For years, 1P versus 3P was treated as a one-time decision. You either sold wholesale to Amazon through Vendor Central and let it own the retail relationship, or you sold direct through Seller Central and kept control of pricing and margin. You picked a side and lived with it. The brands doing this best have stopped choosing. They run a hybrid portfolio, some products on 1P, some on 3P, and they are deliberate about where each SKU sits.

On a recent MerchantSpring Marketplace Masters episode, Sebastian Barrios and Stephan Putter of Leadsphere, a Mexico-based agency and certified Amazon partner that runs both vendor and seller programs across Amazon and MercadoLibre, laid out how they make that call product by product. Their framing has a Latin American edge, but the logic travels. Here is the playbook.

1P and 3P Are Not Two Versions of One Business

Start with the mental model Putter uses: on 3P you have thousands of customers, and on 1P you have exactly one, Amazon, and Amazon only makes money when your product sells through. These are two different customers on two different platforms that reward two different strategies.

Going 1P buys you three things. The “Ships from and sold by Amazon” trust signal lifts conversion because a shopper's perceived risk drops the moment they see it. You get operational simplicity: no pick and pack, no returns desk, no inventory feed to babysit. And you gain a stakeholder with skin in the game, because once Amazon owns the inventory, moving it is Amazon's problem too. What you give up is pricing control, since Amazon's algorithm sets the retail price by matching the lowest price it finds anywhere, plus retail margin, since you are now selling wholesale, and speed, because adding or pivoting products moves at Amazon's purchase-order pace.

The counterintuitive part is risk. Brands assume 1P is the safe channel because Amazon is doing the selling. Leadsphere sees the reverse. Amazon pushes nothing out of loyalty; a product that stops turning gets tagged CRaP, its internal label for “can't realise a profit,” and the purchase orders quietly stop. Barrios adds a warning most brands never model: in 1P, money gets subtracted between the purchase order and the payment, some of it contractual (marketing and damage allowances, freight) and some of it Amazon claiming it received fewer units than you invoiced. It is real money, and it lands after the fact. The cleaner summary: 3P is your risk, experimentation and demand-creation channel; 1P is where you reward proven products.

Why Hybrid, and Why Now

Three years ago the show's guests were explaining how to migrate off 1P entirely. So what changed? Leadsphere points to three shifts, and one of them is not optional. Since late 2024, Amazon has been terminating smaller vendor relationships in waves, consolidating Vendor Central around its largest suppliers and pushing US brands under roughly five million dollars in annual sales out to Seller Central (ChannelEngine). The most recent wave carried a termination date of 2 August 2026. For thousands of brands, hybrid stopped being a strategy discussion and became something they had to stand up quickly.

The second shift is maturity. A decade ago, most brands had one person running Amazon. Now they have real e-commerce teams and agencies that can operate two portals, two P&Ls and two inventory strategies in parallel. The third is tooling. You can now see profitability per SKU, per channel, net of fees, chargebacks and advertising. A hybrid is fundamentally a SKU-by-SKU allocation decision, and without that visibility it was guesswork. With it, the allocation becomes something you can audit.

Barrios adds a fourth, more provocative point. Third-party unit share on Amazon peaked at 62% in late 2024 and has since slipped to 60% across two consecutive quarters, the first back-to-back decline since Amazon began disclosing the figure in 2004 (Marketplace Pulse). For two decades, there was one direction of travel, and it has stopped. That is what makes this a portfolio decision rather than a forecast. And there is a harder version: the market stopped waiting. Leadsphere keeps walking into Mexican categories where 40 to 60% of a brand's demand is being served by unauthorised resellers. That brand was not hybrid; it was absent, and the grey market filled both channels on its behalf.

The Allocation Framework: One Product, One Source of Supply

The rule Leadsphere keeps returning to is one product, one source of supply, and the first filter question is not the one people expect. It is not price or margin. It is whether you can forecast the product yourself, independent of Amazon. A SKU is only a 1P candidate when you can build your own forecast that holds up. Use Amazon's numbers and JBP targets to cross-check, never to replace your own. Complement, don't just comply.

From there, Barrios runs four tests: 

First, proven products with stable velocity go to 1P, where the machine rewards consistency.

Second, new launches, seasonal variants and anything experimental stay in 3P, which is your lab; you graduate the winners into a vendor conversation with data in hand instead of hope.

Third, price point, and this one surprises people: low-ticket items around eight to ten dollars are often unprofitable in 3P once fulfilment fees load, but work in 1P because Amazon absorbs the fulfilment economics, and the same goes for anything heavy or bulky.

Fourth, price sensitivity: if a product is MAP-critical or tied to physical retail accounts with price-match clauses, handing Amazon the pricing pen through 1P can cost you more off Amazon than you gain on it.

Don't Range the Same ASIN on Both

The move that sounds like a safety net and is not: putting the identical ASIN on 1P and 3P. It reads like sensible backup, stock ready to go if Amazon runs dry. In practice, it creates friction with the 1P team. Leadsphere has seen Amazon claim, incorrectly, that you cannot even keep a 3P account active alongside 1P, and when the buy box slips to 3P for anything beyond a genuine stockout, the commercial conflict is real. Their example: a personal-care brand in Mexico doing 1,000 to 1,500 units a month on 3P scaled to 4,000 to 5,000 in 1P. You do not want to hand Amazon a reason to go hunting for another distributor to source a core winner.

So keep the core ASIN in 1P and route pack sizes, bundles and variants, the things Amazon often will not buy anyway, into 3P. Use 3P to build the evidence that graduates the next product into 1P. This is more workable with a large catalogue; if your whole operation rides on ten or twenty SKUs, the overlap risk gets sharper, and the hybrid gets more delicate.

One Brand, One Content Standard, Two Advertising Strategies

Hybrid does not mean doing everything twice. The rule Putter offers: one brand, one content standard, but two distinct advertising strategies, which is how the channels reinforce rather than cannibalise each other. Treat 1P products as upper-funnel workhorses; their higher conversion lets you afford broad category terms and awareness plays. Run 3P on the lower funnel, retargeting, defensive branded terms and conversion promotions, where your pricing control lets you actually close the deal.

Content is where you unify. One brand store, one A-plus standard, one visual identity, because the shopper should never sense there are two operating models behind the storefront. But know the control difference. On 3P, Brand Registry locks your titles, bullets and images; they are yours. On 1P, Amazon's merchandising team gets the final say and can override you. That makes your most content-sensitive products an argument for 3P, unless you lay the groundwork with Amazon to keep their hands off. Trust works differently too: 1P borrows Amazon's credibility through “sold by Amazon,” while 3P builds your own, so sequence them, using borrowed trust to enter a market and your own to hold it.

Hybrid is Not for Everyone

Having the option does not mean you should take it. Putter frames hybrid as a question of internal bandwidth. You do not need two architects, but you need one architect with genuine oversight of both channels and a team under them to run each. One point he raises comes from MerchantSpring's own vendor coverage: the deductions you do not push back on in 1P are money you never see again, so without a team running live audits on what Amazon pays you, the leakage is quiet and constant.

If you cannot dedicate that bandwidth, or your catalogue is only four to twenty SKUs, or your advertising budget is too small to fund both channels properly, hybrid will likely make you underperform on both fronts. Cash flow matters as much as anything: 1P pays on 30, 60 or 90-day net terms while 3P pays on a roughly two-week cycle, and that gap alone can decide the model for you. For many smaller brands, the honest answer is to stay on 3P, build validation and market exposure, grow the catalogue, and revisit hybrid once the operation can actually carry it. For deeper background on the vendor cuts driving these decisions, MerchantSpring's guide on proactive steps for Amazon vendors facing account closure is a useful starting point.

What to Do With This

Treat allocation as an ongoing audit, not a one-off. Map every SKU against the four tests, keep core winners in 1P and your experiments in 3P, and refuse to run the same ASIN on both. Where a 1P price keeps breaking, don't argue with your vendor manager; find the distributor leaking your product, because on Amazon, distribution control is price control. And be honest about whether your team, catalogue and cash flow can actually support two operating models. The brands that win the next phase are the ones treating 1P and 3P as one deliberate portfolio, not a loyalty test they hope Amazon rewards.

See Your 1P and 3P Performance in One Place

A hybrid portfolio only works if you can compare SKUs across both channels net of fees, chargebacks and ad spend, and catch the 1P deductions before they disappear. MerchantSpring gives sellers, agencies and enterprise brands one view of vendor and seller performance side by side, so allocation becomes an audit instead of a guess. See it on your own accounts with a walkthrough of your data.