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Amazon is the place to be for brands looking to grow their online presence—when customers make an online purchase, 74% of their product searches start on Amazon. Whether you’re new to selling on Amazon or have more experience on the marketplace, you may be wondering about the complexities of first-party (1P) and third-party (3P) sales. Common questions include:
If you’re interested in becoming a first-party seller, you must be invited by Amazon to operate on the Vendor Central platform. First-party sellers supply their products directly to Amazon in a wholesale relationship. There are several benefits of becoming an Amazon first-party seller. For example, you only have to worry about providing supply—Amazon takes care of retail pricing, fulfillment, customer service, and everything in between. As long as you have enough supply and can get your inventory to Amazon’s fulfillment centers, Amazon’s responsible for managing all aspects of your products on the Amazon marketplace. First-party sellers also have access to the full suite of Amazon marketing assets through Amazon Marketing Services.
There are some significant drawbacks of selling directly to Amazon as a first-party seller. You cannot interact directly with your customers and have limited control over your product pricing. Selling on Vendor Central results in a general lack of visibility into the sales process and brand ownership. First-party sellers also risk lower margins—and even selling product prices below MAP guidelines—due to the wholesale relationship with Amazon.
Let’s take a deeper look at the selling options available to you on Amazon so you can make the best possible decision for your company and accelerate your Amazon sales.
So, what about the other selling options on Amazon? There are unique advantages (and disadvantages) of selling first-party (1P), second-party (2P), and third-party (3P):
If you want to increase your Amazon sales, make sure your products stand out against competitors—look at Amazon third-party seller statistics and compare your products, marketing, and advertising strategies to other third-party sellers. Because there are so many Amazon third-party sellers, it can be difficult to stay competitive across the marketplace. You can regularly update and optimize your Amazon product listings to draw more attention from Amazon shoppers and improve your brand’s credibility.
As an Amazon third-party seller, you maintain control over nearly every aspect of your brand and sales process, which includes inventory, pricing, and product listings. Unfortunately, you’ll continue to compete against a lot of other Amazon third-party sellers, which is one of the most common Amazon third-party seller problems. To stay competitive, you may be tempted to lower your prices. However, as a third-party seller, you can mitigate a lot of the problems that first-party sellers face such as Amazon dropping your retail prices below MAP guidelines, enabling you to stay competitive while maximizing your profit margins.
Additionally, as a third-party seller, you have more flexibility to stock up for new product releases and promotions. Because you are in control of your inventory, you can share inventory across multiple marketplaces when required.
Even though there are many successful third-party sellers on Amazon, there’s no complete list of all Amazon third-party sellers. However, there are some straightforward ways to identify the differences between first-party sellers and third-party sellers on Amazon.
To start, look closer at the shipping information associated with the Amazon product listing. If the shipping description says “ships from and sold by [brand]”, you’re viewing a listing from a third-party seller. If the description says “ships from and sold by Amazon.com”, you’re looking at a first-party seller’s product. A second-party seller can be identified by a shipping description that says “ships from Amazon, sold by [brand]”.
To get the most out of your Amazon selling experience and elevate your sales, be sure to focus on key areas such as marketing, MAP policies, and optimizing performance on Amazon. To offload the day-to-day management of Amazon and focus on other aspects of your business, you may want to partner with an Amazon agency.
Ultimately, there are a lot of moving parts if you want to sell successfully on Amazon—it is important to determine which sales model will work best for your business. That’s why it’s helpful to work with a professional who has experience in navigating the complexities of the Amazon marketplace.
As you decide whether it’s best for you to sell first-party or third-party on Amazon, focus on how much control you want to have over your brand. Consider partnering with an Amazon seller consultant to scale your online business while maintaining brand ownership. At SupplyKick, we can help you navigate first-party and third-party sales, or help you make the switch from Vendor Central to Seller Central.
Connect with us to discuss your current Amazon strategy and learn how we can help you save time and grow your sales.