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Vendor Central:

Amazon 1P Vendor

Invitation Only: Amazon must invite you to be a 1P seller with them
Sell inventory directly to Amazon
Amazon Controls Retail Pricing
A+ Content
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
Enhanced Brand Content
Sponsored Brands, Sponsored Products
Fulfilled by Amazon
Overview

Selling on Amazon isn't really optional in the world of retail today. If you're not on Amazon, to most consumers, you don't exist. But navigating the Amazon relationship can be tricky. Vendor Central, or Amazon 1P, has its advantages, but Seller Central, or Amazon 3P, is appealing too. As time passes the differences and advantages or disadvantages can get a bit blurry, so we're going to break it down for you to help you decide if sticking with 1P is the right move, or shifting to a 3P relationship with Amazon might make more sense.

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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 are getting a product by a brand they trust. In reality though, no one really looks at the seller, a customer just wants to know that it's Prime and they're getting two-day shipping. So while this might see like an advantage, it's not much of a differentiator.
  • 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. Product Display Ads can only by a Amazon Vendor.
  • ARAP: Amazon Retail Analytics Premium, or ARA Premium, provides additional data and reports for Vendors. Reports like 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.
  • 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 any time based on their internal data.
    • If they rack up losses because of the brands 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)
  • Logistics: 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:

Amazon's Vendor Central, Seller Central and now Vendor One

- Jason Gerrard
Why
Seller Central
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Advantages

  • Brand Control: As the seller, you have more control over the pricing. You can set your price at MAP, you still have to strictly tract and enforce other sellers of your product who might violate MAP so you don't lose the BuyBox, but you have more control. 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 Enhanced Brand Content that will improve the consumer experience, boost your brand recognition, and instill trust in your brand. Simply put, you can protect your reputation.
  • Analytics: When it comes to selling online, data is king. Seller Central offers consumer data at no charge.This data can be used to get to know your customers better, understand who's buying your products and where they are being purchased from. This reports aren't as in depth as ARA Premium but still offers good insights.
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Challenges

  • Fulfillment Costs: Often times the shipping and/or fulfillment costs limit your ability to sell low-priced items on Amazon. At the time of this article being written, the minimum fulfillment charge for non-media FBA items is $2.41, not including Amazon's category specific commissions.
  • Logistics: Many manufacturers logistical operations were created to meet the demands of distributors and traditional retail. Essentially they are 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: Because of the changes in the last couple years 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. The brands and manufacturers who have never had to deal with taxes across multiple states and municipalities this can be a huge burden, essentially requiring you 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, gain back brand control, grow sales through content optimization and product advertising and handle all of the distribution and logistics.

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Give us a Call385-200-3434
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Protect Your Brand

Taking back control of your brand bycreating and enforcing pricing and distribution policies that protect your brand value.

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Increasing sales by driving high-quality traffic to product pages and improving on-page conversions via stellar content, data-driven SEO and stats-based advertising.

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Scale Your Distribution

Scaling distribution of your products to new marketplaces, countries and growing markets

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