The 1P vs 3P Debate: The Shifting Landscape of Selling on Amazon

Unless you’ve had your head in the sand over the past five years or so, you know that Amazon Business has become an unstoppable force in B2B commerce. More than 8 million businesses now buy through Amazon Business, and the channel continues to grow at double-digit rates year over year. Some Wall Street analysts predict that Amazon Business will soon surpass $80 billion in annual sales, and it already accounts for a significant share of procurement spend across industrial, electrical, plumbing, medical, and other commercial categories.

For B2B manufacturers, this means the buying lifecycle is taking place on Amazon in many cases. From starting their product research on Amazon to making bulk purchases, B2B buyers rely on Amazon for the same convenience, transparency, and availability as consumers do in their personal shopping journeys. This means that for B2B firms, Amazon is no longer optional but a requirement.

But having a profitable Amazon program isn’t as simple as listing products. There are many factors that drive profitability on the platform. One of the most important elements is a foundational choice between the two selling models Amazon offers: Vendor Central, also called 1P, and Seller Central, also called 3P.

The two models generally look the same to buyers, but they operate very differently behind the scenes. Each model carries distinct implications for pricing control, profitability, operational workflows, systems integration, and most important, profitability. The decision you make at the outset can set the trajectory for your Amazon performance, and getting it right early prevents costly pivots later.

It’s important to note, of course, that there are other models available to B2B manufacturers who want to get creative, such as the hybrid model or using resellers. However, the majority of firms will want to explore the two main options before considering other selling methods.

Let’s take a closer look at the 1P vs 3P debate to help you figure out what’s best for your business.

What Are 1P and 3P on Amazon?

Before we dive into the specifics on how to decide, it’s important to understand what the two selling models are and how they differ.

Vendor Central (1P) is essentially a wholesale model. Businesses sell inventory directly to Amazon, Amazon issues purchase orders, and Amazon becomes the retailer of record. They own the inventory, set the retail price, and manage the downstream customer experience. For many manufacturers, this feels familiar because it mirrors a traditional retail/wholesale relationship.

Seller Central (3P) is a marketplace model, meaning Amazon provides a platform where sellers can set up a shop and sell their products. Businesses sell through Amazon to customers on the marketplace. While Amazon is still the transacting entity, sellers set their own prices and directly manage the catalog offered along with product and brand content. Amazon provides the platform and optional fulfillment services (e.g. Fulfillment By Amazon), but sellers retain commercial and operational control. This model offers more flexibility and visibility, but it also requires additional internal capabilities from sellers.

Choosing between Vendor Central and Seller Central is a key consideration because the choice has implications that impact your entire organization. Product category, margin structure, and operational maturity all influence which model is the better fit, and each approach comes with its own set of advantages and trade-offs.

To make an objective choice, companies need a clear view of how each model impacts fulfillment workflows, financial processes, channel management, and systems integration. Depending on the chosen approach, you may need to spend time integrating ERP and accounting platforms. You may also need to revisit internal processes and procedures, depending on which model you choose, as the accounting and payments are different between the two models.

1P vs 3P: The Pros and Cons of Each

Choosing between 1P and 3P is not always a clear cut decision. There are a number of factors that can go into a decision. It’s best to take a data-driven approach, and this is where an experienced professional can come in handy. At Enceiba, we’ve worked with hundreds of B2B firms to help them decide the best approach.

Here are a number of trade-offs to consider when choosing the right Amazon sales model for your business.

Vendor Central (1P)

Pros

Cons

Familiar wholesale mechanics. Many B2B firms are set up to sell wholesale, making 1P an easy choice in some cases. Amazon issues purchase orders, payments follow a predictable cadence, and the workflow mirrors traditional wholesale relationships, often making it easier for manufacturers entering Amazon for the first time. Early relationship support. New or strategic brands may receive attention from Amazon’s Vendor Managers or category leaders, giving them access to programs such as the Retail Deal Desk or enhanced advertising support. Advantage for low-priced items. For products typically priced below $10–$15, Amazon’s fulfillment economics can make 1P more profitable than running those items through a 3P operation.

Lower revenue and margin. You sell at wholesale, not retail, which reduces revenue and typically profitability.  No price control. Amazon sets the initial retail prices, and then manages them algorithmically, often driving prices down and creating channel conflict if your broader distribution isn’t tightly managed. Limited visibility. Amazon owns the customer relationship and provides less data about product movement, buyer behavior, or account performance.  Restricted catalog and access. Vendor Central is invitation-only, and Amazon may choose to carry only a portion of your product line.  Declining human support over time. As accounts mature, Amazon often shifts management from people to algorithms, reducing the direct relationship many brands expect.

Seller Central (3P)

Pros

Cons

Higher revenue and margin potential. You sell at retail (vs. wholesale) prices and generally keep more of the profit.  Full price control. You set and maintain your own retail pricing, which helps protect channel strategy and margin integrity.  Faster cash flow.  Amazon payments arrive every 2 weeks (vs. 30-90 days in 1P), improving working capital.  Closer to customers. You gain access to richer customer data, clearer insights into their buying behavior, and better tools for serving Amazon Business buyers.  More strategic flexibility. You control catalog breadth, content, promotions, and inventory strategy.

Higher operational demands.  Taking a 3P approach on Amazon requires a more hands-on level of support and additional resources, including catalog management, pricing oversight, customer service, and operational execution.  Potential process changes. Warehousing, fulfillment, and finance workflows may need to adapt to support a marketplace model, which can include placing inventory on consignment with Amazon’s Fulfillment by Amazon (FBA) service.  Less direct Amazon relationship. Seller Central offers fewer high-touch programs and less hands-on support from Amazon teams for most sellers managing the channel internally.

One important thing to point out: Both models allow methods for businesses to have their products qualify for Amazon Prime and/or Amazon Business Prime. Achieving this for your products can be a huge boost to both visibility on the platform and converting sales.

How B2B Manufacturers Can Decide on 1P vs 3P

Choosing the right Amazon model starts with understanding your own margins, operational strengths, and product mix, and figuring out Amazon fits into your broader channel strategy. Manufacturers with low-priced, high-velocity items or a strong history of wholesale distribution often find Vendor Central (1P) easier to adopt because it mirrors existing workflows. Those with higher-priced products, complex catalogs, or a need for strict price control typically see stronger long-term performance in Seller Central (3P).

Product category also matters: some categories are more tightly managed by Amazon’s retail (1P) teams, while others thrive in the marketplace environment. And for brands that Amazon deems strategic to its own competitiveness in the market (e.g. brands that are extremely high volume and are carried by key Amazon competitors), suppliers may not have a choice; 1P could be the only option for selling on the platform. 

Internal capabilities, or lack thereof, can be another major factor. Seller Central rewards companies that manage pricing, content, inventory, and customer experience. It also demands more from finance, operations, and systems teams, because the marketplace model integrates differently with ERP and accounting workflows. Vendor Central, by contrast, reduces operational complexity but limits control and visibility.

The right choice comes from evaluating these trade-offs objectively across functions. For many manufacturers, the most reliable path is to model both scenarios, understand the economics and resource requirements, and align the decision with long-term channel goals rather than short-term convenience.

Keep in mind that 1P is often by invite only, so if this is your preferred approach, your firm will need to make its case to Amazon as to why it is a good strategic partner. Typically, these businesses will need to prove they can consistently generate $10-$15 million or more in revenues, as well as the fact that they can handle that level of production and fulfillment. In fact, Amazon has been pushing firms away from 1P and into 3P for some time now, and will likely continue to do this as 3P requires less support and is often more profitable to Amazon.

In fact, we know from our annual Amazon B2B Industry Pulse survey that more and more manufacturers are turning to 3P. Today, 3P sellers on Amazon represent approximately 63 percent of all sales on the platform, and we believe that will continue to grow. If you’re not considered “strategic” by Amazon’s 1P team, you may in fact not have any choice but to start with 3P.

For manufacturers already selling on Amazon, shifting from Vendor Central to Seller Central (or the other way around) can often be possible, though the path varies by size and strategic fit. Larger vendors may face more friction when moving to Seller Central, while small and mid-sized brands often find the transition more straightforward, especially as Amazon increasingly releases non-strategic vendors from the 1P program.

Whether you’re just getting started or reassessing an existing Amazon program, we can help you evaluate your options, model the impact, and determine the approach that positions your Amazon channel for long-term success. Contact our top B2B Amazon specialists to talk about which selling model is right for you!