A large number of companies see selling on Amazon as a no-brainer. But there’s more than one approach to making a sale. It’s tempting to use Amazon.com for all of your 1P needs because of how simple and streamlined their system is. However, many find more independence, higher potential profits, and a foundation for expansion into other markets by selling directly to consumers through third-party platforms (3P).
So which suits you better? 1P Vs 3P?
Let’s find out!
What Is 1P?
The 1P model is the fastest way to sell on Amazon. Moreover, it’s the most prevalent form.
The Amazon Marketplace is avoided in favor of a straight sale to the company. Amazon will buy your inventory wholesale, organize delivery, and list products. It decides prices, monitors listings, and when to make more purchases.
What Is 3P?
Direct-to-consumer (or “3P”) sales occur when vendors go straight to the market.
The 3P Amazon is to list your products on Seller Central so that customers may buy them straight from you. While this increases profits, it also necessitates a larger logistics network. The current era has seen a rise in the use of 3P marketplaces, which are now enormous.
How Does 1P Stack Up Against 3P?
Which model, Amazon 1P or 3P, is best for your business will depend on how hands-on you want to be. 3P vendors on marketplaces face additional challenges than traditional retailers when it comes to logistics, customer service, and e-mail marketing. Even if the added complexity and additional expenditure pay out in higher earnings in the long run, it can still be a burden for a corporation.
Cost of Time Versus Monetary Investment
The time and effort required to make a sale of 3P products are higher, but the profits made from each transaction are higher as well. While 1P drastically decreases inconvenience, it often comes at the expense of profit.
To prepare packages for fulfillment by Amazon FBA, you will still need to invest heavily in infrastructure, even if you sell through a third-party logistics provider like Amazon FBA (which you should be doing).
Allowing for Variety
The risk of getting delisted from other marketplaces if you undercut Amazon means that most 1P vendors can only sell on Amazon or elsewhere. When you sell 3P, you set the price and protect yourself from delisting. This only happens when Amazon finds out you have been selling on another site. If problems emerge with one account or marketplace, your business will still be safe if you sell through other channels.
Brand Dominance
Amazon’s direct sales model often allows vendors to supply details like product descriptions, marketing materials, etc., upfront. The next step is up to Amazon. If your products undergo changes, you will still be charged for advertising, and you will have no say over how they are shown, whether or not their listings are kept current, or any other aspects of the service.
However, if you want to make money off of selling 3P, you’ll need to take care of it all, which involves spending money on marketing, making listings, and keeping them up to date.
See Also:
Upgrading to 3P
3P sales can boost revenue for many organizations, especially when combined with logistics and preparation services. If you can handle the infrastructure, 3P Seller Amazon Central is best.
Catalog Data
List and publish. Investing in quality merchandising pays off (photos, descriptions, Amazon Vine reviews, etc.). More time and work you invest into developing high-quality listings, the better.
Promotion
Keyword research, SEO, and a PPC marketing budget can help improve Amazon sales. If Amazon stops marketing your products once they’re no longer sold directly by the company, you can avoid a sales dip.
Access to FBA
Using FBA reduces the hassle and cost of building a global distribution network. Fulfillment by Amazon (FBA) is a convenient and economical multi-channel fulfillment service for selling on Walmart.com. Changing marketplaces won’t require a new fulfillment partner (although you may want to).
Training Facility Collaboration
In addition to FBA, an FBA prep center handles packing, labeling, inspecting, picking, and packing. Amazon doesn’t get the profit margin, but 1P purchases are still easy. All the heavy work will be done while preserving solid profit margins, but a cost analysis is still necessary.
Online Store Framework
You will get the online store tools needed to:
- Keep track of FBA and warehouse inventory
- Maintain a steady supply of your products across all of your marketplaces by using inventory tracking and just-in-time replenishment
- Track sales to ensure you have enough products.
Get in Touch With Your Clients
When businesses scale up, basic customer service will need to be expanded. 3P sales add complexity to cost, infrastructure, and logistics. You’ll still need to handle listing creation, promotion, and long-term listing administration, but you can save money by outsourcing inventory management, shipping, and customer care.
Get Quick Capital Assistance
With this in mind, you should be able to decide between Amazon 1p vs 3p and come up with a game plan to boost your business. Now, it could be possible that your hesitation comes from a lack of capital. But that should not stop you from growing your business or making strides in a profitable direction. Reach out to us at PIRS Capital for quick capital assistance and we will be more than willing to give you a great deal based on your business! After all, everyone must strive to achieve more!
I work with companies that sell products on platforms such as Amazon, Shopify, Walmart, Ebay, Etsy, etc. I understand that every business is unique and thats why I form genuine relationships with owners so I can help them reach their goals and find success through our working capital solutions.
