It could almost feel overwhelming when you’re trying to understand terms like Amazon 1P vs 3P. These designations refer to different selling models on the Amazon marketplace, each with its own advantages and drawbacks. 

As the years went by, and the years to still come, e-commerce has and will continue to explode in growth. 

According to a report by Statista, global e-commerce sales surpassed $5.3 trillion in 2023, and this trend is projected to continue. 

As a major player, Amazon has established brands and aspiring entrepreneurs to its wide marketplace. 

What is Amazon 3P?

Amazon 3P or third-party selling is the most common selling model on the Amazon marketplace. 

In this model, you, as the seller, retain ownership of your inventory and are responsible for all aspects of selling your products directly to customers. 

You are responsible for creating and maintaining accurate and compelling product descriptions, images, and pricing. 

With 3P vs 1P Amazon, you are responsible for inventory management. You may choose to fulfill orders yourself using Fulfillment by Merchant or FBM or use Amazon’s fulfillment services (Fulfillment by Amazon or FBA). 

Whether you use FBM or FBA, you are responsible for processing orders, packing items, and ensuring timely delivery to customers. 

Handling customer service is of vital importance. If any customers have doubts or concerns it’s best to tackle it head on to best insure positive feedback. 

With 3P, you are responsible for marketing your products on Amazon, including using advertising options like Sponsored Products and Sponsored Brands.  

What is Amazon 1P?

Amazon first party seller involves selling your products directly to Amazon. 

You become a wholesale supplier, and Amazon purchases your inventory in bulk at an agreed-upon price. Amazon then takes on the responsibility of: 

Amazon creates and manages product listings, determines pricing, and handles all marketing and advertising efforts. 

When it comes to Amazon 1P, Amazon stores, packs, and ships your products to customers. 

Amazon also handles all customer inquiries, returns, and refunds. Basically, in the 1P model, Amazon becomes the retailer, selling your products under its own brand alongside other offerings. 

How to Become a 3P Seller on Amazon? 

To become a 3P seller on Amazon, you must first choose a selling plan. The individual plan is suitable for occasional sellers or those who expect to sell fewer than 35 items per month. 

The Professional Plan is recommended for businesses that expect to sell more than 35 items per month. It offers a monthly subscription fee but provides access to more advanced selling tools. 

Next, you need to create an Amazon Seller Central account and complete account verification. 

Then, prepare your product listings by conducting thorough research, capturing high-quality product images, writing compelling product descriptions, and setting competitive pricing. 

After that, choose a fulfillment method: Fulfillment by Merchant (FBM) or Fulfillment by Amazon (FBA). Optimize your listings for search by conducting keyword research, incorporating relevant keywords into your product titles and descriptions, and use Amazon’s advertising tools. 

Finally, provide excellent customer service by responding promptly to customer inquiries, resolving issues efficiently, and managing returns and refunds. 

Monitor and analyze your performance by tracking key performance indicators, analyzing data, and continuously improving your selling strategy. 

How to Become a 1P Seller on Amazon?

Amazon has specific criteria for selecting 1P vendors, which may include factors such as product demand, brand reputation, sales volume, and product category. 

You will need to submit a formal application to Amazon, providing detailed information about your business, product offerings, and sales history. This application might require extensive documentation, including financial statements and marketing plans. 

If your application is approved, you will need to negotiate a vendor agreement with Amazon, which will outline the term of the sales relationship, including pricing, order quantities, and other key terms. 

Pros and Cons of Amazon 1P vs 3P

Amazon 1P offers multiple advantages, such as the potential for higher sales volume due to Amazon’s extensive marketing reach and customer base. 

By selling directly to Amazon, vendors can significantly reduce their operational burden as Amazon handles most aspects of the sales process, including order fulfillment, customer service, and marketing, freeing up significant resources for the vendor to focus on other areas of their business. 

Furthermore, 1P Amazon vendor central sellers gain access to Amazon’s wide logistics network, sophisticated marketing tools, and robust customer service infrastructure. 

But selling to Amazon at wholesale prices typically results in lower profit margin compared to the 3P model. 

Additionally, 1P vendors have limited control over pricing, marketing, and customer interactions. Finally, Amazon may make decisions that impact the brand image and product positioning of 1P vendors. 

An Amazon 3P seller retains more control over pricing and can potentially achieve higher profit margins. 3P sellers also have full control over their product listings, marketing, and customer interactions. 

Furthermore, 3P sellers enjoy greater flexibility in terms of pricing, promotions, and fulfillment options. 

The Amazon marketplace is highly competitive, and 3P selelrs face intense competition from other sellers. Finally, Amazon has strict policies for Amazon 3P sellers, and non-compliance with these policies can lead to account suspensions and potential business disruptions. 

Differences Between 1P vs 3P Amazon

The primary difference between 1P vs 3P Amazon lies in the ownership of inventory. In 1P, Amazon owns the inventory, while in 3P, the seller retains ownership. 

In 1P, the seller sells to Amazon, while in 3P, the seller sells directly to Amazon customers. 1P offers less control over pricing, marketing, and customer interactions compared to 3P. 

1P generally results in lower profit margins compared to 3P. 

Finally, 1P shifts more operational responsibilities to Amazon, while 3P requires the seller to handle all aspects of the sales process.