1P (First Party) - Amazon Glossary

First Party (1P) is an Amazon selling model where a brand operates as a wholesale vendor directly to Amazon via Vendor Central. Amazon purchases the manufacturer's inventory through wholesale Purchase Orders (PO), retains legal ownership of the stock, sets retail prices, and handles fulfillment to the end consumer.

Operating as a 1P vendor offers predictable transaction volume through bulk wholesale shipments while displaying the trusted "Ships from and sold by Amazon" badge on product listings. However, it requires surrendering control over retail pricing, which can compress gross margins if automated repricing engines lower consumer prices across the catalog. Managing cash flow also becomes challenging due to extended payment terms, promotional Co-Op Fees, and unexpected operational Chargebacks.

$$\text{1P Net Wholesale Profit} = (\text{PO Volume} \times \text{Wholesale Unit Price}) - \text{COGS} - \text{Co-Op Allowances} - \text{Vendor Chargebacks}$$

How Does First Party (1P) Differ From Third Party (3P)?

The primary distinction between selling models lies in the ownership of inventory and the operational relationship with Amazon. In a 3P seller arrangement via Seller Central, the brand retains legal title to the inventory, sets retail prices on the marketplace, and pays referral fees for each unit sold to consumers. The 3P merchant acts directly as the retailer of record.

In contrast, a 1P business model establishes a business-to-business (B2B) vendor arrangement under a Wholesale Model. Amazon assumes full retail control upon taking delivery at its distribution hubs. Amazon handles buyer customer service, establishes selling prices, manages returns, and directly controls inventory replenishment schedules. While 3P sellers maintain agility over pricing and direct customer communication, 1P vendors focus primarily on supply chain execution, manufacturing throughput, and enterprise-level purchase order negotiations.

How Are Wholesale Orders Processed in Vendor Central?

In a 1P operational workflow, inventory movement begins when Amazon's automated ordering system generates wholesale purchase orders. These orders are issued based on predictive demand models, inventory velocity, and fulfillment center capacity constraints.

Once a purchase order arrives in the vendor portal, the brand must confirm item quantities, prepare shipments according to strict routing guidelines, and deliver the goods within an agreed delivery window. Amazon inspects the shipment upon arrival, scans advanced shipping notices, and adds the inventory to its retail catalog. Payment is subsequently processed based on pre-negotiated wholesale terms, which typically range from Net 30 to Net 90 days.

How Does Pricing Control Function for First Party Vendors?

Under standard 1P vendor agreements, Amazon retains full legal authority to dictate retail prices on its marketplace. Brands submit a wholesale cost price to Amazon, but they cannot enforce a Minimum Advertised Price (MAP) directly on Amazon retail algorithms.

Amazon's web scrapers continuously monitor competing e-commerce platforms. If a third-party site drops the price of a vendor's item, Amazon's repricing engine automatically matches that lower price point to protect marketplace price competitiveness. This dynamic can create channel conflict if traditional brick-and-mortar distributors or authorized online retailers are undercut by Amazon's automated discounting, leading to margin compression across all sales channels.

What Are the Financial Risks and Fee Structures of 1P?

While 1P selling eliminates standard per-item seller referral fees, it introduces complex vendor agreement deductions that directly impact net profitability:

• Co-Op Allowances: Vendors must negotiate agreement terms that include marketing, freight, and damage allowances. These fees typically represent a fixed percentage of total wholesale revenue and are automatically deducted from invoice payments.

• Vendor Chargebacks: Operational non-compliance - such as late shipments, missing barcode labels, or improper pallet dimensions - triggers automated penalty fees assessed by Amazon logistics teams.

• Remittance Deductions: Amazon frequently applies early payment discounts or automated dispute deductions, requiring vendors to maintain rigorous accounting audits to recover unauthorized deductions.

What is a Real-World Scenario for 1P Operations?

In Practice: A manufacturer of premium cookware receives a purchase order for 10,000 units of a 10-inch skillet at a negotiated wholesale price of $25 per unit. Amazon receives the shipment, lists the product as "Ships from and sold by Amazon.com" at $49.99, and handles all consumer shipments. The brand receives payment 60 days later, minus a 12% co-op agreement deduction.

Common Mistake: A mid-sized brand transitions from 3P to 1P without auditing its supply chain compliance. The brand fails to format carton barcodes to exact Amazon logistics standards, resulting in $15,000 in operational chargebacks across their first three purchase orders. Additionally, because Amazon matched a temporary liquidation discount on an external website, retail pricing dropped below wholesale cost, creating severe friction with the brand's traditional retail partners.

How Does the Fulfillment Context Change for 1P Brands?

In traditional 3P selling, merchants must choose between Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) to store and ship orders to buyers.

For 1P vendors, the FBA versus FBM distinction does not apply in the standard consumer context. Once Amazon takes receipt of a 1P wholesale shipment, Amazon handles logistics, warehousing, and shipping entirely through its internal distribution infrastructure. The vendor acts purely as a bulk B2B supplier shipping to Amazon fulfillment centers, rather than a direct-to-consumer shipper managing individual parcel operations.

Should You Choose 1P, 3P, or a Hybrid Strategy? (SoldScope Expert Tip)

Selecting between 1P and 3P is not necessarily an all-or-nothing decision. Many enterprise brands implement a hybrid strategy, utilizing 1P relationships for high-volume legacy SKUs that require bulk manufacturing distribution, while maintaining a 3P Seller Central account for new product launches, seasonal items, or listings requiring tight pricing protection. Operating a 3P account alongside a 1P vendor profile provides a safety net if Amazon temporarily pauses wholesale purchase orders, ensuring sales continuity across your core catalog.

How SoldScope Helps

SoldScope provides essential market intelligence that empowers First Party vendors to benchmark performance against competing 3P sellers and optimize their product catalog. By utilizing the Keyword Research tool and its Reverse ASIN capabilities, 1P brands can track organic search visibility and identify top-converting search terms across their category. Additionally, the Listing Analyzer allows vendor managers to perform side-by-side gap analyses of listing content against 3P rivals to ensure Amazon maintains high-converting detail pages. For hybrid brands operating across Vendor and Seller Central, SoldScope’s Rank Tracker monitors keyword positioning to safeguard overall brand share of voice.