Consulting & Strategy
Deciding Between Seller Central and Vendor Central
What a Switch Between 1P and 3P Could Mean for Your Business
Profitability
Feasibility
Project Planning
Results
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How Brandwoven Helps with Decisions Between 1P and 3P
Deciding What's Best for YOUR Business
Deciding What's Best for YOUR Business
There are many opinions about what’s better: Seller Central or Vendor Central models. At Brandwoven, we know that the answer depends on your brand, your strengths, and the size of your business, amongst many other factors. We evaluate any transition based on the unique attributes of your business, not a general consensus about one being better than other.
In every aspect of our business, we offer a custom approach for each of our brands – and 1P vs 3P decision is no different. We ask questions first and learn not only about your Amazon business, but your products, other channels of trade, operations, finances, and marketing. After we learn from you, we make a fact-based recommendation on how to proceed.
Decisions Based on Your Capabilities
Decisions Based on Your Capabilities
A business’s unique capabilities can largely dictate whether Seller Central or Vendor Central is the right platform. From finance to accounting, product development cycles to logistics, a marketplace strategy impacts them all.
At Brandwoven we’ve seen organizations of various sizes switch from one strategy to the other, and have seen the challenges and benefits that each can produce. We have developed tools and trainings for all areas of the business, with the goal of assuring your business not only chooses the right strategy, but has success in whatever platform you choose.
Through collaboration and partnership, Brandwoven can help choose a strategy and educate internal stakeholders to assure success – whether you’re 1P, 3P, or switching between the two.
Financial Impact
Financial Impact
While not the only factor in deciding between Seller and Vendor Central models, the financial impact is huge. Brandwoven takes the time to measure all the financial factors of a potential switch or evaluating the profitability of your current model.
It’s easy to use a simple calculator and say one model SHOULD be more profitable than the other, but we work to evaluate all necessary costs, plus the cost of the transition. We can also help model the cash impacts of a switch. Even if a change in model has exceptional long-term financial benefits, there may be short-term cash implications or a short-term dip in sales required to make the transition that a business may choose to avoid.
Brandwoven can walk you through the complete financial picture of 1P or 3P strategy.
Frequently Asked Questions
What do you mean by 1P vs 3P?
Typically, 1P refers to a direct relationship between the marketplace and the brand, where the marketplace is actively purchasing product from the brand. The classic example is Amazon Vendor Central.
3P on the other hand is a marketplace model where the brand is selling directly to the consumer, using the marketplace as a transaction platform. Amazon Seller Central is the best example of a 3P model. It’s important to note that selling 3P can also be done by resellers and retailers, not only brands.
In many cases, a single product might have as many as one hundred 3P sellers, while there will only be one Vendor Central offering.
Can all brands choose between 1P and 3P?
It depends on the marketplace, but the majority of the time the decision is made by the platform. For Amazon and Walmart, 1P is an invite-only program with few new brands being invited. 3P is generally more open and available to most brands. However, Amazon and other marketplaces may place limitations on a brand changing from Vendor Central to Seller Central, while others might have the flexibility to choose.
Can you calculate the costs of my Seller Central (3P) business?
While costing is always an estimate, we can get very close. Many of the fees associated are fixed and predictable, like Amazon FBA fees or referral fees. Others, like storage costs, are dependent on sell-through rate and safety stock levels. That said, Brandwoven has developed models to predict costs and profitability within a few percent.
I heard 3P is always better. Do you agree?
While many will claim this, and it can often be true, it’s not 100%. Every brand is different, every market is different, and thus the answer to which is better is relative to each unique situation. We have many successful partners on both programs. As brand advocates, Seller Central is often the first choice due to control of pricing and assortment, but there are many situations where we recommend Vendor Central as well.
Is it true I can control price on Seller Central?
Yes – it’s 100% true that you set your own price when selling via a 3P model. That said, you can’t control other sellers. This means other sellers might continue to offer the product at a lower cost, resulting in lost buy box and loss of control of the product page, and marketing as well. This is one example why deciding between 1P and 3P is complex and unique to each brand. Considerations like pricing and resellers often dictate the direction that’s best for our partners.
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