First-party sellers on Amazon have made partnerships with the online e-commerce giant to sell their products directly to Amazon for resale on the Amazon Marketplace or through Amazon Business.
A first-party relationship (1P) forms between Amazon and sellers in the marketplace when they sign an agreement for Amazon to act as the retailer while they fulfill purchase orders. 1P Amazon sellers focus on product fulfillment, while Amazon handles the rest of the sales process.
In a 1P relationship, vendors sell their products directly to Amazon using Vendor Central. Amazon then sells those products to online consumers shopping in the marketplace. While there are many benefits of entering first-party relationships for selling your e-commerce products on Amazon, there are also a few downsides.
For example, first-party relationship agreements say that Amazon can sell your products for above or below your recommended sales price. 1P sellers have no input on how Amazon raises or lowers the prices of their products, which can work out either positively or negatively in their favor.
For example, selling above the recommended sales price in the Amazon Marketplace works in the seller's favor when low-cost items generate high sales. However, the opposite is true when high-cost items selling on Amazon fall below what sellers priced, sellers can lose money.
First-party sellers on Amazon have the distinction of being invited to partner with this online retail giant. It is an honor for most sellers to receive an invitation to become first-party sellers on Amazon. The following are a few of the benefits 1P sellers get in one of the world's busiest global marketplaces.
Benefit #1. - Amazon sellers with 1P status have exclusive access to manage their product listings and fulfill Amazon purchase orders using Vendor Central. Third-party (3P) sellers can only access their products and purchase orders on Seller Central unless Amazon invites them to become a 1P seller on Vendor Central.
Benefit #2. - Boosting your products via Amazon marketing campaigns and running promotions can help increase 1P sales. Amazon's proprietary algorithm relies on first-party data to market the right products to the right customers at the right time.
Although 1P sellers can use Vendor Central to promote their products via marketing campaigns, the platform handles key processes that display the right ads to customers on its own.
Benefit #3. - The more products you sell on Amazon as a 1P seller, the more products Amazon will buy from you. If your products consistently achieve a high sales rank, Amazon will buy more. Selling high-volume products on Amazon can produce an income stream with unlimited earning potential. Sellers with products listed on Amazon Best Sellers can focus less on marketing on more on increasing revenue.
Benefit #4. - Amazon doesn't require first-party sellers to complete inventory forecasting. Since Amazon handles product forecasting internally, 1P sellers don't have to worry about managing this tedious metric and can spend more time on Amazon product marketing and fulfillment.
Benefit #5. - First-party Amazon sellers have their products shipped to customers with proprietary Amazon packaging and logos. Packaging from first-party sellers stands out with the highly sought-after "Shipped and Sold by Amazon" label on delivery packages and builds trust with marketplace customers.
High-ranking products and products featured on Amazon's Best Seller's List can generate a large amount of annual revenue for first-party Amazon sellers.
Amazon invites first-party sellers to join the marketplace. 1P sellers fulfill purchase orders sent from Amazon and send the products directly to Amazon, who takes control of the product. Amazon then prices, sells, and ships products to customers.
First-party sellers pay chargeback fees and sales fees. Third-party sellers control their product pricing and sell directly to consumers shopping in Amazon's online marketplace. In third-party relationships (3P), the brand, individual, or Amazon store acts as the retailer and sells directly to buyers.
First-party sellers can log in to their Amazon accounts and update product listings via Vendor Central. Sellers with 1P status can advertise their products and promote them in the marketplace to generate more sales.
Third-party sellers manage branded product listings sold to the comsumer via Seller Central. Unlike their 1P counterparts, 3P sellers can change prices at will and have full control over their product listings and promotions.
Amazon requires 3P sellers to pay the following structured marketplace fees.
Click here for more information on Amazon Seller Fees.