Marketplaces
Amazon 1P or 3P: which selling model fits your brand?
Amazon can become an important sales channel, but the commercial relationship behind it deserves attention first. Will you supply Amazon as a retailer, or build your own selling operation in its store?
For a brand with existing retailers, distributors and a webshop, that decision affects the wider channel mix. Start with the role Amazon should play and the organisation available to support it.
In short
With Amazon 1P, you sell to Amazon. With 3P, you sell directly to customers through Amazon. That choice shapes how you earn revenue, which commercial decisions you can make and what your team needs to organise. Compare the complete business case for each model. A higher selling price or fewer daily order-handling tasks does not automatically mean a more profitable channel.
The difference between Amazon 1P and 3P
In the first-party model, usually called 1P, Amazon buys products from your business and resells them to customers. You work as a supplier through Vendor Central. Access to this model is by invitation from Amazon.
In the third-party model, or 3P, your business sells directly to customers in the Amazon store. You manage that activity through Seller Central, subject to registration, verification and any relevant product approvals.
The central distinction is who your customer is: Amazon as the buyer, or the end customer on the platform.
FBA and FBM are a separate decision. They concern order fulfilment within the seller model. A seller using Amazon’s FBA logistics does not become a 1P supplier. Our guide to Amazon FBA or FBM explains that choice.
Compare the complete contribution
Comparing Amazon’s purchase price with the consumer price in Seller Central gives an incomplete picture.
For 1P, assess the net proceeds from supplying Amazon. Alongside product and transport costs, include the agreed commercial terms. These may involve discounts, contributions, payment terms or deductions where they apply to your agreement.
For 3P, calculate what remains after referral fees, fulfilment, returns, advertising and the work required to manage the channel. The consumer selling price is not your margin.
Use a consistent basis: the same market, product and period. Compare figures excluding VAT where relevant, and distinguish variable costs from fixed channel costs.
Then test price pressure, lower volumes or additional advertising expenditure. The model should remain defensible beyond the most optimistic scenario. Our article on more ecommerce revenue and less profit provides a wider framework for that assessment.
Decide where you need commercial influence
As the retailer in a 1P relationship, Amazon makes its own decisions about the consumer offer. Your commercial relationship centres on supplying Amazon and the terms of that supply.
With 3P, you manage your own offer, including pricing, availability and promotions within platform rules. This creates more direct decision-making opportunities and more responsibility.
That influence does not amount to complete control of the product page or market. Other sellers may offer the same product. Shared product information, competition and Amazon’s rules remain relevant.
Identify which decisions your brand needs to make directly. Do you want to test a new assortment? Do pricing or stock decisions need to change quickly? How should Amazon sit alongside existing trading partners? These questions are more useful than a general preference for ‘more control’.
Consider stock, cash flow and ownership
The models require different planning.
With 1P, your business needs to accommodate purchase orders, delivery commitments and payment terms. Expected consumer demand is not the same as a confirmed order from Amazon.
With 3P, you organise selling inventory, replenishment and the funding of the operation. When using FBA, someone still owns the stock sent to Amazon and decisions about replenishing or reducing it.
Both models need a person who connects commercial priorities, content, advertising, finance and supply chain. A 3P operation also needs ownership of account notifications and its chosen fulfilment process. A 1P relationship requires attention to supplier commitments and any discrepancies.
A model fits your business when the recurring tasks have owners, capacity and a workable decision process.
When could a combination make sense?
A combination of 1P and 3P may be worth investigating when markets or product groups have different needs. An established range and a new product launch do not necessarily share the same business case.
Treat a combination as a separate operating design. First check your Amazon agreements, applicable account and product conditions, and commitments to other trading partners. Do not assume you can move products freely between the models.
Define which assortment belongs to each model, how performance will be compared and who coordinates pricing, stock and content decisions. Without those agreements, a combination can mainly add work and ambiguity.
Choose by market and assortment
Resolve these questions before choosing a model or planning a transition:
What should Amazon contribute to our channel mix?
Is 1P available to us, and do we know the terms?
What remains after the relevant costs in each model?
Which commercial decisions do we need to make directly?
What does the choice mean for stock and cash flow?
Can our team and partners deliver the recurring work?
How will the decision affect existing sales channels?
Record your assumptions and identify what still needs investigation. A transition also needs its own plan. Existing stock, supply commitments, product information and operational continuity do not disappear when you open another account.
If you are still deciding whether Amazon fits your brand at all, start with our Amazon readiness guide.
Conclusion
1P may suit a brand that wants a supplier relationship with Amazon and can support its commercial and operational terms. 3P may suit a brand that wants to manage its own selling offer and can organise the required capacity.
The right choice connects contribution, commercial influence and an operating model your business can deliver. BND helps brands structure that assessment through Growth Strategy, giving the next step a clear commercial basis.
Sources and further reading
Account options, platform conditions and costs can change. Check the current information for your market and agreement.
About the author
Pieter helps brands strengthen their marketplace performance through hands-on account management and practical optimisation. He turns commercial priorities into day-to-day action, keeping accounts running smoothly and identifying opportunities to improve.
Topics
Amazon
Marketplace Strategy
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