Editor's note (March 2019): This blog was originally published in April 2017. It has been updated to include new insights and information regarding Amazon's rumored One Vendor.
Amazon sells your products on a wholesale relationship. Amazon sends you a purchase order, and you ship your inventory back. Under this agreement, Amazon gains ownership of your products and controls the pricing. Your listing will therefore display as "Ships from and sold by Amazon.com."
You sell your products on Amazon as a marketplace merchant. Amazon's marketplace simply acts as another sales channel, through which you can list, price and sell any number of products. You're in charge of shipping and inventory. You're also in charge of maintaining a high seller score to maintain your right-to-sell. Note: You can choose to have Amazon fulfill your orders from their fulfillment centers via Fulfillment by Amazon (FBA) and/or you can fulfill orders from your own warehouse or third-party warehouse (Fulfillment by Merchant, FBM).
When a 3P seller strikes gold on Amazon's marketplace, Amazon tends to take notice. Successful marketplace sellers are commonly approached by Amazon Retail about selling direct-to-Amazon (1P). This is a flattering proposition that should be carefully considered. As with anything, there are pros and cons. Here's a quick rundown. For more details, this article on 1P vs 3P by our friends at Buy Box Experts is extremely insightful.
Many successful sellers (brands, manufacturers) find themselves in a hybrid arrangement with Amazon. Under this model, they sell a portion of their SKUs direct to Amazon (1P) and the rest via the marketplace (3P). Amazon's merchandising teams are often selective about the SKUs that they decide to carry 1P. The math needs to make sense. This means that some SKUs are left alone to be sold 3P.
That being said, we believe it's most ideal to adopt a hybrid model. By selling 3P, your brand can stay in control of pricing and the customer experience. Selling through both platforms lets you extend your inventory, too, and increase your chances for landing a sale beyond 1P availability.
Some consider the shift from 1P to 3P to be intimidating. But if you're a 1P seller, we highly encourage you to sell at least a subset of your SKUs 3P to take advantage of the benefits outlined above. For questions or support making this change, contact our team.
March 2019 Update
"Amazon One Vendor" continues to trend in the rumor mill. Sellers making less than $10million and were formerly selling through Amazon Vendor Central (a.k.a. their 1P marketplace) abruptly had orders cancelled on them. We'll continue to update you on new findings as we hear!
Zentail supports sellers that sell on both 1P and 3P. Let us know if you have any questions.
Zentail is a multichannel software platform that makes it easy to sell on Amazon, eBay, Walmart Marketplace, Jet.com, Google Shopping, Google Shopping Actions, Shopify, BigCommerce and a growing selection of channels. Centrally manage product information, listings, inventory, orders, business analytics and reordering from one beautiful interface.