Sep 13, 2023 12:00AM
Think twice before switching from 1P to 3P on Amazon. The debate is hot on shifting from 1P to 3P models on Amazon. But beware, the reasons cited—like bypassing capacity constraints—are not valid for making the switch. Amazon doesn't prioritize 3P inventory, and you risk overwhelming your team with self-management. Thanks, Martin.
Should #Amazon 1P Vendors consider a 3P/FBA model?
Moving from 1P to 3P is a hot debate among vendors right now.
Unfortunately, I keep hearing reasons that do not justify a switch to a hybrid or full 3P model at all.
» Bypassing capacity constraints,
» Avoiding price-matching, or
» Escaping vendor negotiations
❌ All these are »no« valid reasons to change from 1P to 3P.
Amazon does not prioritise 3P over 1P inventory in its warehouses and may also suspend the Buy Box for prices from sellers that are not competitive.
Without a crystal clear business case, most vendors underestimate the number of tools and mechanisms they have to manage themselves when moving to 3P.
This can crush your operation and overwhelm your teams from one day to the other.
Worse, you'll have to invest in external agencies that can make up for the lack of knowledge within your business.
So if you are planning to switch to 3P:
Do it for the right reasons, and make sure you hire Amazon experts with 3P/FBA experience well ahead of time.
PS: Amazon has just recently announced hikes to its SFP offer by 2% and FBA rates will increase once again during the upcoming holiday quarter.
This underlines how chasing short-term cost benefits can quickly become unprofitable in the mid-to-long term.
Are you thinking of moving from Vendor to Seller Central? What's your #1 motivation?
Let me know in the comments!