The way customer service is handled is very important in the ecommerce world. It can be the difference between a repeat customer or a negative product review, which in turn affect sales. <\/p>\n\n\n\n

1P CUSTOMER SERVICE <\/h4>\n\n\n\n

As Amazon takes ownership of the inventory, they also take ownership of the full customer service process for consumers ordering the products. <\/p>\n\n\n\n

3P CUSTOMER SERVICE<\/h4>\n\n\n\n

 As a seller of a product, you will be responsible to respond to customer inquiries and process returns. Amazon Seller Central mandates that customers receive a response no later than 24 hour<\/strong>s after they submit a question including weekends and holidays. If you fail to respond within the proper time, you may have your account suspended. <\/p>\n\n\n\n

E3P EXCLUSIVE SELLER CUSTOMER SERVICE <\/h4>\n\n\n\n

The exclusive 3P seller who sells the actual product will be responsible for responding to customer questions and complaints along with the responsibility of processing refunds and returns.<\/p>\n\n\n\n

Payment Terms <\/h3>\n\n\n\n

After figuring out whether or not to sell to Amazon or sell on Amazon, the more important question is, \u201cHow do I get paid?\u201d<\/p>\n\n\n\n

1P PAYMENT TERMS <\/h4>\n\n\n\n

Amazon pays its vendors monthly, either 30, 60, or 90 days after invoices are submitted, depending on your needs. During negotiation, Amazon includes several types of 1P accruals for vendors. Accruals are chargebacks for specific areas of running and operating the business.<\/p>\n\n\n\n

Common accruals consist of: <\/strong><\/p>\n\n\n\n

\n
• Base Accruals: Amazon essentially deducts a base percent (typically between 5-10%) of your wholesale price. This accrual used to be called marketing accrual and is typically called out as being an accrual to support many of the automated advertising such as retargeting and general business fees. <\/li>\n\n\n\n
• Accel Accrual: This 1% accrual<\/strong> is typically an optional accrual to give a brand access to additional data from Amazon Retail Analytics Premium (ARAP) which provides insights into demographics, search keywords, and sales history. <\/li>\n\n\n\n
• Freight Accrual: 2-7% accrual<\/strong> meant to fund and support freight shipping <\/li>\n\n\n\n
• Damage Accrual: 2-10% accrual<\/strong> meant to fund damages and returns <\/li>\n\n\n\n
• Merch Accrual: 4-6% accrual <\/strong>funding merch program activities on Amazon <\/li>\n\n\n\n
• AMS Committed Spend: 2-7% buyers<\/strong> often require acommitment of AMS and paid search spend on Amazon<\/li>\n<\/ul>\n\n\n\n

  3P PAYMENT TERMS <\/h4>\n\n\n\n

  Amazon will pay you twice a month and notify you after each payment. There are several costs and deductions that are taken out of your Amazon payments similar to accruals. <\/p>\n\n\n\n

  These costs include: <\/p>\n\n\n\n

  \n
  • FBA Shipping Costs: Aggregated costs of all shipping FBA costs <\/li>\n\n\n\n
  • Seller Commission Fees: % of total retail value of the product based on category <\/li>\n\n\n\n
  • Long Term Storage Fees: Additional fees for products held in Amazon\u2019s fulfillment centers over 6 months \u2022 Promo Rebates: for any discounts or concessions provided to customers <\/li>\n\n\n\n
  • Advertising Costs <\/li>\n\n\n\n
  • Premium Account Monthly Cost Shipping Requirements<\/li>\n<\/ul>\n\n\n\n

    Sales Tax <\/h3>\n\n\n\n

    Understanding how to sell on Amazon can be tricky. Understanding how taxation works on Amazon can be even trickier. <\/p>\n\n\n\n

    1P TAXES <\/h4>\n\n\n\n

    Amazon handles sales tax as they own the inventory being sold to a consumer. <\/p>\n\n\n\n

    3P TAXES <\/h4>\n\n\n\n

    Amazon requires a seller to file their own taxes with each state that requires ecommerce taxes. Because Amazon FBA centers ship products and inventory to multiple Fulfillment Centers in a variety of states, you are technically liable in the Tax Nexus to file individual taxes with each state you have inventory. <\/p>\n\n\n\n

    3P AUTHORIZED WHOLESALE PARTNER <\/h4>\n\n\n\n

    The wholesale reseller of products will be liable for filing taxes according to Amazon\u2019s policy<\/p>\n\n\n\n

    Amazon Brand Registry<\/h3>\n\n\n\n

    Vendors or suppliers often find their products being resold by third-party sellers without permission. Often there are duplicate listings, mislabeled information, wrong content, and bad brand experiences. Some of the listings violate trademark infringements and these listings often contain very little detail and can harm your brand image. <\/p>\n\n\n\n

    BRAND REGISTRY AVAILABLE TO 1P, 3P, AND E3P<\/h4>\n\n\n\n

     By using with Amazon\u2019s Brand Registry program, you have a tool to assist in deactivating or merging duplicate listings and trademark violations. Amazon will not enforce or work with any brand to stop unauthorized sellers. Instead, they defer to the brand to work directly with sellers to stop selling. <\/p>\n\n\n\n

    Brand registry also allows a brand to create A+ Content that will improve the consumer experience, boost your brand recognition, and instill trust in your brand. Brand registry is a step to helping manage and control product listing content and consumer experiences.<\/p>\n\n\n\n

    COUPONS & PROMOTIONS<\/h3>\n\n\n\n

    Amazon has standardized many of the self-service coupons that brands and sellers have access to. Coupons in Vendor Central, Vendor Powered Coupon (VPC), and Seller Central, Coupons, offer customers discounts on their products. Vendor Powered Coupons (VPCs) appear as digital coupons within ad units (Amazon). Similar to VPCs, Sellers can upload coupons into Seller Central that show up as a clipped digital coupon ad. Promotional codes that are redeemed at the end of cart can be generated by both sellers and vendors. <\/p>\n\n\n\n

    SUBSCRIBE & SAVE <\/h3>\n\n\n\n

    One of the best methods for increasing customer retention is the Amazon Subscribe & Save program. Subscribe & Save is a feature offered through Vendor Central to approved Sellers to help them retain and acquire repeat customers. Customers that choose Subscribe & Save will receive free shipping. They\u2019ll also get a 5% discount on their first four subscriptions, and a 15% discount for five subscriptions or more if their subscriptions are from the health, baby care, grocery, or beauty categories. All other product categories are capped at a 10% discount.<\/p>\n\n\n\n

    Which to Choose? 1P, 3P, E3P Pricing<\/h2>\n\n\n\n

    While Amazon may have started out as the sole retailer on their platform back in 1994, the 3P marketplace has become more profitable for them than the 1P side in many instances. Which selling model you choose will ultimately depend on your pricing and distribution strategies. Here\u2019s why and which option to choose depending on your goals.<\/p>\n\n\n\n

    WHY GO 1P, 3P OR E3P? PRICE CONTROL<\/h3>\n\n\n\n

    \u201cYour margin is my opportunity.\u201d \u2013 Jeff Bezos <\/p>\n\n\n\n

    1P PRICING <\/h4>\n\n\n\n

    When Amazon sells your product for you, that also means they have the right to sell it at any price they see fit\u2014even if that\u2019s below your established Minimum Advertising Price (MAP) or even wholesale cost. Some online shoppers can be unsure about a new brand, but seeing that the product is sold by Amazon helps to reassure them enough to click \u201cBuy.\u201d Amazon\u2019s goal is to help shoppers find the best deal, and so the liberty of pricing to meet those needs could mean your product is sold at cost value as opposed to retail value. <\/p>\n\n\n\n

    3P PRICING <\/h4>\n\n\n\n

    As the retailer of record, you maintain the price at which you sell your inventory. Due to the complex dynamics of having multiple sellers listing on products, you may find that if you price too high, you will not win the Buy Box and therefore not sell any of your inventory from your seller account. This incentivizes many brands to lower prices until they can win the Buy Box by having a lower price than other resellers. <\/p>\n\n\n\n

    It is recommended that you create individual item P&Ls to understand the price point thresholds of profitability for your products. Many believe that as a seller you\u2019ll price and sell your product according to your needs. However, Amazon will always defer to the lowest priced seller on the marketplace with the exception of similarly priced MFN (fulfilled by the seller) vs. Amazon FBA seller (fulfilled by Amazon). This means you\u2019ll have tougher competition for the Buy Box.<\/p>\n\n\n\n

    For more information about getting pricing control of online sales and winning back the Buy Box, check out our eBook about online brand control. <\/p>\n\n\n\n

    E3P EXCLUSIVE SELLER PRICING <\/h4>\n\n\n\n

    An E3P seller is limited in lowering price by the margins that they make on the products. Some sellers are incentivized to sell through remaining inventory as quickly as possible to avoid long term storage fees or to move unit volume. <\/p>\n\n\n\n

    OVERALL, 3P OUTPERFORMS 1P IN SALES <\/h4>\n\n\n\n

    A Cleveland Research Company report estimated 3P sales will likely account for nearly 70% of GMV for Amazon in four years as Amazon has realized that letting sellers sell their own products on the marketplace is far more lucrative than for them to own those costs. <\/p>\n\n\n\n

    Overall this makes sense as there are millions of Amazon sellers and Amazon is pushing for an even more curated 1P owned selection. We will likely see 3P share driving higher over the coming years as Amazon pushes for profitability and less inventory ownership risk. <\/p>\n\n\n\n

    We suggest brands use a 3P approach if they care about their pricing policy and margin. If their goal is simply to make sales on Amazon,without regard to pricing policy or brand equity, 1P is a suitable option.<\/p>\n\n\n\n

    Conclusion:<\/h3>\n\n\n\n

    Ultimately, there is no wrong way to sell on Amazon. Whether you sell 1P, 3P, or use an E3P seller is up to your brand and your individual goals. <\/p>\n","protected":false},"excerpt":{"rendered":"

    Understanding the differences, advantages, and disadvantages behind Amazon 1P, Amazon 3P, and the 3P Exclusive Authorized Seller models. Introduction…<\/p>\n","protected":false},"author":1,"featured_media":906,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","yasr_overall_rating":0,"yasr_post_is_review":"","yasr_auto_insert_disabled":"","yasr_review_type":"BlogPosting","footnotes":""},"categories":[3,4],"tags":[146,147,145],"class_list":["post-903","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-amazon","category-fba","tag-amazon-1p","tag-amazon-3p","tag-selling-on-amazon"],"yoast_head":"\n