There are a variety of ways to sell on Amazon. First, you can sell your products at wholesale to a variety of third-party resellers, or partner with an exclusive reseller. Another option is to take the direct-to-consumer approach by opening your own seller account. Alternatively, Amazon can purchase your products, own the inventory, and sell them on the platform to the consumer. This is considered a 1P or Vendor selling strategy.
This 1P selling strategy is often a beneficial short-term strategy for brands, but over time you can lose control of your strategy and representation on the platform.
Pros of a 1P selling strategy
PO’s from Amazon, sometimes significant ones
In some cases, you’ll receive an account manager at Amazon to help with a strategy on the platform
You may have access to certain additional reporting that you cannot get out of Seller Central or other third-party software
Cons of a 1P selling strategy
Amazon purchases what already works and sells it, but they don’t often buy into new products that a brand might want to see do well on the marketplace
Contacts and account managers often quickly change as employees at Amazon shuffle around the organization
Loss of pricing control is a big one. Ultimately, Amazon owns the inventory and is going to manage the pricing in order to sell at a rate they consider adequate. This often means selling your products at a discount
Control over advertising and merchandising is in the hands of Amazon. This can often make it difficult to quickly push through changes to your content or advertising strategy
Chargebacks and additional fees are often associated with a 1P selling relationship
Amazon will own control of your brand and products on Amazon even if you move away from a vendor relationship. This creates headaches when, or if, you change your strategy in the future
Other options
Many times brands want to claw back control over the brand but want to avoid the maintenance and management of opening their own seller account. The best way to do this is to find one trustworthy partner to sell your brand and drive growth.
Ridgeline Insights offers an innovative 2PxP selling strategy that allows brands to claw back margin, gain control of their brand presentation, and drive a cohesive growth strategy.