Third-Party Seller

A Third Party Seller is also known as a 3P seller.
These sellers operate independently on Amazon and use the platform as a sales channel, unlike 1P vendors, who sell their products to Amazon for Amazon to retail.

Key Characteristics of Third Party Sellers:

• Retain ownership of inventory until the customer purchases it
• Set their own retail prices
• Decide how to fulfil orders (FBM or FBA)
• Are responsible for customer service when using FBM
• Manage their own advertising and promotions

Fulfilment Options for 3P Sellers:

1. FBA (Fulfilment by Amazon)
   • Amazon stores, picks, packs, ships, and handles customer service
2. FBM (Fulfilled by Merchant)
   • The seller stores and ships orders themselves
3. SFP (Seller Fulfilled Prime)
   • Sellers ship from their own warehouse but must meet Prime level SLAs

Responsibilities of a Third Party Seller:

• Managing listings and catalog data
• Inventory management
• Pricing strategy
• Advertising (SP, SB, SD)
• Customer service (if FBM or SFP)
• Returns handling
• Compliance with Amazon policies

Why Third Party Sellers Are Important to Amazon:

• Provide massive selection and catalog diversity
• Drive competitive pricing
• Contribute significantly to Amazon’s GMV
• Increase marketplace resilience and category depth

Benefits for Sellers:

• Direct control over pricing and margins
• Flexibility in sourcing and catalog management
• Ability to scale globally with Amazon’s marketplace
• Access to Amazon advertising tools and Brand Registry
• No need to negotiate retail terms with Amazon

Challenges:

• High competition and price wars
• Buy Box dependency
• Inventory management complexity
• Strict compliance requirements
• Potential account health risks

Example:
A home décor business uses Amazon as a marketplace.
They store products in FBA and run Sponsored Products ads.
They never sell inventory to Amazon, so they operate fully as a Third Party Seller.

Why It Matters:
Understanding the role of Third Party Sellers is key to mapping how Amazon’s hybrid retail model (1P + 3P) works.
The majority of Amazon’s marketplace growth comes from 3P sellers.

In short:
A Third Party Seller is a seller who lists products directly on Amazon’s marketplace and sells them to customers, without selling inventory to Amazon first.