Amazon 3P: Frequently Asked Questions and Things to Consider

Garrett Bluhm

March 8, 2019

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.

How do I start selling with a Seller Central Account?

Factors to consider before starting a Seller Central Account

What are the challenges of selling 1P versus selling 3P?

If I received notice from Amazon Retail that they will no longer be sourcing my products 1P, can I sell 3P?

Are there capabilities that are exclusive to Vendor Central (1P) that are not available on Seller Central (3P), and vice versa

If I have sold my products 1P in the past, can I sell 3P?

Can I sell CRaP products via a 3P account?

Will Amazon allow unauthorized sellers to sell my brand?

What is an Authorized 3rd Party Seller?

What are the advantages of selling through an authorized 3P seller like Pattern versus selling 3P yourself?

If my 1P account was suspended by Amazon, what should I do next?

DroppingBrands

How do I start selling with a Seller Central Account?

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

Factors to consider before starting a Seller Central Account:

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.


What are the challenges of selling 1P versus selling 3P?

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

If I received notice from Amazon Retail that they will no longer be sourcing my products 1P, can I sell 3P?

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.

Are there capabilities that are exclusive to Vendor Central (1P) that are not available on Seller Central (3P), and vice versa?

- 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.

 

If I have sold my products 1P in the past, can I sell 3P?

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*

Can I sell CRaP products via a 3P account?

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.

Will Amazon allow unauthorized sellers to sell my brand?

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.

What is an Authorized 3rd Party Seller?

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.  

amazon seller central

What are the advantages of selling through an authorized 3P seller like Pattern versus selling 3P yourself?

- 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.

If my 1P account was suspended by Amazon, what should I do next?

- 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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Global Ecommerce: Weekly News (6th September 2022)
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Global Ecommerce Weekly News: 6th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon announces new inventory and distribution service, AWD Amazon has launched Amazon Warehousing and Distribution (AWD), providing inventory and distribution services to its sellers as a means of addressing current supply chain issues. AWD is now available for sellers using Fulfilment by Amazon (FBA), i.e. outsourcing their fulfilment to the platform. Amazon has plans to expand the service outside the platform in 2023. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/02/amazon-introduces-new-service-to-help-solve-supply-chain-challenges/) Amazon Web Services (AWS) launches in the UAE AWS, Amazon’s cloud-computing platform offering, has launched its second region in the Middle East and now provides its services in the UAE. The move will now allow anyone in the UAE who utilises cloud technologies to harness AWS’s advanced platforms and APIs. An estimated $11 billion USD is expected to be added to the UAE’s GDP thanks to the implementation, with an average of 6,000 external vendor jobs to be created annually. AWS is now available in 87 zones across 27 regions, with sights set on expanding further across Australia, Canada, India, Israel, New Zealand, Spain, and Switzerland. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/30/amazon-web-services-launches-region-in-uae/) --- Other Marketplace News --- Lazada to launch in Europe Alibaba-owned ecommerce platform Lazada is set to launch in Europe, marking a refreshed internationalisation push from the company. The move follows toughening economic conditions and performance in Southeast Asia, advancing the need to tap overseas markets. In Europe, Lazada will face tough competition from giants like Amazon and Zalando. Lazada’s exact entry strategy is to be confirmed and will be reliant on macroeconomic and market conditions, according to Lazada CEO James Dong. [Read more on DigitalCommerce360](https://www.digitalcommerce360.com/2022/09/01/alibabas-lazada-to-take-on-amazon-zalando-in-europe-push/) Chinese ecommerce giant Pinduoduo to launch cross-border platform in the United States Pinduoduo, a Chinese ecommerce giant rivalling Alibaba and JD, has announced it will be launching a new cross-border ecommerce platform. The marketplace is set to launch in the United States next month, as part of the company’s larger push into new markets. Pinduoduo found success in China thanks to its rock-bottom price offerings and harnessing of social commerce marketing, emulating strategies similar to fast-fashion giant Shein. [Read more on Yahoo Finance](https://uk.finance.yahoo.com/news/pinduoduo-launch-international-e-commerce-034129263.html) Alibaba launches its biggest B2B sales event, ‘Super September’ China ecommerce giant, Alibaba, has now launched its month-long B2B sales event ‘Super September’. The event provides 40 million buyers and 200,000 suppliers with the ability to connect on the platform, showcasing a ‘virtually unlimited’ number of products. The event hopes to foster new cross-border business relationships to tackle supply chain challenges currently faced by businesses. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/alibaba-launches-super-september-b2b-sales-event/) --- Other Ecommerce News --- Klarna’s losses quadruple in first half of 2022 BNPL provider, Klarna, has reported losses of $581 million USD for the first half of 2022. This figure is almost four times larger than a year earlier, where $129 million USD in losses were reported. The company attributes the losses to employee costs, technology investments, and rising credit losses. Klarna’s figure reporting comes amidst worsening economic conditions, fresh legal and regulatory scrutiny, and pressure from Big Tech competitors. [Read more on The Financial Times](https://www.ft.com/content/483451db-9221-4ca4-83a6-b4ddc6bfcfbb) [Read more on the Guardian](https://www.theguardian.com/business/2022/aug/31/klarna-losses-more-than-triple-as-consumer-spending-slows) One fifth of Snap employees to be laid off amidst poor financial performance Social media platform Snap (‘Snapchat’) has announced it will be laying off 20% of its employees and closing out a number of projects following a year of poor financial results.The move will see 1,200 employees globally lose their jobs, saving the company an estimated $500 million USD in costs. Snap is currently valued at $20 billion, an 84% decrease from its valuation of $130 billion last year. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/snap-to-lay-off-20-of-its-workforce-and-wind-down-a-number-of-projects/)

Global Ecommerce: Weekly News (30th August 2022)
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Global Ecommerce Weekly News: 30th August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon set to shut down Amazon Care Amazon is closing its telehealth service, Amazon Care, which launched in 2019 as a trial program for its headquartered employees. Later the service was rolled out nationwide for employees and other companies. The ecommerce giant has now made the decision to move away from the healthcare space, believing it was not the right long-term solution for its enterprise customers. [Read more on CNBC](https://www.cnbc.com/2022/08/24/amazon-is-shutting-down-amazon-care-telehealth-service.html) Peloton closes new deal to sell on Amazon Following a recent deal, Amazon customers will soon be able to buy Peloton fitness equipment on the marketplace, marking Peleton’s first move outside a direct-to-consumer model. According to Peloton’s CCO, there are already around half a million searches on Amazon for Peloton products every month, despite having no presence on the marketplace. Some key products include the original Peloton Bike, retailing for $1,445 and Peloton Guide for $295. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/24/peloton-strikes-deal-to-sell-fitness-equipment-on-amazon/) --- Other Marketplace News --- 60% of Malaysians are buying from local sellers on Shopee A recent survey of nearly 3,500 respondents found that nearly half of the shoppers prefer to purchase from local sellers due to shorter delivery times. Other shoppers decide to shop locally due to the quality of the products made in Malaysia and an interest in keeping the economy running. As a result, smaller local merchants have been able to grow their businesses, and shoppers benefit from shorter delivery times, products of high quality and supporting local businesses. [Read more on The Malaysian Reserve](https://themalaysianreserve.com/2022/08/25/around-60-malaysians-are-buying-from-local-sellers-on-shopee/) Flipkart’s social commerce platform Shopsy crosses 100 million users Flipkart launched a social commerce arm, Shopsy, in July of last year, which has now surpassed 100 million users, ahead of its target timeline being the end of 2022. This acquisition of new users has made Shopsy one of the largest platforms of its kind in the country, and is expected to onboard a further 100 million by the end of 2023. The platform is centred around boosting local entrepreneurship and powering ecommerce for consumers across tier 2+ regions where users face challenges around trust and navigation when shopping online. [Read more on Business Standard](https://www.business-standard.com/article/companies/flipkart-s-social-commerce-platform-shopsy-hits-100-million-users-1220828006851.html) Meta joins Amazon and Walmart in bid for Indian ecommerce market Amazon mentioned earlier in the year that it would be building a logistics division in-house through its purchase of a 51% stake in Ecom Express, an end-to-end logistics firm, to make ecommerce deliveries more efficient in the country. Walmart operates Flipkart in India and is set to continue its investment in the marketplace. In an effort to compete in the Indian ecommerce market, Meta has partnered with Indian ecommerce company, JioMart, to offer customers a grocery shopping platform within its WhatsApp chat feature. [Read more on Pymnts](https://www.pymnts.com/news/retail/2022/meta-joins-amazon-walmart-indian-ecommerce-market/) --- Other Ecommerce News --- Ecommerce in Spain worth €57.7 billion in 2021 Spanish ecommerce saw 11.7% growth compared to last year, largely attributed to cross-border sales. In the final quarter of 2021, ecommerce sales in Spain were at €16.9 billion euros, at least 60% of which came from cross-border sales. Transactions from foreign locations to Spain generated a turnover of €1.56 billion in Q4, a growth of 27.7% compared to Q4 a year before. [Read more on Ecommerce News](https://ecommercenews.eu/ecommerce-in-spain-was-worth-e57-7-billion-in-2021/)

Global Ecommerce: Weekly News (23rd August 2022)
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Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)