news related to pricing since price is a key factor in a brand’s profitability (as explained in the Ecommerce Equation). When brands are able to optimize their price, conversions, and traffic, they can optimize their profitability. And profitability leads to better allocation of resources, better brand control, and gives leaders the ability to expand their presence to new markets worldwide.

YoY Instrument Pricing Increased at a Slower Pace

When analyzing the pricing changes of instruments from 2021 to 2022, our teams found that prices increased, but at a slower rate than from 2020 to 2021.

As shown below, the year over year Q4 changes show quite a lower rate of increase.

Inflation Improvements Raise Profitability

Because inflation impacts online shopping behaviors, lower inflation can lead to better overall profitability for brands. This idea, of course, is nuanced, but Pattern’s Ecommerce Equation can help illustrate the general principle.

When inflation rises, consumers change their spending habits. Shoppers spend more time researching products, forego premium, higher-priced brands, and buy more in bulk. Brands tend to see a loss of loyalty as they’re forced to raise prices.

Price is a key variable in the Ecommerce Equation: price x conversion x traffic = profitability. As inflation lowers, brands can expect better performance in all of these areas—more traffic as spending habits return to normal, higher conversion from returning customers, and price that better fits consumer demand. As inflation lowers and these variables stabilize, brands will see profitability increase.

Raise Your Profitability with Pattern

As an ecommerce accelerator, Pattern is obsessed with gathering data that helps our brand partners succeed. We’ve created best-in-class technology, models, and analytics to understand changes on the horizon and inform our decisions. With an incredible team of data obsessed Pattern employees, we see what makes the difference in truly great ecommerce performance and apply those learnings for brand partners. 

Ready to improve your profitability? Contact us here.

Inflation hits LEGO, but lighter than you’d suspect
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Inflation hits LEGO, but lighter than you’d suspect

**Some sets get more expensive, while others become cheaper** In June 2022, LEGO announced it would be increasing the prices of their sets. Ever since, consumers anticipated their favorite plastic construction toy prices to increase [by as much as 25%](https://9to5toys.com/2022/06/02/lego-officially-confirms-price-increases-coming-to-most-sets-later-this-fall/). **Why it matters:** Consumers are feeling the sting of inflation in all areas of their lives, from groceries and gas to entertainment. With LEGO Day right around the corner (January 28th), fans may wonder whether it’s a good time to purchase a set. **What we’re seeing:** While inflation continues to ravage the economy, consumers are seeing a small reprieve when it comes to the pricing of LEGO sets. Despite the anticipated 25% price increase, average prices among the top LEGO sets only increased by 4.7% year over year when comparing Q4 2022 to Q4 2021. <iframe title="YOY Price Change for All LEGO Sets – 2022 vs. 2021" aria-label="Interactive line chart" id="datawrapper-chart-3gn9L" src="https://datawrapper.dwcdn.net/3gn9L/3/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="393" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> * During this same period, annual prices for some of the most popular LEGO sets were up as much as 23%. <iframe title="U.S. Price Change for LEGO Sets – Q4 22 vs. Q4 21" aria-label="Split Bars" id="datawrapper-chart-vh7B2" src="https://datawrapper.dwcdn.net/vh7B2/1/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="708" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> **Yes, but:** Prices of other popular sets were down by as much as -12% during this same period. Depending on the kit, consumers might actually find some popular LEGO sets have gotten less expensive since 2021: * LEGO Star Wars Imperial Probe Droid was down -6% in Q4 2022 vs. Q4 2021 * LEGO Creator Tuk Tuk was down -7% * LEGO Star Wars Ultimate Millennium Falcon was down -10% * LEGO Ideas Tree House Business Kit was down -12% **However:** Even for the sets that experienced a price decrease, the decrease was less significant in Q4 2022 as set prices increased across the board following the June 2022 announcement. <iframe title="YOY Price Change for Individual LEGO Sets – 2022 vs. 2021" aria-label="Interactive line chart" id="datawrapper-chart-KjSXz" src="https://datawrapper.dwcdn.net/KjSXz/1/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="400" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); </script> **The takeaway:** While prices didn’t increase as much as consumers anticipated, inflation still had an effect on the cost of LEGO sets. As ecommerce brands prepare for increased demand ahead of LEGO Day, they could increase customer interest in all sets by promoting the sets that have seen a price decrease. * Pattern’s data science team analyzes consumer demand on Amazon to understand how economic forces impact pricing and shopping behavior. If you’re interested in using insights like these to propel your ecommerce strategy forward, [contact our team today. ](https://pattern.com/contact-us/)