As of Q4’18, 52% of unit sales on Amazon were generated by third-party sellers. For Vendor Central brands now being migrated to 3P, the shift can seem daunting. But it comes with distinct benefits, and Stackline has the tools and teams to make the transition smooth.

Whether you're choosing between Vendor Central and Seller Central or on a forced march, we're here to make sure you're maxing out the P that matters most: your profitability.

First, a quick primer on the differences between 3P and 1P selling on Amazon.

Third-party sellers with a Seller Central account sell to the end-consumer through the Amazon platform. First-party sellers with Vendor Seller accounts sell to Amazon, which then sells to the end-consumer and fulfills orders on the brand’s behalf.

While Vendor Central sellers enjoy exclusive account services and logistics management, Seller Central account-holders trade those resources for greater end-to-end control.

Fulfillment

Unlike 1P sellers, 3P sellers have a choice in how orders are fulfilled and managed. They can give Amazon authority to store, package, and ship products through Amazon fulfillment centers (an option known as “Fulfillment by Amazon,” or FBA), or they can opt to manage fulfillment independently (“Fulfillment by Merchant,” or FBM).

FBA products (which also empower Amazon to handle returns) are given preference in Amazon’s search rank and buy box algorithms, but it’s always worth running an FBA analysis before making the choice. (The Stackline team has helped hundreds of brands run the numbers and make the decision that works best for the bottom line.) Below is our back-of-napkin pro and con for FBA participation.

Pricing

Vendor Central sellers are subject to Amazon’s pricing decisions, which may or may not follow a brand’s MAP policies, depending on price pressure in the category. Third-party sellers have traditionally enjoyed more pricing autonomy so long as they do not undercut their Amazon prices on any other site. But in light of recent anti-trust buzz, Amazon’s making moves; word came down today that they will lift the prohibition on 3Ps selling products on other sites for lower prices. That’s a huge boon to brand owners with independent seasonal and promotional strategies for their DTC channels.

Brand Content & Merchandising

For a while, there were some distinct disparities between the merchandising tools available to Seller Central and Vendor Central account holders, but Amazon has largely leveled that playing field, giving both 3P and 1P sellers access to Stores, Sponsored Brand Ads, Sponsored Product Ads, and Enhanced Brand Content (the A+ tool set).

Brands migrating from 1P to 3P will need to enroll in the Amazon Brand Registry — a certification process for trademark-holders with Seller Central accounts — in order to create a Store, Sponsored Brand Ads, or Enhanced Brand Content. Per the Amazon Brand Registry site, prospective enrollees will need

  • An active registered trademark that appears on products or packaging
  • Verification of rights ownership or status as the authorized agent for the trademark

Customer Service & Brand Safety

Selling via Vendor Central comes with the benefit of fully-managed customer service and brings a brand under the halo of Amazon’s superlative brand equity. Not only that, Amazon handles customer and competitor fraud on the brand’s behalf. The recently-unveiled Project Zero goes even farther, empowering select sellers with tools to police trademark violations on the platform with a high degree of autonomy.

Seller Central does not come with the same level of support and protection, leaving customer service and fraud management in the hands of brands. But Stackline offers sophisticated 3P tracking to help our 1P and 3P clients monitor brand and product sales activity across the ecosystem.

Reporting

For a cost, first-party sellers can access Amazon Retail Analytics through Vendor Central, which provides relative market share, sales, and inventory data; performance by geo; category keywords; customer reviews; high-growth products; and some forecasting and trendcasting support.

Third-party sellers have far more limited access to category, brand, and product analytics through Amazon, but Seller Central still provides customer data and detailed accounting reports.

What's Next

Stackline’s whole reason for being is to provide performance management software and services that help brand leaders optimize their digital investments across channels and platforms. We wrangle more data and do more with it than anyone else in e-commerce, and whether you’re a 3P seller, a recently-migrated 1P seller, or the reigning king of your category, we’ve got the tools you need to thrive in a complex world.

Sign up for a free consultation with an expert.

Posted on
March 11, 2019
in
Strategy Briefs
category