How to Evaluate an Exclusive 3P Seller on Amazon

Cassandra Shaffer

February 3, 2021

Should I sell 1P or 3P on Amazon? What about globally? How can I ensure my ecommerce distribution strategy gives me the most control of my online channels to reduce channel conflict and price erosion? These are all important questions for ecommerce businesses to consider as they evaulate their distribution strategy and decide whether to sell 1P, 3P, or use an exclusive third party seller.

Companies face multiple selling options when deciding how to go to market on Amazon. The four main ones are:

  • Sell products directly to Amazon (i.e. the traditional “1P” approach)
  • Sell through a hybrid model, with some products sold 1P through Vendor Central and others through on the Seller Central third party marketplace
  • Sell solely on Seller Central through their own storefront
  • Sell solely through Seller Central using an exclusive third party seller (“3P”)

This decision is significant for brands, and each approach brings its own unique challenges and opportunities. Indeed, this decision can—oftentimes more than any other ecommerce-related decision today—have the greatest impact on a brand’s ability to achieve its desired growth metrics, while maintaining overall brand stability and control across all other channels.

We’ll discuss in this blog how, for brands who want to maintain control over their own destiny while still reaping the sales opportunities in the Amazon channel, selling their products through an expert exclusive 3P seller can optimize sales growth while maintaining brand integrity.

Amazon challenges: Unauthorized sellers, brand equity erosion, CRaP’d products, & increasing channel conflict

The fact is, many brands engaged in a 1P go-to-market strategy are experiencing some form of brand erosion, which is often exacerbated by the presence of unauthorized resellers and the realities of Amazon’s dynamic pricing algorithm.

A typical scenario for brands across a myriad of verticals is as follows:

  1. The brand enters the Amazon channel without a clear distribution strategy, often selling directly to Amazon and allowing other customers to sell on Amazon as well (sometimes with no product segmentation strategy).
  2. Due to a lack of distribution controls in other sales channels, products are diverted or arbitrage opportunities leveraged by multiple unauthorized third party sellers, who promptly list their products on Seller Central.
  3. A battle for the Buy Box ensues between Amazon, other authorized sellers, and the free-riding, unauthorized third party sellers. Each slashes advertised prices in an effort to beat the other and maintain Buy Box control, and the downward spiral ensues.
  4. Making matters worse, if the brand also sells on other major ecommerce platforms, this spiral will quicken, with the other retailers chasing prices advertised on Amazon, Amazon chasing the other retailers, the other retailers chasing unauthorized third party sellers, and so on.
  5. Authorized customers in core brick-and-mortar channels soon begin complaining and clamoring for price concessions, and products on Amazon may end up CraPped out or Amazon may likewise demand additional concessions.

Virtually no brand, manufacturer, or product vertical is immune to this new reality. If brands do nothing, the end result inevitably is incredible downward pressure on their brand value and a significant rise in channel conflict. This can lead to what we call the Profitability Death Spiral, because as your price and brand spirals out of control online, your profits erode—on ecommerce and eventually on brick-and-mortar channels too.

The Profitability Death Spiral for Ecommerce | Pattern

Against this backdrop, executives are increasingly turning to their ecommerce and sales teams, demanding that they “fix this” right away. For the reasons below, a crucial first step towards fixing the problem—and achieving brand stability—is to take a critical look at your company’s online marketplace distribution strategy and making sure it realistically aligns with your key brand metrics.

Retaking control: Evaluating your Amazon distribution strategy

For many brands, while ecommerce sales remain a minority percentage of overall revenues, the channel conflict and erosion caused by a lack of control over online sales becomes the proverbial “tail that wags the dog” across all channels. Companies will find that their ability to protect and grow their brands in today’s retail environment will be significantly impacted by the Amazon distribution strategy they select. The chosen strategy will greatly inform whether control can be achieved, in addition to defining the additional actions that need to be taken or avoided along the way.

The following chart describes the pros and cons that need to be evaluated when considering which distribution strategy is best for your company. As is evident, for many companies seeking to maximize growth while protecting brand value, selling through an exclusive 3P seller often is the best Amazon GTM strategy.

In summary, by selling through an exclusive 3P seller that is capable of handling large product volumes, respects MAP, and works hand-in-hand with the brand in terms of advertising, search, content, images, product descriptions and the like, brands can achieve significant control over their products in the Amazon channel and dramatically improve sales performance. The brand’s products will be removed from dynamic pricing and no longer subject to being CraPped out, all while benefiting from the exclusive 3P seller’s intensive promotional and search enhancement efforts. For many brands, this strategy can be the quickest way to resolve challenges associated with channel conflict, brand erosion, and an overall lack of control in the channel, all while realizing improved growth metrics.

Ecommerce distribution strategy pros & cons


Distribution StrategyProsConsBest Candidates
Multiple Resellers & No ControlsRequires no effort on the part of the brand.Brand will have no control over its online sales, brand image, product quality or consumer experience. Brand will likely face a high degree of intrabrand competition, significant erosion of its value, and material channel conflict. Online sellers will have no incentive to invest in a brand's growth. Companies that have no real concern for long-term brand value (i.e. those selling highly commoditized, low margin, short life-cycle products and relying predominantly on raw sales volume as a success metric).
Brand Sells All Applicable Product Line 1PRequires minimal involvement. Amazon will likely win the majority of sales in the channel given its ability to secure the greatest Buy Box percentage.Brand is unable to have a meaningful MAP program, as Amazon will typically not follow MAP policies. Products are captive to dynamic pricing algorithms, which will benchmark off of unauthorized 3P sellers and other retailers, often automatically reducing price to keep Buy Box. This creates significant downward pressure on advertised prices and, over time, material erosion of brand equity. “CraP’d” products and frequent concessions demanded. In light of recent announcements, may no longer be an option for many brands.Companies that want to actively engage with Amazon platform and have no strategic need to preserve brand value over an extended timeframe for products at issue. Again, brands whose key metric is pure sales volumes. Best suited to companies selling high volume, short life-cycle products, and companies not susceptible to intrabrand competition.
1P/3P HybridAffords the company the ability to insulate strategically important and/or new product launches through 3P distribution. More commoditized and pure volume plays can continue to be sold 1P.Company will continue to face control challenges associated with IP products.Companies that sell a differentiated mix of products, with some commoditized items and others that are more strategically important from a brand value and consumer perception perspective.
Brand Operates Own 3P StorefrontHighest margin in marketplace channel. Brand maintains full control of all marketplace activity.Requires commitment of material internal and fulfillment infrastructure to maximize potential. Brand must realistically evaluate whether its internal resources are capable of driving equivalent performance on an expert 3P seller.Companies with deep internal experience in marketplace sales and growth tactics, as well as the resources to execute on the same.
Exclusive 3P SellerCompany obtains a true “partner,” highly incentivized to protect and grow its brand. Ability to leverage true marketplace growth expertise. Typically respect MAP policies—company not subject to dynamic pricing algorithms. Company maintains control over brand image and presentation. Oftentimes growth levels achievable that are well beyond current performance. MAP stability on Amazon channel.Requires company’s dedication to restoring order to distribution channels and clearly defining how products may be sold in an authorized manner across channels. Brand must have a clear strategy for ensuring an authorized 3P seller is capable of winning the vast majority of the Buy Box.Companies that desire a “partner” in marketplace channels to which to largely outsource marketplace management. Companies facing erosion of brand equity due to presence of unauthorized sellers, competing marketplaces, or other market dynamics. Companies seeking to materially increase sales on marketplace channels. Companies seeking to reduce channel conflict and protect long term brand value.

E3P checklist: What to look for when selecting an exclusive 3P seller

As more and more companies realize the benefits of the exclusive 3P selling model, more and more 3P sellers crowd the market. The result is a significant amount of noise, with newcomers and fly-by-nighters vying for brand attention. Oftentimes, 3P seller pitches become indistinguishable, leading to confusion for companies who want to know who is best.

Companies evaluating 3P sellers should carefully probe and evaluate the following criteria before selecting the exclusive seller for their products on Amazon:

  • What major brands are they already selling? You don’t want to be a “guinea pig” or the seller’s first foray into partnering with a major brand. The ideal 3P seller will already represent multiple major brands and be able to quickly provide references.
  • What level of sales is the seller generating in marketplace channels on behalf of its partner brands? The most successful 3P sellers are selling in excess of $300 million of their partners’ products annually.
  • Do they have the ability to distribute into and sell your products on international marketplace platforms? The best 3P sellers have the ability to distribute products into major international online marketplaces, providing a global one-stop marketplace solution.
  • What is their average customer annual growth rate? The best 3P sellers will be fully transparent with respect to their average brand partner growth rates, which should significantly out-pace industry average growth rates.
  • **What is their average brand partner MAP compliance rate? **In the US, the best 3P sellers will be similarly transparent regarding the overall MAP compliance rates for the products they sell.
  • Will they pay for the legal foundation necessary to achieve control over your online sales and stabilize your channels? Will they pay for the unauthorized seller enforcement truly needed to clean up your channels? The best 3P sellers happily pay these costs because they know that this work is critically important for them to realize the value of channel exclusivity through maximized sales.
  • What marketing and advertising support will they provide? The best 3P sellers contribute significantly to these efforts and provide detailed analytics regarding the efficacy of various approaches so that resources can be focused on tactics that will generate real growth.
  • What is their relationship with the major marketplaces? Are they able to access services available directly from marketplaces on behalf of their customers? The best 3P sellers will enjoy overall positive relationships with Amazon and have meaningful contacts within the organization.
  • Does the 3P seller have inherent advantages with respect to Buy Box ownership? This includes: large number of units sold over time, a very high seller rating, high sales volume across multiple product categories, low defect scores, and the ability to purchase and maintain large amounts of inventory. The best 3P sellers share this data and clearly explain how it benefits their ability to win the Buy Box over lesser sellers.
  • What investments has the 3P seller made in personnel who have deep experience growing brands on marketplaces? What specific marketplace expertise do these individuals or teams bring? The best 3P sellers have retained high level ex-Amazon and other marketplace executives, they have top notch data and technology teams, and they have first in class distribution processes around the world.
  • What enhanced quality control measures will the seller implement with respect to your products? The best 3P sellers will go the extra mile to provide enhanced quality controls, inventory auditing procedures, and other testing to ensure the highest quality product in-channel and to best support legal claims against unauthorized sellers.
  • What data and analytics can the 3P seller provide? The best 3P sellers provide robust monitoring and data that enhances the ability to drive sales rather than simply report on “vanity” metrics.
  • What is the 3P seller’s customer retention rate over time? The best 3P sellers have extremely high customer retention rates across a number of different product categories and will be fully transparent with that information.
  • What case studies is the seller able to present? The best 3P sellers will have case studies clearly explaining how their efforts lead to material shifts in business success for their partner brands.
  • What top tier references can the seller provide? The best 3P sellers will be able to provide multiple references at diversified businesses for which they have delivered superior results.

3P seller red flags: When to keep looking

As discussed above, as the Amazon marketplace continues in its dominance, new “professional” 3P sellers pop up all the time. Each has a slick website and makes largely indistinguishable promises concerning increased sales, channel management, and the like. However, in the world of 3P resellers, all are NOT created equally.

When you identify the issues, consider looking elsewhere:

  • The 3P seller represents only a few smaller brands or a series of obscure brands about which you have no knowledge or familiarity.
  • The 3P seller is unable to present clear, comprehensive case studies demonstrating their partner brands’ successes over time.
  • The 3P seller is unable to commit to regular product purchases at market-appropriate levels.
  • The 3P seller lacks true internal thought leadership in terms of marketplace strategy, data and analytics, and fulfillment processes.
  • The 3P seller is actually a former diverter or gray market 3P seller and is now simply dabbling with direct buying relationships.
  • The 3P seller lacks any distribution or fulfillment capabilities.
  • The 3P seller cannot offer services on international marketplaces.
  • The 3P seller is unable to provide sophisticated data and analytics around marketing and advertising spend and/or enforcement efforts.
  • The 3P seller is unable to provide enhanced quality controls for products sold into the marketplace channel.
  • Finally, the 3P seller can’t or won’t fund the legal work needed to support this model.

An exclusive 3P seller could be an advantage & help control online channels

Many companies can significantly alleviate—if not solve—their biggest pain points in the marketplace channel by moving towards an exclusive 3P strategy. The alternative is to do nothing (which could be a disaster), or keep products solely 1P and face consistent downward pressure on your brand value. By placing your products with a strong 3P seller on Amazon and conducting robust enforcement against remaining unauthorized sellers, brands can stabilize their brands on Amazon and across their other channels all the while realizing increased growth.

Pattern is a global exclusive 3P seller, data provider, and strategic partner. If your company is considering using an exclusive 3P seller, confused about the best go to market strategy for your products, or has marketplace challenges you want to solve with an E3P solution, get in touch today to learn what Pattern can do for your brand.

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Amazon's Sponsored Product ads
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What Are Amazon’s Advertising Products? Sponsored Product, Brand, & Display Ads

What Are Amazon’s Advertising Products? Sponsored Product, Brand, & Display Ads

Utilizing Amazon sponsored ads can be a smart way for a brand to drive greater traffic to a product listing and start increasing sales. While many brands still struggle to manage their advertising strategies, 30% of Amazon brand sellers increased their advertising budgets in 2022. As ecommerce executives (or even on the nose with VPs of ecommerce?)  approve their 2023 advertising budgets, it may be worth it to take a look at Amazon’s advertising products and the benefit they may have on increasing conversions. 

​​Pattern is the premier ecommerce accelerator with all of the expertise, data-driven insights, and technology brands need to gain control on Amazon and maintain their competitive niche. We know the high value of and how to utilize Amazon’s advertising products to drive the most traffic and conversions to benefit and accelerate your brand.

Here are Amazon’s three main advertising products you should know about in order to drive listing traffic to your products and increase conversions: 

For a brand executive who is selling their product on Amazon, you may not already know the differences between campaign type, so we will walk you through the differences and uses for each of these three ad campaigns.

Sponsored Product Ads

Sponsored Products are a mid-funnel advertising strategy that gives visibility to products above the top organic listings (see example below). This strategy uses custom keywords to get products in front of the consumers who are searching for them, however it can be used to capture new audiences as well.These cost-per-click (CPC) ads require no additional copy or images, but usually receive the most interaction of the campaigns and need to be monitored closely.

As you can see, these ads look just like an organic listing, however they say, “Sponsored,” on them. These types of ads can be especially effective forms of advertising because they tend to blend in with the organic results around them. With Sponsored Products, you can get your products in front of qualified customers who are searching for your product in such a way that doesn’t make them feel like they are being served an advertisement.

Sponsored Brand Ads

Sponsored Brand Ads are a top-of-funnel brand awareness tool and function on keywords. This ad format helps show a customer what they may be in need of and where to get it.  Commonly used to promote product lines or best sellers, a Sponsored Brand ad shows up as a banner above the search results (see example below). This type of ad requires that the brand showcase at least three separate products.

Unlike other campaigns used on the Amazon platform, Sponsored Brand ads require ad copy and a unique logo. These ads also can take customers to a custom landing page, or a page on the brand store, that way they get a clear and overall picture about who your brand is, what other products you sell, and why they can trust your brand

Sponsored Display Ads

Sponsored Display ads can be a tactic for top, middle, or bottom of the advertising funnel due to its varying targeting abilities. Although most commonly found under the bullet points of a detail page, these ads can also show in emails, newsletters, and even more locations off platform.

Unlike the previous ad campaigns discussed, sponsored display ads can target shopping behaviors, like repeat purchasers, similar product purchasers, and even people who viewed the detail page but did not buy. Sponsored Display ads help customers discover your brand, drive awareness, and create loyalty. 

The example above shows just one of the many placements Sponsored Display has.

Accelerate Your Sponsored Products With Pattern 

Rather than competing with each other, each of the three sponsored ad products focus on a different section of the sales funnel, allowing you to target your customers and hit your sales numbers, all while edging out possible competitors. When brands use these advertising campaigns, they can better optimize their ad budget to improve ROAS and build revenue. 

At Pattern, we have all the resources to help your brand build successful advertising and digital marketing campaigns on Amazon so you can increase traffic and conversions, which will in turn increase your revenue

Global Ecommerce Weekly News: 27th September 2022
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Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)

How an Amazon SEO Agency Should Be Serving Your Brand
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How an Amazon SEO Agency Should Be Serving Your Brand

If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.

Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.

At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise  are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead. 

What is an Amazon SEO Agency?

An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.

A great Amazon SEO Agency partner will:

Prioritize Your Success

Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance

Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS. 

To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.

Provide Detailed Competitive Insight

A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.

It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.

Reduce Your Ad Spend Over Time

Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins. 

Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.

Amazon SEO Optimization and More

As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.

Contact us to learn more about our SEO optimization services.