1P Selling Model
on Amazon
Gain direct access to Amazon’s vast customer base and streamline your operations
SIMPLIFY YOUR LOGISTICS OPERATIONS WITH AMAZON
1P SELLING MODEL
In the 1P (First Party) selling model, you operate as a wholesale supplier to Amazon instead of selling through it. The platform buys products from you in bulk (you need to have a registered Vendor Central Account) and then sells them directly to customers.
While this model delegates much of the work to Amazon, it comes with its own risks and limitations.
THERE ARE FOUR WAYS FOR SELLERS TO ARRANGE THEIR WORK THROUGH AMAZON, FOUR SELLING MODELS YOU CAN CHOOSE FROM.
If you are ready to cede some control over your operations to Amazon in exchange for a reliable source of revenue and a diminished scope of work, then the 1st Party Selling Model might be a great choice for you.
HOW WE CAN HELP
Vendor Central Management
Vendor Central is a platform for brands with whom Amazon has a wholesale business relationship. Through it, you can monitor your product inventory, manage your catalog, receive and acknowledge purchase orders and access Amazon’s analytics. Even though you need to do less than 3P sellers, it’s crucial for you to manage Vendor Central properly. Delay in restocking can cost you a pretty penny or even terminate your 1P partnership.
We can manage your Vendor Central account to help you stay on the good side of Amazon and utilize the data to the fullest.
Amazon Brand Registry
Your brand image is one of the key factors of your success on any platform, Amazon included. With some of the tasks delegated to the platform, it is still your responsibility to keep the brand image holistic and consistent. Amazon Brand Registry grants tools to protect your intellectual property and product content from infringement, while also giving access to advanced marketing tools.
We can help you enroll in the Brand Registry so that you can leverage all the tools accessible.
Catalog Management
Even though Amazon sells your products, it’s well within your interests to make the product listings appealing and optimized. A small favor from Amazon is helpful, but it won’t help you bypass all the competitors – you aren’t the only 1P seller, after all. You need to draw and retain people’s attention, and for that, an optimized catalog is a must. Here’s how we can help you:
PROS & CONS OF 1P SELLING MODEL
ACCESS TO AMAZON'S RESOURCES:
As a 1P seller, you will have access to Amazon’s extensive customer base, shipping infrastructure and customer service support. Your products will be automatically eligible for Amazon Prime and two-day shipping and will receive a placement priority.
LIMITED CONTROL:
In the 1P model, Amazon controls the retail price of your products. It can sell your products below the established Minimum Advertising Price and edit the texts and visuals of your product listings at its own discretion. As a result, you won’t have full control over your brand image.
AMAZON RETAIL ANALYTICS (ARA):
Amazon grants 1P sellers access to its Retail Analytics tools that give insights on various aspects of the product’s performance. You can get your hands on data on sales, traffic, search terms and other metrics.
LOWER PROFIT MARGINS:
Negotiating favorable selling terms with Amazon is difficult. As a rule, the platform demands discounts and fees to sell your products for wholesale prices. This will inevitably impact your profit margins, and not in a good way.
VENDOR CENTRAL BENEFITS:
1P sellers operate via Amazon Vendor Central, which provides additional marketing and promotional opportunities. Your products will be eligible for A+ Content, Sponsored Products ads, Amazon Vine and other tools which will help you increase the visibility of your products and boost sales.
LONG PAYMENT TERMS:
Amazon typically has long payment terms for 1P sellers. You will get your money less frequently than 2P sellers, which means you will have a less consistent cash flow.
REDUCED INVENTORY RISK:
As a rule, Amazon purchases products in large quantities from 1P sellers. Not only does it provide a steady stream of revenue, but also minimizes the risks of inventory-related issues. Timely replenishment becomes your only responsibility in this regard.
STOCKOUT & ACCOUNT SUSPENSION RISKS:
Amazon decides when and how much inventory to order. If Amazon doesn’t order enough, stockouts become a real problem. And if you struggle with inventory management, chargebacks from Amazon and account suspension won’t be long in coming. You also need to adhere to strict policies for Vendor Central users to not get your account banned, and it’s easy to overlook something on the long policies list.
EASE OF OPERATION:
The 1P approach is more hands-off, requiring minimal time and effort from the seller as Amazon handles most processes itself. Those include pricing, fulfillment, customer service and returns.
LIMITED CUSTOMER DATA ACCESS:
Even though Amazon shares its analytics with 1P sellers, brands do not have access to customer data. This limits your ability to build direct relationships with your customers and make adjustments based on their behavior and feedback.
