The Situation

An established consumer brand with 30+ years of market recognition was selling through Amazon’s 1P program (Vendor Central). While the arrangement drove high unit volume, the economics were unsustainable.

Amazon controlled all pricing decisions, routinely discounting products to $18-20 per unit – well below their true retail value. The brand was effectively subsidizing Amazon’s marketplace strategy at its own expense, with products frequently selling at or below cost.

The Problem with 1P

Top-line revenue looked healthy at over $2.1M annually, but the brand had no control over pricing, product presentation, advertising strategy, or customer experience. Chargebacks, PO management, and compliance costs eroded what little margin remained. Worst of all, Amazon’s aggressive discounting was undermining the brand’s premium positioning across every other sales channel.

The Price Gap

1P (Vendor Central)

Amazon’s Price
$18-20
Amazon controlled pricing. Sold at or below cost.

3P (Seller Central)

Brand’s Price
$40-45
Brand controls pricing. True retail value restored.

What the Transition Required

This was not a simple channel switch. ScaledOn managed the full transition across five workstreams simultaneously:

Pricing Strategy

Products repriced from $18-20 to their true retail value of $40-45, aligned with DTC and retail channel pricing.

FBA Logistics

Shifted from Vendor Central purchase orders to FBA inventory management with capacity planning.

Content Rebuild

New A+ content, optimized listings, and a full brand store built from scratch under Seller Central.

Advertising Launch

Full-funnel defensive PPC campaigns to protect brand traffic during and after the transition period.

Channel Alignment

Amazon pricing brought into line with DTC and retail partners, eliminating channel conflict.

Brand Protection

Competitor ads on brand search terms and product pages blocked through defensive campaign structure.

The Key Insight

1P revenue is a vanity metric. When Amazon controls pricing and sells your products at a loss, high revenue masks the fact that the brand is losing money on every unit. The right question is not “how much revenue?” but “how much profit per unit?”

The Results

Unit Price
2x+
$18-20 to $40-45
Pricing Control
Brand
Was Amazon
Content Control
Full
Was Limited
Chargebacks
$0
Eliminated

Before and After

Metric 1P (Before) 3P (After)
Annual Revenue $2.14M $1.18M
Unit Price $18-20 $40-45
Pricing Control Amazon Brand
Content Control Limited Full (A+, Brand Store)
Advertising Control Limited Full-Funnel PPC
Customer Data Minimal Search terms, analytics
Chargebacks Ongoing cost Eliminated
Channel Conflict Amazon undercutting retail Pricing aligned

Revenue dropped 45% on paper. But under 1P, Amazon was moving 100,000+ units at or below cost. Unit margin was restored from near-zero to healthy, and chargeback, PO, and compliance costs were eliminated. Net profit is meaningfully higher despite lower top-line.

Post-Transition Advertising Performance

After transitioning to 3P, the brand launched full-funnel defensive PPC campaigns to protect brand traffic and block competitors from showing ads on their product pages and brand search terms.

$36.4K
Ad Spend
$192K
Attributed Sales
18.9%
ACOS
16.3%
Ad Share of Sales

What Actually Changed

  • Profit margins improved dramatically – every unit sold contributes real profit instead of subsidizing Amazon’s pricing
  • Brand equity restored – products positioned at their proper price point, consistent across all channels
  • Full content control – A+ content, brand store, and product imagery now reflect the brand’s 30-year heritage
  • Advertising unlocked – defensive PPC running at 18.9% blended ACOS (~5x blended ROAS), blocking competitor poaching
  • Customer data access – search term reports, advertising analytics, and behavior data that 1P never provided
  • Chargeback burden eliminated – no more PO management, compliance fees, or Amazon-initiated deductions

Is Your Brand Ready for a 1P to 3P Transition?

  • Established brand recognition – consumers know your name and search for you
  • Amazon is discounting below retail – your 1P pricing undercuts your DTC and retail channels
  • Thin or negative margins on 1P – revenue looks good but profit per unit does not
  • Multi-channel presence – Amazon’s pricing creates conflict with your other sales channels
  • PE-backed or growth-focused – under pressure to improve EBITDA and margin profile
  • Ready for operational change – have the capacity (or a partner) to manage FBA logistics

Want to Explore This for Your Brand?

ScaledOn manages the full 1P-to-3P transition: pricing strategy, FBA setup, content optimization, advertising launch, and ongoing marketplace management. We have done this before, and we know what to expect at every stage.

If you are currently on Vendor Central and wondering whether 3P would deliver better economics, we are happy to walk through the case study in more detail and assess your specific situation.