Amazon 1P vs 3P: A Comprehensive Guide to Understanding Your Selling Options


In the world of online retail, Amazon reigns supreme. However, as an emerging or established seller, it’s essential to understand the dynamics of selling on Amazon. When it comes to Amazon’s ecosystem, you’re often faced with a critical decision: Do you opt for the 1P (first-party) or 3P (third-party) selling model? This decision of Amazon 1P vs 3P can significantly impact how you do business and ultimately your bottom line.

amazon 1P vs 3P

Understanding Amazon 1P (First-party) Selling

The first-party model on Amazon can be compared to a traditional wholesale-retail relationship. As a 1P seller, you act as a supplier, selling your inventory in bulk to Amazon. The e-commerce giant then becomes the official seller of these products, managing pricing, storage, fulfillment, and customer service. Essentially, Amazon buys from you, sells to the end customer, and assumes the risks associated with inventory and consumer satisfaction.

Pros of Amazon 1P Selling

Credibility and Trust:

As a 1P seller, your products appear as “sold by Amazon,” which can boost consumer confidence. Many customers trust Amazon due to its stellar customer service and reputation, potentially leading to more sales.

Hands-Off Approach:

Amazon takes responsibility for storing, packing, and shipping your products. They also handle customer service and returns, saving you from logistical headaches. This allows you to focus more on product development and less on operations.

Cons of Amazon 1P Selling

Less Control:

While Amazon taking charge can be a pro, it’s also a con if you value control. Amazon dictates the retail price and promotional strategies of your products. Moreover, if Amazon decides not to reorder your products, you could find yourself in a precarious position.

Payment Terms:

Amazon typically has longer payment terms than other retailers. You might have to wait 60-90 days to receive payment for your inventory, affecting your cash flow.

amazon 1P vs 3P

Understanding Amazon 3P (Third-party) Selling

In contrast, the 3P model offers an entirely different experience. As a third-party seller, you’re selling directly to consumers through Amazon’s marketplace. You have two options for fulfillment: Fulfillment by Amazon (FBA) where Amazon takes care of storage and delivery, or Fulfillment by Merchant (FBM), where you handle logistics.

Pros of Amazon 3P Selling

Control Over Pricing and Inventory:

You maintain control over your prices, promotions, and inventory. This means you can adjust your strategy based on market changes, giving you more business flexibility.

Potential for Higher Margins:

Selling directly to consumers generally allows for higher margins than wholesaling. However, remember to factor in Amazon’s seller fees and the cost of FBA if you choose that route.

Cons of Amazon 3P Selling

Operational Challenges:

With greater control comes greater responsibility. Handling customer service, returns, and potentially fulfillment can be a lot of work, especially for smaller businesses. That is where MyAdvat comes in, we can provide exceptional operational experience and can ensure a lesser workload for brands while at the same time growing your brand!


Amazon’s marketplace is notoriously competitive. It can be tough to stand out, and you’ll need to continuously optimize your listings and advertise your products.

amazon 1p vs 3p

Amazon 1P vs 3P: Making the Right Choice

Choosing between Amazon 1P and 3P depends largely on your business model, goals, and capabilities. To make an informed decision, consider the following factors:

Product Type and Brand Strength:

Well-established brands might benefit from the prestige associated with the “sold by Amazon” tag. On the other hand, niche or newer brands might find more success in the 3P marketplace where they can control their branding and pricing.

Margins and Volume:

If you sell high-volume low-margin products, the wholesale model might be a better fit as it simplifies the selling process. However, if you have higher-margin products or limited inventory, you may benefit more from the control offered in the 3P model.

Operational Capabilities:

Your ability to handle logistics, customer service, and returns can also determine the best model for your business. If these aspects are overwhelming, the 1P model, or using FBA in the 3P model, could offer the necessary support.

Strategic Goals:

Consider your long-term plans. If your goal is to build a strong, standalone brand, 3P selling provides the control needed to shape your brand identity and customer experience. If your goal is mainly to move product volume without much hassle, the 1P model might be more appropriate.

Leveraging Amazon’s Hybrid Model

The good news is that the decision between Amazon 1P vs 3P isn’t necessarily a strict binary choice. Amazon offers a hybrid model, allowing sellers to use both strategies simultaneously. This model is particularly beneficial for sellers with a diverse product range. For instance, you could sell high-volume, lower-margin goods as a 1P seller, while listing specialty or higher-margin items through the 3P marketplace.

The hybrid model can also be an effective risk-mitigation strategy. Diversifying your sales channels across Amazon 1P vs 3P can provide a buffer against potential issues or changes in one selling model.

Private Label and the 3P Model

The third-party (3P) model lends itself well to private-label selling. Private label sellers create their own brand of goods, often manufactured by a third party, to sell under their own label. These products are exclusively offered by the seller, allowing for greater control over product specifications, pricing, branding, and customer experience.

In the 3P model, private label sellers have the opportunity to establish a unique brand identity, set their prices, and maintain control over their inventory. This model allows for innovative product offerings and differentiation, helping sellers stand out in the competitive Amazon marketplace.

amazon 1P vs 3P

Advertising in the 3P Model

Given the crowded nature of Amazon’s marketplace, advertising is an essential aspect for 3P sellers, especially those in the private label business. Here’s how to leverage Amazon’s advertising tools effectively:

  1. Amazon Advertising (formerly Amazon Marketing Services):

This includes Sponsored Products, Sponsored Brands, and Sponsored Display ads. Each type serves a different purpose and will be most effective depending on your objectives.

Sponsored Products:

These are cost-per-click ads that promote individual product listings and appear in search results and product detail pages. This is an excellent way to improve the visibility of specific items, especially new or unique products.

Sponsored Brands:

These promote your brand and up to three products within your brand. These ads appear at the top of, alongside, or within shopping results, offering increased exposure for your private label brand.

Sponsored Display:

These ads reach customers on and off Amazon by retargeting users who viewed your products but didn’t purchase. It’s a powerful tool to drive conversion and can be particularly effective for private label sellers seeking to build brand loyalty.

Amazon Stores:

For private label sellers, setting up an Amazon Store can help showcase your entire product line under one brand. It’s a multi-page, immersive shopping experience that highlights your brand story and product portfolio. You can drive traffic to your Amazon Store from your Sponsored Brand campaigns, providing customers with a more comprehensive understanding of your brand.

Optimizing Product Listings:

Your product listings should be optimized with relevant keywords to appear in organic search results. Good Search Engine Optimization (SEO) practices are essential here. The more effectively you can use relevant search terms in your product titles, descriptions, and backend keywords, the more likely your products will appear in customer searches.

Amazon Brand Registry:

This is a program that provides access to powerful tools including proprietary text and image search, predictive automation based on your reports of suspected intellectual property rights violations, and increased authority over product listings with your brand name. For private label sellers, this can be a crucial tool to protect your brand and provide a consistent, trusted experience to customers.

In conclusion, private label selling in the 3P model, combined with the effective use of Amazon’s advertising and optimization tools, can create a potent opportunity for sellers to carve out a unique niche, attract, and retain customers, ultimately driving growth and profitability in the bustling Amazon marketplace.

How can MyAdvat Help with all these models?

Our team has over 5 years of experience managing brands on Amazon and Walmart, we provide exceptional brand growth and maintain your Advertising spend. Having worked with top-notch Amazon brands we provide,

Graphic and Listing Optimization

Inventory Management

Account Audits

Weekly & Monthly Reports

Full Account Management

Which Model is preferred? Amazon 1P vs 3P

According to Amazon’s Small and Medium Business (SMB) Impact Report, more than half of the items sold on Amazon worldwide were from third-party sellers. Amazon’s 2020 net sales stood at $386.06 billion, of which third-party seller services contributed $80.46 billion. This represented a 57% increase compared to 2019, far outpacing the growth in Amazon’s online store sales, which include Amazon’s first-party offering.

In addition, according to Marketplace Pulse, third-party sellers accounted for 55% of paid units sold on Amazon’s marketplaces in 2020, up from just 30% in 2007. These figures highlight the growing importance of the 3P model for Amazon’s overall business, even though the revenue recorded by Amazon is still larger for 1P sales. Given the significant and steady growth of third-party sales, their contribution to Amazon’s total revenue is likely to increase further.


Whether you opt for Amazon 1P, 3P, or a hybrid model, remember that the key to success lies in understanding the unique requirements and benefits of each approach. As Amazon continues to dominate the e-commerce space, the sellers who succeed will be those who can nimbly navigate and adapt to the marketplace’s evolving dynamics. With a thorough understanding of your business goals and the resources at your disposal, you can make the most of the opportunities Amazon provides, turning the giant’s platform into a powerful engine for your own growth and success.