Home Resources Amazon Retail (1P) or Amazon Marketplace (3P): Which Model Fits Your Brand in 2025?

Amazon Retail (1P) or Amazon Marketplace (3P): Which Model Fits Your Brand in 2025?

Amazon now sells 62 % of its units through third-party sellers (3P) — an all-time high reached in Q4 2024. Yet Vendor Central (1P) remains the preferred door for many brands chasing simple logistics and strong wholesale margins. The real win in 2025 is learning how—and when—to use both models together.

1 | Core Differences at a Glance

Feature	Vendor Central (1P)	Seller Central (3P)
Ownership of inventory	Amazon buys wholesale	You own until customer receipt
Price control	Amazon sets retail price	You control retail price
Fulfilment choices	FBA, Cross-Dock, Direct Fulfilment	FBA, FBM, Seller Fulfilled Prime (2 % fee)
Key 2024-25 fees	Co-op, charge-backs, damage (≈ 5 % COGS)	Referral fee + FBA fees, Low-Inventory-Level fee (Apr 2024)
Supply-chain extras	Born-to-Run, Direct Fulfilment	Supply Chain by Amazon (AWD + auto-replenish, –25 % promo)
Payments	Net 60–90; 1–3 % quick-pay discount	14-day disbursement; Account-Level Reserve may hold funds ≤ 30 days

2 | Logistics Deep-Dive

Inbound & Storage

Stage	1P	3P
Prep & labelling	Must meet Amazon’s spec; non-compliance fines €0.15–€0.30/unit	FBA prep option or seller-prep; restock caps managed via FBA Capacity Manager pay-to-expand
Buffer stock	Amazon can request 13 weeks cover	AWD staging cuts storage cost ~25 %
Low-stock penalties	None	Low-Inventory-Level fee if < 28 days cover

Fulfilment & Delivery

1P – Amazon chooses the speed (Prime, Same-Day). Direct Fulfilment lets vendors ship single units but on-time metrics are strict.

3P – Options are FBA, FBM, or Seller Fulfilled Prime (Prime badge + 2 % fee from Oct 2023).

Returns & Reverse Logistics

Aspect	1P	3P (FBA)	3P (FBM/SFP)
Routing	Amazon network; vendor charged defects	To Amazon, then graded; Returns Processing Fee on high-return ASINs (Jun 2024)	Seller provides prepaid label; greater A-to-Z risk

3 | Finance Deep-Dive (Margin Now 1P-Favourable)

Payment Cycle

Topic	1P	3P
Cash flow	Net 60–90; early-pay 2 % possible	Paid every 14 days; reserve holds for claims
Deductions	Charge-backs, co-op, shortages (≈ 5 % COGS)	A-to-Z, FBA returns, low-inventory fee

Unit-Economics Snapshot (example retail €40)

Component	1P	3P + FBA
Buy-in / referral	Amazon wholesale €32	15 % referral €6.00
Fulfilment & returns	Included	FBA €4.90
Co-op / low-inventory	€3.20 co-op + €0.80 charges	€0.40 fee
Net to brand	€27.00	€26.70

Take-away: When Amazon accepts a solid wholesale cost, 1P edges ahead on margin, especially for heavy or bulky SKUs where FBA fees rise. Control and reach, however, still sit with 3P.

4 | Customer-Service Deep-Dive

Area	1P	3P + FBA	3P + FBM/SFP
CS owner	Amazon Retail	Amazon	Seller
Guarantee	Amazon policy	A-to-Z Guarantee inc. property-damage (EU/UK May 2024)	Same—higher claim exposure
VOC tools	Limited view	Full Voice of the Customer dashboard (NCX alerts)	Same dashboard
Metrics to hit	N/A	ODR < 1 %	ODR < 1 %, Late-Ship < 4 %

Sellers must also carry $1 m+ product-liability insurance once turnover passes Amazon’s threshold; A-to-Z now files claims against that policy for injury/property losses.

5 | Which Model Should You Choose?

Objective	Lean 1P	Lean 3P	Hybrid (Best Practice)
Highest unit margin	✔		List fast-moving, heavy items 1P
Retail price control		✔	Keep MAP-sensitive SKUs 3P
Rapid cash cycle		✔	Blend 14-day 3P payouts with 1P POs
Global catalogue reach		✔	Use 3P + NARF / AGS
Big promo funding	✔		Use 1P co-op for Prime Day; long-tail in 3P