There are two ways to sell your products on the Amazon marketplace. Amazon buys your inventory in what is called a 1P or vendor relationship or you, the Amazon vendor, sell directly to the consumer yourself through Amazon 3P as a third party seller on Amazon. If you've never sold 3P before, you probably have some questions. We'd like to answer them and provide some ecommerce tools. Feel free to click on your question below to jump to the answer, or take time to read the whole post.
If you are interested in setting up your own seller account, Amazon does a great job of providing you details of how to sign up and get going.
1. FBA Tax Nexus: When you use FBA, inventory is sent to multiple warehouses all over the United States. Since you technically own the inventory, you are now liable to file taxes in each state that you hold and sell inventory in. Tax Nexus also can make you liable to file taxes on any product sales in these states, even if the products were not sold on Amazon.
2. Account Suspensions: Your account can be suspended! As a seller, you are liable to meet Amazon’s guidelines for selling including on time shipping, labeling, and proper preparation.
3. Buy Box Re-Pricing: In order to win the BuyBox, you will have to implement a repricing option that will lower your price to win.
4. Customer Service: You are responsible as a seller to respond to customer inquiries within 24 hours - even on weekends and holidays. You will be responsible for approving and handling customer returns and working with disgruntled customers to ensure they are happy.
5. Store Feedback: You will be starting a new account on Amazon with 0 feedback. Feedback is a way that customers can rate how well you are doing your job. If you have too much negative feedback, you will be suspended. Other sellers who have more positive feedback will have a better chance of winning the BuyBox until your account gains traction and positive ratings.
6. Inventory Forecasting: Amazon does not do any forecasting for you. You are responsible for creating ‘PO’ shipments into Amazon, likely managing them with ecommerce software. You still own the inventory when it is in FBA up until it sells to a consumer.
7. Inventory Feeds: You will likely need to invest in or develop an inventory feed directly into Amazon Seller Central that automatically adjusts inventory levels and ability to ship. This can be done with Pattern's ecommerce tools. If you cancel too many orders due to out of stock issues, your account will be at risk of suspension.
Challenges of selling 1P include:
- Limited control over product and brand control forecasting
- Limited control over POs
- Pricing at the discretion of Amazon
- Launching New Products and getting Amazon to order enough inventory
- Limited data provided by Amazon
- Self Service First Platform
Challenges of selling 3P include:
- Inventory ownership risk
- Prep & labeling consistent with Amazon shipping standards
- Tax Nexus and Liability
- Customer Service Management
- Returns and Stranded Inventory
- Competing for BuyBox ownership
Yes you can. That being said, Amazon reserves the right to source your products for 1P in the future. [Learn more](https://info.pattern.com/contact-us) with our ecommerce software solutions.
- A+ Content is exclusive to 1P sellers. However, Enhanced Brand Content is available to 3P sellers and functions almost exactly the same with the exception of a couple modules.
- Product Display ads remain 1P Exclusive, but other advertising options are all available to 3P sellers. Rumors have surfaced that PDA’s will be available to sellers in the near future likely with One Vendor rollout.
- 1P offers ARA and ARAP data for an added % or fee structure. 3P sellers recently were given Brand Analytics which provides very similar data sources and information. 3P sellers also receive a lot more individualized data from purchases.
Amazon Vine Program currently is a Vendor Only program—although there have been beta Vine programs run with Sellers.
Amazon’s updated Standards for Brands Selling in the Amazon Store states, “we may choose to source products from some Brands for sale by Amazon only. Other Brands can operate as sellers in the Amazon store if they can consistently maintain our standards for customer experience.”
Brands Eligible to Sell on the Amazon Store:
- Brands who have been told by Amazon that they are ineligible for a 1P offer
- Brands who have never sold inventory directly to Amazon
Brands Ineligible to Sell on the Amazon Store:
- Brands who Amazon selects to source products as a 1P Vendor Relationship
- Brands who do not price competitively on the 3P marketplace*
Some Vendor Managers allow hybrid accounts. Others prohibit having both a 1P and a 3P account, which may impact your ecommerce growth strategy. Several hybrid accounts have been shut down over the last few months by Vendor Managers and several brands have been notified that their Hybrid Seller Accounts will be shut down later this year.
Yes. Amazon will not block unauthorized sellers from distributing and selling your products on the marketplace—even if they are not price competitive. In specific categories such as Luxury Beauty, Amazon will gate a brand from having unauthorized sellers.
An Authorized 3rd Party Seller is a 3P seller that will buy your products directly from you and resell on Amazon’s marketplace. An Authorized seller should be involved with helping curate and provide content and messaging consistent with your brand’s objectives. They should adhere to any MAP pricing policies and work directly with you to forecast for a consistent availability of goods on Amazon. Often, a distribution policy can be created to permit certain authorized sellers to sell on your behalf on Amazon, while prohibiting unauthorized sellers.
- Wholesale Payment Relationship: Inventory ownership passes to an authorized distributor / reseller, meaning you get paid faster.
- No Tax Implications: Authorized reseller handles all tax implications of FBA.
- No Account Management: You do not have to worry about managing customer service, managing seller central, re-pricing, or developing ways to avoid account suspension.
- No Additional Prep / Shipping: The authorized reseller typically takes care of your distribution efforts.
- Inventory forecasts, POs, Prep, labeling and fulfillment are all included.
- Additional Services: Pattern provides additional services included in the cost of goods. Services include content creation, advertising management, our ecommerce software, and basket size optimization.
- FeedbackPattern and other Authorized Sellers already have an established seller account with high amounts of feedback to help win the BuyBox consistently and provide a positive experience to consumers.
- Define your business objectives: What is your ultimate goal?
- Define your current capabilities: Do you have the ability to prep, ship, and manage inventory?
- Develop a strategy to be successful
- Determine your current and long term objectives and ways to achieve them.
- Explore the financial setup and ongoing costs of managing your own 3P seller store vs. partnering with an authorized seller to improve your ecommerce growth strategy.
- Determine the speed at which your organization can move on this initiative initially and develop the capabilities to sell on your own.
- Move quickly!
- The longer you are out of stock after your 1P account is shut down, the lower your rankings and product listing sales will drop. It is imperative to act quickly and decisively.
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Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces.
Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.
So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.
Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products.
An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.
An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.
Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.
At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services.
It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.
It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.
The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.
Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces.
With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.
Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.