A first-party marketplace refers to an eCommerce model where the marketplace itself acts as the retailer, buying products directly from suppliers or manufacturers, and then selling those products to customers. Amazon’s Vendor Program operates as a first-party marketplace. Amazon buys products directly from manufacturers or suppliers (vendors) and sells them on its platform under the “Ships from and sold by Amazon” label. In this model, Amazon takes on the role of the retailer, controlling pricing, inventory, and promotions while ensuring a consistent customer experience. This is exemplified by Amazon’s Vendor Program which operates as a first-party marketplace. Amazon buys products directly from manufacturers or vendors and sells them on its platform under the “Sold by Amazon” label. In this model, Amazon takes on the role of the retailer, controlling pricing, inventory, and promotions.

Products sold directly by the marketplace (Sold by Amazon) are often perceived as more trustworthy and reliable, which can increase conversion rates. A first-party marketplace has full control over inventory management, pricing, and promotional strategies, allowing for more flexibility in responding to market trends and customer demand. The marketplace is also responsible for customer service, shipping, and returns, it can offer a more consistent shopping experience, ensuring quality control and meeting customer expectations. And first-party data allows businesses to build stronger relationships with customers and enhance their loyalty through personalized interactions and tailored offers.

A challenge could be the limited involvement of sellers go through. Suppliers and manufacturers have limited control over how their products are priced, marketed, or presented on the platform since the marketplace manages all aspects of the sales process. This is an important factor for businesses to consider when deciding how to sell their products.