Amazon’s success has not only been contributed but its own retail efforts, the millions of third-party sellers in the different marketplaces have also had a significant contribution. Based on the paid units’ statistics, third-party sellers contributed up to 54% of the paid units sold on Amazon marketplace. This percentage has gradually been going up since 2007 as more and more third-party sellers are coming to Amazon marketplace.
First and third-party sellers on Amazon
If you want to sell goods on Amazon, there are a couple of ways you can do it. One of them is being first party(1P) seller where by you send your inventory to Amazon and the products will be listed and shipped by Amazon.com. The benefit of this method is that your sales volume will go a little higher because buyers have more trust in Amazon.com. However, the profit margins are a little down.
The other option is selling as a third-party (3P) seller on Amazon marketplace where you have control over the pricing and shipping. When it comes to fulfillment third-party sellers can choose either “fulfillment by Amazon” or “fulfillment by merchant” and the option they choose is what will appear in the listing of their products. 3P sellers have an edge over 1P sellers especially when it comes to profit margins.
At the end of the day whether sales are by first part or third-party sellers, Amazon as platform also benefits. In 2019, Amazon made over $53.76 Billion (a $9.1 Billion increase from the previous year) in sales from third-party selling services.