If you hang out in Amazon circles long enough, you hear the same advice on repeat: “You really should transition to 3P. Better margins, more control.”
That’s become almost a reflexive talking point. Agencies say it. Aggregators say it. Consultants say it.
The problem is that this advice completely ignores how Amazon 1P (Vendor Central) really works for a huge chunk of brands.
In many cases, “just move to 3P” is not only unrealistic, it’s strategically wrong.
Let’s see why.
1P vs 3P Refresher
Just to level set:
- 1P (Vendor Central) – You sell your products to Amazon as a wholesale vendor. Amazon owns the inventory, sets the retail price, and sells directly to the customer. Operationally, this looks and feels like another big retail account (Walmart, Target, etc.).
- 3P (Seller Central) – You sell on Amazon as a marketplace seller. You own the inventory and the listing, pay FBA or fulfillment costs, and manage retail pricing and promotions directly.
The narrative for years has been:
- 3P = more control, higher margins, more “modern”
- 1P = old-school, less control, lower margins
Reality is a lot messier than that.
Reality Check #1: Sometimes Amazon Simply Won’t Let You Leave 1P
One of the most underestimated facts about 1P is this:
Some brands cannot practically “transition to 3P” because Amazon won’t allow it.
If you’re critical to your category and make up a meaningful chunk of a vendor manager’s book of business, Amazon has a say in whether you move. I’ve personally seen multiple attempted transitions blocked or quietly slowed down because the brand was too important to lose from the 1P side.
From Amazon’s perspective, it makes sense:
- They want to protect core retail categories.
- Vendor managers are accountable to revenue targets and margin expectations.
- Losing a high-volume, high-visibility vendor to 3P hurts those targets.
So the well-meaning advice of “just go 3P” glosses over an uncomfortable truth:
For a lot of large, strategic brands, this isn’t fully their decision.
Reality Check #2: Vendor Central Mirrors Other Retail Channels (And That’s a Feature)
Another misconception:
“Vendor is old-school and complicated. 3P is simpler and more modern.”
In practice, for many established brands, it’s the exact opposite.Selling through Vendor Central lets them treat Amazon like any other major retail account.
That brings real advantages:
- Operational simplicity – You run Amazon through your existing retail playbook: line reviews, wholesale pricing, ship to one (or a few) DCs, track PO flow.
- Payment up front – You’re selling wholesale into Amazon. You’re not waiting for retail sell-through to get paid.
- No inventory spread across the country – With 3P FBA, you own the inventory sitting across dozens of FCs. With 1P, Amazon owns that risk and distribution complexity.
- Cleaner internal alignment – Finance, supply chain, and sales teams already understand how to model and manage traditional retail accounts. Vendor fits neatly into that framework.
For large organizations that value predictability and simplicity across channels, Vendor isn’t a relic, it’s a relief.
Reality Check #3: 3P Isn’t Automatically More Profitable
This is the assumption that drives most “go 3P” advice: “You’ll make way more money if you move off Vendor.”
Sometimes that’s true. A lot of brands have unlocked better margins and more pricing flexibility as 3P sellers.
But not always. And not in some very important product profiles:
- Large and bulky items – Think furniture, big appliances, oversized products. FBA fees can get brutal here. What looks great in a spreadsheet becomes ugly once you factor in dimensional weight, storage, and fulfillment complexity.
- Fast-moving, low-price items – High velocity but low ASP (average selling price) creates tight contribution margins on 3P once FBA, pick/pack, and returns are baked in. 1P terms can often be more favorable at scale.
- Categories where Amazon is highly invested – In segments Amazon really wants to dominate, Vendor terms plus marketing support can be stronger than what a 3P model realistically delivers.
For every case study where 3P unlocks 5–10 points of margin, there’s another where the full cost stack of FBA + advertising + returns ends up worse than a well-negotiated 1P relationship.
The right question isn’t “How fast can we move to 3P?”
It should be:
“On a fully loaded basis, SKU by SKU, channel by channel, where is profit actually better?”
Sometimes the answer is 3P. Sometimes it’s 1P. Sometimes it’s a hybrid. But “3P is always better” is just not serious analysis.
The Scale of 1P: Thousands of Vendors Doing Serious Volume
There’s also this uncomfortable fact for the “1P is dying” narrative: There are a lot of vendors doing very serious revenue on Amazon.
From SmartScout's data on 1P Vendor brands by annual revenue (2025):
- >$1B: 9 brands
- >$100M: 317 brands
- >$50M: 710 brands
- >$10M: 2,586 brands
- >$5M: 3,948 brands
- >$1M: 7,998 brands
That’s thousands of Vendors at real scale. These aren’t confused, passive organizations accidentally stuck in a bad model.
They’re often:
- Highly analytical
- Very aware of their 3P options
- Deeply familiar with their cost structure
- Running sophisticated multi-channel strategies
In my experience, Vendor brands are sharp, data-driven businesses that choose to stay 1P because it works for their economics, operations, and organizational design.
Why Aren’t More Agencies Specializing in 1P?
This is the part that genuinely surprises me. Given how large and sophisticated 1P brands are, you’d expect to see a whole wave of agencies and consultancies focused exclusively on Vendor Central.
Instead, most of the agency world is:
- Built around 3P playbooks
- Optimized for Seller Central tools and reporting
- Speaking a language that doesn’t fully match how 1P brands think and operate
But 1P is a totally different beast:
- The levers are different (terms negotiations, chargebacks, co-op, promotions, forecasting).
- The internal stakeholders are different (sales leadership, retail teams, trade marketing, finance).
- The success metrics look different (fill rates, OTIF, purchase orders, retailer margin, etc.).
That’s a massive opportunity. A US-based agency that goes all-in on 1P — instead of treating it as an afterthought — could carve out a serious niche serving brands that feel underserved by 3P-centric partners.
Is 1P “Better” Than 3P?
Not universally. Not even close. There are absolutely brands that should:
- Launch or transition to 3P for margin and control
- Run hybrid (1P + 3P) to manage assortment, lifecycle, and long tail SKUs
- Use 3P as a strategic pressure valve when Vendor relationships get too constraining
But if the only advice we give is “3P or bust,” we’re missing the point:
- Amazon 1P is not a mistake.
- It’s not always a trap.
- And it’s definitely not dead.
For many brands, Vendor is a deliberate, data-backed choice — one that fits their scale, structure, and risk tolerance.
Unless I’m Missing Something…
In my work with Vendors, I see sharp operators who:
- Understand their options
- Have run the 1P vs 3P math more than once
- Still decide that Vendor is the right core model for now
They’re great businesses to work with, and it’s exciting to see how many are thriving at serious scale. Could I be missing something?
From where I sit, “Amazon 1P is misunderstood” isn’t just a hot take, it’s a gap in how the industry talks about strategy, profit, and what “control” really means on the world’s biggest marketplace.
