“Amazon’s 3P Transition: Driving Growth in 2023”
Why has Amazon gradually shifted its first-party sales model (1P) to that of third-party sellers (3P) over the past few years?
It’s simple because growth (and profitability) lies in the leverage of allowing a maximum number of new brands to access the Amazon 3P service.
In 2023, Amazon and its 3P marketplace sellers sold $700 billion worth of goods, doubling compared to 2019.
According to Marketplace Pulse, this growth is largely fueled by the 3P marketplace, accounting for approximately 75% of the increase in gross merchandise volume (GMV).
To sustain this growth, Amazon needs a 3P marketplace that attracts even more brands, enticed by its ability to execute quickly and efficiently.
Amazon’s CEO, Andy Jassy, sees the reduction in service costs per unit and ultra-fast delivery by Amazon as the primary competitive advantage compared to emerging players such as Shein, Temu, and TikTok.
But the arrival of Temu also changes the perception of Amazon for brands, as they are now drawn to a higher-quality and more competitively priced 3P marketplace.