Dear ChannelAdvisor: Should I Be Selling First Party or Third Party on Amazon?

28/05/2015

Marketplaces John Bryan By John Bryan

dear channeladvisor

As we host webinars, post blogs and interact on social media, we frequently receive questions from online retailers about how to best sell on Amazon. Some questions are specific and technical. Some are broad and strategy based. Over the next few months (or longer — it depends on how many questions we get!), we’ll be answering your Amazon questions each week right here on our blog.

Have an Amazon question you need answered by one of our marketplaces experts? Just email marketing@channeladvisor.com and check back each week to see if your question was chosen.

Should I be selling first party or third party on Amazon?

Please help!

Party Animal

 

Dear Party Animal,

This is an increasingly common question, especially among branded manufacturers that both manufacture and sell their products directly to consumers. Unfortunately, there’s no single answer. Each business is unique, and your decision should be based on the circumstances, needs and capabilities of your operation.

A first-party Amazon relationship essentially means selling your inventory wholesale to Amazon, which then acts as a retailer and sells it to consumers on the marketplace. In a third-party Amazon relationship, you’re putting on the retailer hat and selling your products directly to consumers on the Amazon marketplace. There are advantages and disadvantages to both methods, but they depend on your situation and even what Amazon will allow you to do.

Some retailers and branded manufacturers develop a hybrid approach, selling some products directly to Amazon and others directly to consumers. It’s usually easier for a brand to transition from a third-party model to a hybrid model, rather than start out as a first-party seller. But each scenario is different. I recommend contacting Amazon Vendor Central to discuss your options.

If you’d like to learn more about this topic, you may find this white paper useful.

 

Hope this helps,

John Bryan

ChannelAdvisor Team Lead,

Marketplace Services