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Overview

Vendor Central:

Amazon 1P Vendor

Invitation Only: Amazon must invite you to be a 1P Amazon inventory seller with them
Sell inventory directly to Amazon
Amazon controls retail pricing
Sponsored Brands, Sponsored Products, Product Display Ads
Sold by Amazon

Seller Central:

Amazon 3P Vendor

Open to Anyone: Anyone can sell products through this platform
Sell directly to Amazon customers
Seller controls retail pricing
Sponsored Brands, Sponsored Products
Fulfilled by Amazon

Your eCommerce sales growth heavily depends on your marketing strategy, inventory management, and eCommerce business solutions, and your relationship with Amazon directly affects your eCommerce growth opportunities.

So, Vendor or Seller central? 1P or 3P? We give you the low-down on both platforms and how being a Vendor or Seller on Amazon stacks up.

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Why
Vendor Central
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Advantages

  • Sold by Amazon: The seller is listed as “sold by Amazon” so the customer knows that they're getting a product by a brand they trust. In reality, no one really looks at the Amazon inventory seller. A customer just wants to know if it's Prime and if they're getting two-day shipping. So while this might seem like an advantage, it's not much of a differentiator.
  • Access to Product Display Ads: These ads can increase visibility for individual products. By linking these advertisements to a product detail page within Amazon, you can target similar products, interest groups, relevant categories, etc. Like all advertising, this may help eCommerce sales growth and increase eCommerce conversions. Product Display Ads can only be used by an Amazon Vendor.
  • ARAP Data Insights: Amazon Retail Analytics Premium, or ARA Premium, provides additional data and reports for Amazon inventory sellers and Vendors. Reports include Customer Behavior, Customer Reviews, Geographic Performance, Market Trends, Operations, and Sales.
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Challenges

  • Dependent on Amazon Buying Inventory: Amazon holds the ace in this relationship. One week they're ordering $100k of inventory and the next you might be dropped from 1P.
  • No Pricing Control: Amazon always wants to offer customers the lowest price in the market, even if that means taking a loss. So if you have Minimum Advertised Pricing (MAP) guidelines, don't trust that Amazon will follow them. Amazon can and will exercise dynamic pricing at any time based on its internal data—no matter the consequences to Amazon inventory sellers.
    • If Amazon racks up losses because of the brand's inability to enforce MAP policy, they will pass those costs on to the brand or decide that your product is not worth selling (CRaPed out products).
  • Logistic Complications and Chargebacks: The eCommerce giant has pretty strict guidelines for filling purchase orders. If a 1P Vendor can't maintain stock and fulfill orders quickly, they might experience some pretty nasty chargebacks.

The Manufacturer's Dilemma:

Is Vendor Central (1P) or Seller Central (3P) Better on Amazon?

- Jason Gerrard
Why
Seller Central?
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Advantages

  • Increased Brand Control: As the Amazon inventory seller, you have more control over the pricing and can set it at MAP to effectively measure your eCommerce sales growth. You still have to strictly track and enforce MAP for other sellers so you don’t lose the Buy Box, but you have more control over your eCommerce marketing strategy. Vendors or suppliers often find their products being resold by third-party sellers without permission. These listings often contain very little detail and can harm your brand image.
    • By registering with  Amazon's Brand Registry program, you can combat these unauthorized sales, create A+ content that will improve the consumer experience, boost your brand recognition, and instill trust in your brand. Simply put, you can protect your eCommerce seller and vendor reputation.
  • Free Analytics: When it comes to online eCommerce business solutions and selling, data is king. Amazon Seller Central offers consumer data at no charge. This data can be used to learn more about customer behavior and demographics and understand who's buying your products and where they're being purchased from. These reports aren't as in-depth as ARA Premium, but still offer effective eCommerce-related insights.
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Challenges

  • Higher Fulfillment Costs: Shipping and/or fulfillment costs often limit your ability to sell low-priced items on Amazon. At the time of this writing, the minimum fulfillment charge for non-media FBA items is $2.41, not including Amazon's category-specific commissions.
  • Logistics Complications for FBA: Many manufacturers' logistical operations were created to meet the demands of distributors and traditional retail. They're really good at delivering pallets of product, but they don't have the logistics built out to do the necessary Fulfilled by Amazon (FBA) prep or even fulfill individual orders through the Fulfilled by Merchant (FBM) option available to sellers.
  • Tax Nexus Creation: Because of recent changes to tax law, if you decide to set up your own Amazon Seller Central account and leverage FBA to fulfill orders, you will create Tax Nexuses in every state that has an Amazon Fulfillment Center. This can be a huge burden for brands and manufacturers who have never had to deal with taxes across multiple states and municipalities, as you're essentially required to file taxes in all of those locations.

How to Become an
Amazon 3P Seller

- Bryant Garvin
Frequently Asked Questions
How Pattern
Can Help

Pattern is one of the largest 3P sellers on Amazon. We help brands navigate the worlds of 1P and 3P, regain brand control, grow sales through content optimization and product advertising, and handle all distribution and logistics.

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