Amazon has completely transformed how brands sell products online. With millions of active sellers and over $700 billion in gross merchandise volume projected for 2025, the platform remains one of the most powerful eCommerce ecosystems in the world. However, before diving into the Amazon marketplace, every seller faces one crucial question — should you sell as an amazon 1P vs 3P seller?
This comprehensive guide will break down everything you need to know about Amazon 1P vs 3P — including how each model works, key differences, profitability analysis, pros and cons, and which one is best suited for your business goals.
Let’s start by breaking down what Amazon 1P and 3P really is — and how it works behind the scenes.
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What Is Amazon 1P (First-Party Selling)?
Amazon 1P, also known as Amazon First-Party Selling or Amazon Retail, refers to the wholesale model where you sell your products directly to Amazon, and Amazon resells them to customers on its platform. In this setup, Amazon acts as the retailer — owning the inventory, setting prices, and handling fulfillment, shipping, and customer service.
How the Amazon 1P Model Works
The 1P process follows a straightforward wholesale structure:
Invitation from Amazon: Amazon invites brands, manufacturers, or distributors to become first-party vendors. Once accepted, you’ll operate through Vendor Central, Amazon’s dedicated 1P portal.
Purchase Orders (POs): Amazon sends you purchase orders for your products. You fulfill these orders by shipping the inventory directly to Amazon’s fulfillment centers.
Amazon Takes Ownership: Once the products are received, Amazon takes full ownership of the inventory. It now determines the retail pricing, manages listings, and sells to end customers.
Sales Under the Amazon Brand: Products sold through this model appear with the label “Ships from and sold by Amazon.com” on their product detail pages — a mark that typically boosts buyer trust and conversion rates.
Ongoing Relationship: You can continue promoting your listings through Amazon’s advertising options (such as Sponsored Products, Sponsored Brands, or Product Display Ads) to encourage more bulk reorders from Amazon.
While Amazon assumes control of the product’s retail side, you remain liable for product quality and compliance, meaning you must maintain product insurance as part of your Vendor Central agreement.
Pros of the Amazon 1P Business Model
The first-party model offers a hands-off, low-maintenance approach to selling on Amazon. It’s especially suited to established brands and manufacturers with strong production capacity and wholesale pricing margins.
Key advantages include:
Bulk & Consistent Orders: You’ll receive large, regular purchase orders from Amazon, simplifying inventory planning and reducing forecasting challenges.
Trusted “Sold by Amazon” Label: This label increases customer confidence, often resulting in higher conversion rates compared to third-party listings.
Improved Visibility & Placement: Amazon’s retail and merchandising teams often help optimize product listings, boosting visibility in search results and on product pages.
No Direct Logistics Burden: Amazon handles storage, order fulfillment, shipping, returns, and customer support — freeing your time to focus on product development and brand growth.
Streamlined Fees: All costs are consolidated into one wholesale invoice rather than multiple marketplace fees.
Automatic Prime Eligibility: Your products automatically qualify for Amazon Prime benefits, such as two-day delivery, enhancing the customer experience.
Access to Enhanced Marketing Tools: As a Vendor Central partner, you gain access to advanced advertising and creative assets like A+ Content, Sponsored Brand Ads, and Amazon Vine for review generation.
Cons of the Amazon 1P Business Model
While convenient, the 1P model also means giving up control of many retail aspects — from pricing to brand presentation. Profit margins are typically lower, and your business becomes heavily dependent on Amazon’s purchasing decisions.
Common drawbacks include:
Limited Pricing & Branding Control: Amazon sets final retail prices, sometimes disregarding your Minimum Advertised Price (MAP) policies, which can impact brand positioning and margins.
Wholesale Margins: Since Amazon buys at wholesale rates, your per-unit profits are often significantly lower than selling directly to consumers (as a 3P seller).
Chargebacks & Fees: Amazon may impose extra costs — such as co-op fees, marketing contributions, freight allowances, and chargebacks — which can total up to 20–25% of revenue.
Long Payment Terms: Amazon’s payment cycle can extend 30–90 days, potentially affecting cash flow, especially for smaller brands.
Reliance on Amazon’s Purchase Orders: Your sales depend on Amazon’s reordering frequency. If Amazon reduces or stops purchasing your products, your sales can drop suddenly.
Loss of Creative Control: Amazon’s retail team can modify product descriptions, titles, or images at its discretion to fit the platform’s merchandising strategy.
Possible Vendor Termination: Amazon can discontinue 1P relationships at any time, leaving sellers without access to Vendor Central.
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What Is Amazon 3P (Third-Party Selling)?
Amazon 3P, or Third-Party Selling, is the most common and flexible way for businesses to sell on Amazon. Instead of selling your products wholesale to Amazon (as in the 1P model), you sell directly to customers through Amazon’s marketplace using Seller Central.
In this setup, Amazon acts as a platform provider, giving you access to its massive global audience, payment processing, and optional fulfillment services — while you remain the retailer of record and maintain full control over your products, pricing, and branding.
How the Amazon 3P Model Works
The 3P model is open to nearly all sellers — from individual entrepreneurs to established brands. Here’s how it typically works:
Set Up Through Seller Central: You create a seller account in Amazon Seller Central, where you can list, price, and manage your products directly on Amazon’s marketplace.
List Your Products: You can create your own product detail pages or join existing listings for items already sold on Amazon.
Choose a Fulfillment Method:
Fulfillment by Amazon (FBA): Amazon handles storage, packaging, shipping, returns, and customer service.
Fulfillment by Merchant (FBM): You manage shipping, logistics, and customer service yourself.
Seller Fulfilled Prime (SFP): You fulfill orders from your own warehouse but still qualify for Amazon Prime delivery standards.
Sell Directly to Customers: You manage your pricing strategy, run advertising campaigns, and control your brand presence across product listings.
Amazon Charges Fees: In exchange for using the platform, Amazon deducts referral fees, fulfillment fees (for FBA), and other variable charges per sale.
Unlike 1P sellers who sell in bulk to Amazon, 3P sellers retain full ownership of their inventory and customer relationships.
Pros of the Amazon 3P Business Model
The 3P model is ideal for sellers who want greater control, higher profit potential, and direct customer relationships. It allows you to manage your entire brand presence on Amazon and adjust your strategy in real time.
Key advantages include:
Full Control Over Pricing and Branding: You set your own retail prices, maintain your product listings, and control the creative aspects of your brand — from images and copy to promotional campaigns.
Higher Profit Margins: By selling directly to customers, you can keep a larger share of the revenue instead of selling at wholesale prices.
Scalability and Global Reach: Through Amazon Global Selling or NARF (North America Remote Fulfillment), you can sell your products to international markets from one account.
Unlimited Product Listings: Unlike 1P, Amazon doesn’t restrict which products you can sell — giving you freedom to expand your catalog anytime.
Access to Advanced Tools: Inside Seller Central, you can use tools for inventory tracking, sales analytics, advertising (via Sponsored Products, Sponsored Brands, and Sponsored Display), and even automate repricing to stay competitive.
Build Brand Equity: Through Amazon Brand Registry, 3P sellers can unlock A+ Content, Brand Stores, and video listings — helping you strengthen your identity and customer trust.
Flexible Fulfillment Options: Choose between FBA for convenience, or FBM/SFP for full logistics control, depending on your business needs.
Cons of the Amazon 3P Business Model
While 3P selling offers greater flexibility, it also demands more time, effort, and operational management compared to 1P. Sellers are responsible for every aspect of the business — from inventory to customer experience.
Common challenges include:
Higher Workload: As a 3P seller, you handle everything — listing optimization, advertising, logistics, pricing strategy, and customer service. This can be overwhelming for new or small businesses.
Amazon Seller Fees: Amazon charges referral and fulfillment fees (especially under FBA), which vary depending on product size, weight, and category. Long-term storage fees can also apply.
Inventory Management Risks: Overstocking can lead to storage fees, while understocking can cause you to lose the Buy Box and sales momentum.
Competition: With millions of sellers on Amazon, standing out requires consistent optimization, reviews, and marketing investment.
Tax and Compliance: You’re responsible for managing your own taxes (sales tax, VAT, etc.) and ensuring compliance with local laws — though many sellers use tax service providers for assistance.
Customer Service Responsibility (FBM): If you choose FBM, you must manage returns, refunds, and customer inquiries yourself, maintaining Amazon’s strict performance metrics.
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How to Become an Amazon 1P Seller
Unlike third-party (3P) selling, becoming an Amazon first-party (1P) seller through Vendor Central isn’t something you can simply sign up for. Amazon Vendor Central is an invite-only program, meaning that you can’t apply directly — you must be contacted by an Amazon vendor or brand manager.
What Does That Mean?
Amazon’s retail team periodically scouts for brands and manufacturers with proven demand, high-quality products, and reliable operations. If your brand fits what Amazon is looking for, they may reach out with an invitation to join Vendor Central. Once accepted, you’ll supply products wholesale to Amazon, and Amazon will handle the rest — pricing, fulfillment, and customer service — under the “Ships from and sold by Amazon.com” label.
How to Get Invited to Amazon Vendor Central
While there’s no formal application, you can increase your chances of being invited by building a strong brand presence and performance record.
Here’s how:
Perform Well as a Seller
If you’re currently selling through Amazon Seller Central, focus on:
Maintaining strong sales volumes and consistent product availability.
Earning high ratings, positive reviews, and customer satisfaction.
Keeping a low order defect rate and excellent fulfillment performance.
High-performing brands often attract the attention of Amazon’s retail team, as strong metrics signal that your products are already in demand.
Build a Recognizable Brand
Amazon wants to partner with brands that customers already trust. Strengthen your brand both on and off Amazon by:
Registering your brand through Amazon Brand Registry.
Creating engaging product pages with A+ Content, videos, and rich imagery.
Maintaining an active presence on social media and your brand website.
Getting press coverage, reviews, or influencer attention that boosts credibility.
Attend Trade Shows and Industry Events
Amazon category managers and vendor recruiters often attend major trade shows and expos to discover new brands. Participating in these events increases your visibility and can help you connect directly with Amazon representatives who are scouting for potential vendors.
Launch High-Demand or Unique Products
Amazon looks for products that can add value to their retail assortment — typically those with strong sales velocity or niche appeal. Introducing new, innovative, or trending items can make your brand more attractive to the Vendor team.
What Happens After the Invitation
If Amazon is interested, they’ll typically contact you via email. From there:
You’ll receive an official Vendor Central invitation and onboarding instructions.
Amazon’s retail team will outline the terms of business, including wholesale pricing, shipping standards, and payment schedules.
Once your account is live, you’ll start receiving purchase orders (POs) from Amazon to fulfill as their supplier.
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How to Become an Amazon 3P Seller
Becoming a third-party seller on Amazon (often referred to as “3P”) is a straightforward process—but you’ll want to follow each step carefully to set yourself up for long-term success. Here’s a detailed guide with practical steps:
Choose Your Selling Plan
First, select between Amazon’s two main selling plans:
Individual Plan – $0.99 per item sold; good if you’re testing or selling fewer than ~40 items/month.
Professional Plan – $39.99/month regardless of how many items you sell; ideal if you plan to scale.
Choose the plan that aligns with how fast you plan to grow and how many listings you’ll manage.
Create Your Seller Central Account
Next, sign up for your 3P seller account via Seller Central:
Provide business information: legal name, address, tax ID, bank account.
Provide valid credit card, phone number and identity verification documents.
Fill out your seller profile: company description, shipping & returns policy, public-facing seller name.
Once your account is approved, you’ll gain access to Amazon’s 3P marketplace.
List Products for Sale
With your account set up, you’ll begin adding your inventory:
Search for the product’s ASIN or SKU if you’re listing something already on Amazon; otherwise you’ll provide UPC/EAN/GTIN to create a new listing.
Upload key product details: titles, bullets, description, high-quality images, variations (size/color). Sell on Amazon+1
Set your price, shipping options, and fulfillment method (FBA or FBM).
Make sure your listing is optimized for search, conversion and complies with Amazon’s product and category policies.
Choose Your Fulfillment Method
How you fulfill orders affects control, cost and scalability:
Fulfilled by Merchant (FBM): You keep inventory, ship items yourself, handle customer service.
Fulfilled by Amazon (FBA): You send your products to Amazon’s fulfilment centres; they handle shipping, returns, service.
Choose based on your budget, resources and growth strategy.
Launch and Promote Your Listings
Once live, you’ll need to drive visibility and sales:
Use Amazon’s advertising tools: Sponsored Products, Sponsored Brands, display ads.
Consider coupon offers, promotions or bundles to attract early customers.
Encourage reviews (within Amazon’s rules) to help build credibility and conversion.
Monitor and Optimize Your Seller Performance
Success on Amazon 3P isn’t just about listing—it’s about continuous improvement:
Track your metrics: Order Defect Rate (ODR), Late Shipment Rate, Valid Tracking Rate, returns.
Keep inventory levels optimized to avoid stock-outs or long-term storage fees. GETIDA
Use analytics (Business Reports, Amazon Brand Analytics if available) to refine pricing, listings, product expansion.
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Amazon 1P and 3P: The Hybrid Model
In today’s complex e‑commerce landscape, many brands are adopting a hybrid selling strategy—combining first‑party (1P) and third‑party (3P) models on Amazon—to optimise reach, control and profitability. This hybrid approach allows you to leverage the strengths of each model while mitigating some of their limitations.
Why Brands Choose the Hybrid Approach
Enhanced Revenue Resilience
Relying exclusively on the 1P model places you at Amazon’s wholesale purchasing discretion. The hybrid model adds a 3P channel to maintain sales even when Amazon reduces POs.
Control & Flexibility
While 1P grants you access to Amazon’s retail engine and “Sold by Amazon” trust signal, 3P gives you control over pricing, brand presentation, and new product launches. The hybrid model lets you allocate different SKUs to different channels depending on strategic needs.
Optimized Inventory Strategy
Inventory allocation can be more efficient: high‑volume stable SKUs can go via 1P, while niche, seasonal or high‑margin SKUs can go via 3P. This allows better stock management and reduces risk of overstocking or being dependent entirely on Amazon’s reorder behaviour.
Key Considerations & Challenges of Hybrid
Operational Complexity
Managing two parallel channels means you’ll handle two platforms (Vendor Central + Seller Central), separate reporting, different payment terms, and dual logistics flows. The internal resource requirement is significantly higher.
Channel Conflict & Brand Consistency
If the same SKUs are sold via both 1P and 3P, you risk internal competition, MAP (Minimum Advertised Price) violations, and inconsistent customer experiences. Clear SKU assignment and pricing strategies are critical.
Margin & Cash Flow Trade‑Offs
While 3P may offer higher margin per unit, you bear all fulfilment and service costs. Conversely, 1P offers less control and often tighter margins but reduced day‑to‑day workload. Hybrid demands thoughtful margin modelling for each channel.
Strategic Channel Assignment
You must determine, product by product, which channel makes sense. For example:
Reserve 1P for hero SKUs with high demand and predictable volume
Use 3P for new launches, limited‑edition variants, niche items or direct‑to‑consumer experiences
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Amazon 1P vs 3P: Important Things You Should Know
Whether you choose to sell directly to Amazon or to online shoppers, you need a clear strategy to run your Amazon business efficiently. To help you build this strategy, here are the crucial aspects you should compare when deciding between the Amazon 1P (first‑party) model and the 3P (third‑party) model:
Listing Customization and Flexibility
With the Amazon 1P model, Amazon controls your product listings once it buys your inventory. That means Amazon can change titles, images, descriptions, and other listing elements. In contrast, with the Amazon 3P model you have much more control over your listings — you can manage keywords, images, descriptions, and other content to better reflect your brand. However, any listing still must comply with Amazon’s overall listing standards and guidelines.
Account Dynamics
How you manage and interact with your business differs greatly:
For 1P sellers you operate through Vendor Central, which is the portal Amazon uses for its wholesale vendor relationships.
For 3P sellers you use Seller Central, where you list products, manage orders, fulfilment (FBA/FBM), pricing, and seller metrics.
Cash Flow & Payment Terms
Cash flow is key in any e‑commerce business. The two models differ in payment timing:
In the 1P model Amazon typically pays the vendor 30–90 days after purchase order fulfilment.
In the 3P model Amazon pays more frequently (often every 14 days or bi‑weekly) since you’re selling directly to customers and Amazon is not buying wholesale from you.
Knowing these payment terms ahead lets you plan for working capital and avoid stress with your suppliers or inventory.
Fees & Cost Structure
The fee structure for each model is different:
For 3P sellers there are referral fees, fulfilment fees (if using FBA), storage fees, closing fees, etc. These are more transparent and often predictable.
For 1P sellers you’ll face marketing/co‑op fees, freight allowances, remittance fees, chargebacks for not meeting Amazon’s standards, and other vendor‑specific fees. These can eat into margins more than you expect.
Customer Interaction
Customer interaction is also impacted by the model you choose:
As a 1P vendor, Amazon handles the customer service, returns, shipping, and overall end‑consumer interaction. You’re more in the background as a supplier.
As a 3P seller you interact directly (or through Amazon FBA) with customers: you manage listings, respond to customer queries, control your brand’s customer experience and build direct customer relationships.
Inventory Management & Risk
Inventory risk and how you manage stock vary depending on model:
In the 1P model Amazon owns the inventory once they receive it, so your risk of unsold stock is lower — but you must meet Amazon’s purchase order cadence and standards, or you may face chargebacks or cancelled POs.
In the 3P model you own the inventory until it sells and are responsible for forecasting, shipping, avoiding overstock or stock‑out situations, and ensuring fulfilment standards (especially if you choose FBA). You bear more risk but also more control.
Branding & Visibility
Finally, branding and how visible your brand is to customers differ:
With 1P your products often appear as “Sold by Amazon.com”, which lends commanding trust but may reduce the direct brand identity you build.
With 3P you have more opportunities to build your own brand, use Brand Registry, A+ Content, Stores, and strong brand presence on Amazon. You retain more of the customer‑facing identity.
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Finding the Right Method for You
When selling on Amazon, you essentially have three strategic routes to consider:
The 1P model – selling directly to Amazon (you act as the wholesale supplier).
The 3P model – selling on Amazon’s marketplace as a third‑party seller, directly to consumers.
The Hybrid 1P/3P model – combining both: some products sold wholesale to Amazon, others sold directly by you.
There’s no one size‑fits‑all approach: your choice should depend on your brand objectives, operational capabilities, budget, inventory risk tolerance, and how much control you want over pricing, branding, and customer relationships.
Consider Your Business Objectives
When deciding which model best fits, ask yourself:
Do I prioritise control or convenience?
3P gives you full control of pricing, listings, branding and direct customer interaction.
1P offers convenience — Amazon handles retail, fulfilment and customer service — but you give up control.
What is my cash‑flow tolerance?
With 1P, Amazon pays on wholesale terms (often 30‑90 days).
With 3P, you may receive payments much sooner (14 days or less) and set retail pricing.
What level of inventory & fulfilment risk am I comfortable with?
In 1P you send bulk stock and Amazon owns the inventory thereafter, so your risk of unsold stock is lower.
In 3P you retain ownership until sale, so you bear more risk—but you also stand to gain more margin.
What role does branding and visibility play for me?
If maintaining your brand identity and customer relationship is key, 3P may be more suitable.
If you want to leverage the “Sold by Amazon” trust signal and focus on manufacturing/wholesale, 1P may align better.
Quick Comparative Summary
| Model | Key Strengths | Key Trade‑Offs |
|---|---|---|
| 1P | Lower day‑to‑day effort; Amazon handles retail & fulfilment. | Less pricing/branding control; lower margin; payment delays. |
| 3P | Full control over pricing, listings, brand; faster payments. | More operational work; inventory risk; more active management needed |
| Hybrid | Combines strengths of both: scale via 1P + control via 3P. | Higher complexity; potential channel conflict; requires robust systems. |
Making the Decision
Start with your end‑goal: Is your priority maximum margin, brand control, minimal logistics effort, or scale?
Match your operational readiness: Do you have logistics, inventory management, content capability?
Evaluate your product mix: Are you selling high‑volume, stable SKUs (well suited for 1P) or niche, premium, rapidly evolving products (well suited for 3P)?
Consider your finances: Can you absorb longer payment terms and wholesale margins (1P) or do you need faster cash turnover (3P)?
Plan for future flexibility: You might start with one model and then expand into a hybrid strategy as your business matures.
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Conclusion: Amazon 1P vs. 3P
Choosing between Amazon 1P vs. 3P selling comes down to your business goals, control preferences, and resources. If you want a hands-off approach with Amazon managing logistics, pricing, and customer service — 1P (Vendor Central) might be a fit. But if you prefer owning your brand, controlling pricing, managing marketing, and earning higher profit margins — 3P (Seller Central) is the smarter long-term play.
In 2025, the trend continues to favor 3P sellers, as tools, analytics, and fulfillment options like FBA (Fulfilled by Amazon) make independent selling easier than ever. However, large brands and manufacturers can still thrive under the 1P model by leveraging Amazon’s vast retail network.
Ultimately, the best model isn’t one-size-fits-all — it’s the one that aligns with your control, scalability, and profitability goals.
FAQs: Amazon 1P vs. 3P
What is the difference between Amazon 1P and 3P selling?
Amazon 1P (First-Party) sellers are vendors who sell their products directly to Amazon at wholesale prices. Amazon then resells these products to customers under its own brand.
Amazon 3P (Third-Party) sellers sell directly to consumers on Amazon’s marketplace, managing pricing, inventory, and marketing themselves.
Can I switch from Amazon 3P to 1P?
Yes, but only if Amazon invites you to its Vendor Central program. You cannot directly apply. However, many sellers who perform well as 3P sellers are later approached by Amazon to join as 1P vendors.
Can I sell both 1P and 3P at the same time?
Yes, this is known as hybrid selling. It allows you to use 1P for bulk SKUs while managing niche or branded products through 3P.
Which model gives me more profit – 1P or 3P?
Generally, 3P sellers earn higher profit margins since they control pricing, marketing, and fulfillment. However, 1P sellers can benefit from large purchase orders and brand exposure without managing retail operations.
What fulfillment options do 3P sellers have?
3P sellers can choose between:
FBA (Fulfilled by Amazon): Amazon handles storage, shipping, and customer service.
FBM (Fulfilled by Merchant): You handle fulfillment yourself.
SFP (Seller Fulfilled Prime): You ship directly but meet Prime’s delivery standards.
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