Selling on Amazon can be incredibly profitable—but only if you choose the right sales model for your needs.
Deciding between 1P and 3P selling is one of the most crucial decisions you must make.
Picking the wrong model can hurt your chances for success on Amazon. But choose wisely, and you can tap into Amazon’s power while maintaining control. With over 310 million global shoppers and counting, the stakes are high to pick the best approach from day one.
This guide breaks down exactly what you need to know about Amazon 1P vs. 3P to pick the perfect path and maximize your Amazon success.
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TL;DR - 1P vs. 3P
- Amazon 1P refers to selling directly to Amazon, which then resells your products to consumers. It is best if you’re an established seller with wholesale experience looking to expand reach, but it is not ideal for control or maximum profits.
- Amazon 3P means selling directly to shoppers as independent sellers in Amazon’s marketplace. It is best for D2C sellers who focus on profitability and control; you need resources and capabilities.
To determine the best selling method for your Amazon business, you need to carefully weigh the pros and cons and evaluate the profitability potential. We will cover these in detail in the next sections.
However, before starting, one thing that can seriously damage your bottom line as an Amazon seller is missed reimbursements for discrepancies like lost inventory or incorrect fees.
We at Getida offer a risk-free way to uncover and secure every possible FBA reimbursement through comprehensive auditing and expert claims management.
Sign up now for an audit review of your account – your first $400 in recoveries is free of service fees. Tap into continuous cash flow opportunities and fuel your Amazon success.
What is Amazon 1P?
Amazon 1P is a retail relationship where you sell your products directly to Amazon. They purchase inventory from you at wholesale prices and resell those products to consumers on Amazon.com.
As a 1P seller, known as a “vendor,” you supply products to Amazon upon request via purchase orders in Vendor Central. Amazon handles customer fulfillment from its warehouses.
This vendor-retailer arrangement is a first-party (1P) relationship since Amazon is the primary seller interacting with shoppers.
1P sellers act essentially as suppliers to Amazon. The online retailer controls pricing, product listings, availability, inventory, shipping, returns, and customer service for your products.
Amazon 1P products are eligible for Prime and “ships from and sold by Amazon.com” designation. This can help increase consumer confidence and trust in you.
Pros of Amazon 1P:
- Increased visibility and discoverability under the Amazon umbrella
- Access to Amazon Prime badge and fast shipping
- Hands-off approach – Amazon handles fulfillment and customer service
- Lower risk and no inventory ownership
Cons of Amazon 1P:
- Lack of control over listings and availability
- No control over product prices (may lead to break MAP policy)
- Lower profit margins compared to 3P
- Lengthy payment terms of 30-90 days
- Can be dropped as a seller by Amazon anytime
Benefits of Being an Amazon 1P Seller
Here are some benefits of being an Amazon 1P seller:
- Access to Amazon’s reputation and reach as a leading online retailer.
- Amazon handles fulfillment, logistics, and customer service responsibilities.
- Potential for increased sales and visibility on Amazon.
- Eligibility for Amazon Prime badge and fast (2-day), free shipping
- No need to handle returns or customer inquiries.
- Lower risk compared to 3P selling in terms of inventory ownership.
- Usage of Amazon’s powerful analytics and advertising capabilities.
- Only pay a consolidated fee instead of multiple fees like referrals and FBA fees.
How to Become a 1P Seller on Amazon
Amazon 1P is invite-only, with no direct application / sign-up method.
To get approved:
- They produce unique, high-demand products that are not currently on Amazon.
- Establish high 3P sales volume and positive metrics.
- Attend trade shows to connect with Amazon reps.
- Showcase stable inventory levels, pricing, and demand history.
- Build an exceptional off-Amazon presence and wide distribution.
- Prove excellent operational capabilities to meet Amazon’s needs.
Even with these efforts, Amazon ultimately decides who receives a 1P invite based on their retail strategy.
What is Amazon 3P?
Amazon 3P refers to third-party sellers who sell products directly to consumers on Amazon’s marketplace. As a 3P seller, you control your inventory, pricing, product listings, and fulfillment.
You list your products for sale on Amazon yourself. You can choose to handle shipping on your own (FBM) or use Fulfillment by Amazon (FBA).
Amazon provides its platform and payment processing. 3P sellers pay Amazon fees for referrals and optional services like FBA.
You manage all marketing, advertising, inventory replenishment, returns, and customer service for your products and store on Amazon.
And you can do all of it through Seller Central.
Pros of Amazon 3P:
- Higher profit margins and pricing control
- Flexibility in fulfillment options
- Own the customer experience end-to-end
- Access to valuable data and insights
- No limits on the number of products listed
- Higher earning potential than 1P
Cons of Amazon 3P:
- Must handle all logistics and operations (which can be complex)
- Pay fees to Amazon for sales and advertising
- Requires greater effort and expertise
- Exposure to more risk with inventory
- Your account can face suspension for poor metrics
Benefits of Being an Amazon 3P Seller
Here are some advantages of being a third-party seller:
- Higher profit potential with pricing control.
- Own and grow a presence on Amazon.
- Access to powerful analytics, advertising tools, and marketing services.
- No limits on the number of products listed.
- Creative control over product listings.
- Share inventory across other sales channels.
- Global distribution to Amazon’s international sites.
How to Become a 3P Seller on Amazon
Signing up for an Amazon Seller Central account is the first step to becoming a 3P seller.
Just follow these steps:
- Create an Amazon Seller Central account.
- Choose an account plan based on projected sales volume.
- Provide tax, identity, and banking information for verification.
- List your products for sale, including details, images, and pricing.
- Choose the fulfillment option.
- Drive sales through marketing, advertising, and optimizing listings.
- Provide amazing customer service and prompt shipping.
There are two main fulfillment options when you become a 3P seller:
- Fulfillment by Amazon (FBA): Inventory stored and shipped by Amazon.
- Fulfillment by Merchant (FBM): You manage inventory and order logistics.
Choose the model that best suits your capabilities and strategy. Use a free FBA calculator to determine the best option for you.
With some effort and optimization, 3P selling allows you to build a profitable Amazon business on your own terms.
Relevant Characteristics Between Amazon 3P and Amazon 1P
When weighing Amazon 3p vs. 1p, you need to compare some vital characteristics between the two models:
- Inventory Ownership
- Amazon 3P: Seller
- Amazon 1P: Amazon
- Pricing Control
- Amazon 3P: Seller
- Amazon 1P: Amazon
- Fulfillment Responsibility
- Amazon 3P: Seller
- Amazon 1P: Amazon
- Revenue Model
- Amazon 3P: Direct to consumer
- Amazon 1P: Wholesale to Amazon
- Relationship with Amazon
- Amazon 3P: Independent partner using marketplace
- Amazon 1P: First-party vendor supplying Amazon
- Branding Control
- Amazon 3P: Full control of the seller
- Amazon 1P: Limited control
- Risk Exposure
- Amazon 3P: Higher
- Amazon 1P: Lower
- Payment Terms
- Amazon 3P: ~15 days
- Amazon 1P: 30-90 days
- Marketing Opportunities
- Amazon 3P: Full suite of advertising and services
- Amazon 1P: Limited promotions
- Customer Service
- Amazon 3P: Handled by seller
- Amazon 1P: Handled by Amazon
- Fee Structure
- Amazon 3P: Referral fees + optional services (storage fees, prep service fees, return fees, labeling fees, etc.)
- Amazon 1P: Wholesale discount + supplemental fees
Both models offer unique pros and cons, so consider which factors are most critical to your strategy when deciding between 1P and 3P.
Similarities and Differences
While there are clear distinctions outlined above, Amazon 1P and 3P share a few core similarities and differences:
Amazon 1P vs. 3P Differences
The main differences come down to the level of control, required capabilities, and profit potential:
- Control: 1P relinquishes control to Amazon, 3P retains control
- Capabilities: 1P simply fulfills POs, 3P manages complex operations
- Profits: 1P – lower margins, 3P – higher margins
What about Amazon 1P vs 3P revenue potential? Despite common perception, there is no inherent advantage in sales volume between the models.
Both can drive significant revenue under optimal conditions.
If you’re a 3P seller using FBA services, you may need to be extra cautious with your inventory. With millions of packages handled daily, items in Amazon Fulfillment Centers inevitably get damaged or lost sometimes.
You have to file claims to get reimbursed for this – which is where Getida comes in.
We provide comprehensive, continuous auditing to uncover every possible FBA discrepancy. We secure over 90% of opened claims, recovering an average of 166% more than sellers auditing alone.
Sign up now to get your first $400 in FBA reimbursements free. Tap into the revenue stream you’re owed and invest in expanding your Amazon business.
Amazon 1P vs. 3P Similarities
Some common things between these two Amazon business models are:
- Platform: Both models operate within the Amazon ecosystem, leveraging its vast customer base and e-commerce infrastructure.
- Branding Opportunities: Both models allow for branding and product listing optimization through tools like Amazon Brand Registry.
- Global Reach: In both models, you can potentially tap into Amazon’s global customer base through its “Remote Fulfillment with FBA” program (previously known as “Amazon NARF”).
What About 2P?
There is also a “second-party” model on Amazon called 2P, or Fulfillment by Amazon (FBA). This refers to 3P sellers who use FBA for shipping and fulfillment but maintain ownership of inventory and the sales relationship.
2P provides 3P sellers a way to balance control of their Amazon business with the logistics benefits of Amazon’s fulfillment network. You can use FBA optionally for greater efficiency.
So, 2P represents more of a fulfillment approach for 3P sellers rather than a wholly separate sales model like 1P. Using FBA does not prevent you from doing your own fulfillment.
1P vs. 2P vs. 3P
The core differences between these three approaches are:
- 1P: Vendors sell products directly to Amazon, which then handles pricing, marketing, and fulfillment.
- 2P (FBA): Third-party sellers list products on Amazon but use Amazon’s fulfillment services (Fulfillment by Amazon) to handle storage and shipping.
- 3P (FBM): Third-party sellers list and sell products on Amazon while managing their own inventory and fulfillment (Fulfillment by Merchant).
Bottom Line
Selling 1P or 3P on Amazon involves tradeoffs between control and convenience. Regardless of your approach, you need efficient systems to maximize your profitability on Amazon.
Missed reimbursements from discrepancies like unaccounted inventory, damages, and fee overcharges can significantly eat into your profits.
At Getida, we’re dedicated solely to uncovering your eligible reimbursement through comprehensive, tech-enabled auditing and expert claim management. With performance-based pricing and your first $400 in recovered funds completely free, we simplify the complex process so you keep more of what you earn.
Don’t leave money on the table – sign up now for an audit review and transform potential losses into revenue you can use to take your Amazon business to the next level.
Frequently Asked Questions (FAQs)
Here are answers to some of the most common queries about difference between 1P and 3P Amazon:
What is Amazon 3P Marketplace?
Amazon 3P Marketplace refers to Amazon’s platform that enables independent, third-party sellers to list products for sale directly to consumers. As a 3P seller, Amazon provides the marketplace to connect with buyers, but you manage all pricing, inventory, etc.
Which is More Profitable: Amazon 1P or 3P?
Generally, Amazon 3P selling is more profitable. You earn higher margins per sale by controlling pricing and avoiding wholesale fees. However, profit potential ultimately depends on factors like volume, conversion, ACoS, and more.
With Getida, you can further increase your profitability as an FBA seller. Our unique, strategic reconciliation approach to Amazon FBA reimbursements uncovers continuous cash flow opportunities to help reinvest in and advance your business.
Learn more about how we make growth simple and sustainable.
How Do Product Listings Differ in Amazon 1P vs. 3P?
As a 1P seller, Amazon creates the listings, though you can provide suggestions. 3P sellers create their own listings with creative control over images, videos, copy, and keywords and can tailor messaging to their branding.
