Paul Sonneveld
Hi everyone, my name is Paul Sonneveld and welcome to another live episode of marketplace masters. Today, we're going to take on one of the probably the oldest debates in the Amazon world, you know, 1P or 3P. For years, brands have really treated this as a fixed choice. You either can sell wholesale to Amazon and let it own the retail relationship or sell direct through Seller Central and keep control of pricing and margin. You're going to pick a side and live with it. But the brands doing this the best have really stopped choosing this between these two models. They run a hybrid portfolio, some products on the 1P side, some on the 3P side, and they're very deliberate about where they range their products on a SKU-by-SKU basis.
Now, joining me today to unpack how that works are Sebastian Barrios and Stephan Putter from Leadsphere. There they are. Who builds and manages these hybrid setups for brands every day. Now, let me briefly introduce them to the audience. Sebastian is the founder and ceo of Leadsphere, a Mexico-based agency and certified Amazon Commerce partner specialising in full-service marketplace management across Amazon and MercadoLibre. His team manages both 1P vendor and 3P seller programs for leading consumer brands and helping them navigate the unique dynamics of e-commerce in Mexico and Latin America.
Stephan is the co-founder and CEO of Leadsphere, where he has led the company since its launch eight years ago. He currently spearheads Leadsphere's global e-commerce strategy and commercial negotiations, including full-scale partnerships with Amazon, both 1P and 3P, and MercadoLibre, spending more than ten product verticals and categories. Sebastian and Stephan, it's great to have you here today. Welcome so much to Marketplace Masters.
Sebastian Barrios
Hey, Paul. Thanks for having us. A pleasure to be here.
Paul Sonneveld
It's an absolute pleasure. I really look forward to you delving into your expertise and getting also, I guess, more of a LATAM and Mexico emphasis on some of the conversation, which would be awesome. Now, before we dive into it, just a reminder to our audience, this is a live recording, which means maybe some things will go wrong; we'll see. But more importantly, you have the opportunity to actually ask your questions and put them to Stephan put them to Sebastian and get some real interaction going.
So this is audience participation live. So don't hold back. Make sure you put your questions in the LinkedIn comments section or on YouTube comments, and we'll pick them up from there. All right. Let's get ready. Let's get into it. Maybe let's just set the scene a little bit in plain terms. Let's start here, right? In plain terms, what does a brand actually give up and gain from moving a product to 3P and 1P, as well as the other way around? You know, what are the benefits of switching one way or another? Maybe Sebastian, you want to, or Stephan, you want to kick us off here?
Stephan Putter
Yeah, for sure. And thank you for the question, Paul. It's great to be on the podcast today. So look, on 3P, you have thousands of customers, right? And on 1P, you really have one main customer. And if you don't address that customer's needs, you don't take off. You gain a stagnant operation. And that customer is Amazon. And Amazon needs sellout to earn its margin. On 3P, you're building demand and loyalty across thousands of people. So these aren't two versions of the same business. There are two different customers, two different platforms, and they require two different strategies. So, focusing on right now on 1P, what do you gain? You gain mainly three things, right? One, you get the trust signal shipped from and sold by Amazon that automatically lives conversion.
So there's no real public number on it, but the consensus is clear because the customer's perceived risk just drops once your product has that label. Two, you gain operational simplicity. You don't have a pick and pack, you don't have returns, no service desk, and you don't have an inventory index, the API, which you need to babysit. And three, you gain a very important stakeholder with skin in the game. Once Amazon owns your inventory, rotating that inventory is Amazon's problem too. So what do you really give up when you go into 1P a bit of pricing control, right? Amazon's algorithm sets the retail price. It matches the lowest price it finds anywhere. And you give up retail margin because you're selling wholesale.
So basically, you're also giving up speed because when it comes to adding products, pivoting, catching opportunities, experimenting with new listings, all of that now moves at the purchase order rate pace, which Amazon sets for you or that they set in the customer-supplier relationship. And just one instinct that I correct on this question, which is super important, is people sometimes assume that 1P, where you take risks, right? Because Amazon is pushing the product for you. We actually see it on the reverse. On the contrary, Amazon pushes nothing out of loyalty, right? An item that doesn't turn goes crap, which is Amazon's label for can't realise a profit. And once that happens, those purchase orders, they just quietly stop. As we see it, if I had to summarise it, 3P is your risk channel, your experimenting channel, your demand creation channel, whilst 1P is more of a rewards proven products channel. That's a really great way of putting it.
Paul Sonneveld
Yeah, I was going to ask, what would you add to that, Sebastian?
Sebastian Barrios
Yeah, perfect. I'd like to add one thing early because it really shapes half of this conversation. In 1P, money gets subtracted between the purchase order and the payment. So some of it's contractual, such as marketing allowance, damage allowance, freight, and some of it's Amazon telling you they received fewer units than you invoiced. So that's real money, and it arises after the fact. And most brands never put it in the model before they even signed with 1P. So it's hard to understand exactly when and where you have to do it, but just consider this before moving products to 1P.
Paul Sonneveld
Yeah, that is a great build. Thanks for that. I think it's a great explanation, both of you. It's a really fresh take on On 3P versus 1P, particularly around the sort of, you know, the experimental side of 3P and the role it can play. Super interesting. Now, for me, what's kind of the broader question here is, why are we even talking about hybrid models here, right? So we've just, you know, painted both options. But for many years, I remember at the start of the show, maybe three, four years ago, I had a number of guests on. It was all about how do you migrate from 1P to 3P. You know, 1P bad 3P good. This is what you need to do. Right. Uh, it was sort of, that's where the debate was at, at the time, but clearly something's changed now. We're talking about hybrid strategies. So my question is, what's really changed in Amazon's programs, brand maturity, tooling? Why are people talking about hybrid now? And what's made it possible.
Stephan Putter
So I think on that question, Paul, three things have changed. And the biggest one is that Amazon has really forced the issue, right? So, since late 2024, Amazon's been terminating vendor relationships in waves. So brands that sell under five to ten million dollars a year, Amazon's been really consolidating their vendor central relationships around its largest partners. And this isn't history. It's been a recent issue. I think it's nine days ago, on the second of August, they carried out their most recent wave of terminations. So for thousands of brands, hybrids stopped being a strategy conversation. It became a reality that they had to adjust to. Multiple brands that were already accustomed to selling through 1P for years or for months had to activate repeat for certain products for the entire operation.
Second, something else that's changed apart from this enforced issue by Amazon is that brands have matured right ten years ago, most brands had one person doing Amazon. They had a single person managing the project so they have real e-commerce teams, they have agencies, and these factors can run two operating models in parallel, so you have two portals, two pnls two inventory strategies, and hybrid was always theoretically possible, but it felt like brands maybe couldn't staff it before they really got to know how the platforms worked. And third, tooling has really caught up, right? You can now see profitability per SKU. You can see it per channel. You can see net of fees, chargebacks, advertising, all of it at a really granular point. And a hybrid is fundamentally an SKU-by-SKU allocation decision. It's a comparison with both platforms, and without that visibility, it was really guesswork, so with it, it is now an audible process, so the more you can audit and the most you can the more you can compare SKU performance between both platforms, the more of a standardised operation you can have, right?
Paul Sonneveld
Yeah, it makes sense. And, you know, the tooling, I can testify to that. The tooling has certainly come a long way, both in terms of external tools, but also inside. I mean, I reckon a few years, maybe two, three years ago, the perpetual complaint was, you know, Amazon's vendor central portal looks like it was last updated twenty years ago. All right. And it's come a long way. So, Sebastian, what's your take on what's your take on this? What would you add?
Sebastian Barrios
You know, agreeing with everything Stephan just said, I'd like to add a fourth, and it's kind of a counterintuitive one because the numbers really just turn. So third party unit share on Amazon peaked around sixty two percent. It's now fallen two quarters in a row. That's the first back-to-back decline since Amazon started publishing the number in, I believe, was 2004. So the story really isn't that everything moves to a third party for twenty years. There was only one direction of travel, and that has ended. And that's what makes this a portfolio decision instead of a forecast. And, you know, there's a hard version of what's changed, and it's the market stopped waiting. If you refuse to choose, someone will choose for you. So we keep walking into categories in Mexico where around forty to sixty percent of brands demand is served by unauthorised resellers. Huge. And build products, Bronze sellers, the brand wasn't a hybrid. It was really absent in a grey market filled with both channels on its behalf.
Paul Sonneveld
That's a great build. Yeah. So when you think about I think it was Stephan, something you're saying, it's like a SKU by SKU proposition. You talked about profitability and the profitability driving a lot of the decisions. But I want to just drill down a bit more on that question. I mean, when you onboard a client, or when you look at a client's portfolio, right there, I'm talking about the product portfolio, right, or brand catalogue. In addition, just to pure profitability, I mean, what other logic do you apply to decide, this ASIN is better on 1P, this ASIN should be 3P, you know, walk us through maybe the framework that you use for this.
Stephan Putter
So actually, you might, yeah, I think Sebastian might want to take the lead on this one.
Sebastian Barrios
All right. So if we go to the framework, there's a couple of ways we can really review. And we have a couple of ways we can get to do that. And one is tracking really the, if the distributor is falling or if you're having issues with Amazon. And really, I'm looking at my notes. So, it's kind of like a price discipline, and you kind of caught me off guard here, Paul, but where it actually works, the price discipline on Amazon is almost never an Amazon problem, right? It's Amazon isn't pricing arbitrarily. It's matching something it found. So when a first-party price keeps breaking, somebody is dumping your product somewhere, and Amazon found it. So, somebody, the fix isn't a conversation with your vendor manager, it's figuring out which distributor is leaking, right? So one tactic I'd point people to is maybe lot code test buys. You buy the product from an authorised seller, and you trace batch the code back to the distributor who received that batch. And that doesn't measure the leak. It really locates it. So, distribution control is Amazon pricing. I don't know if that answers the question.
Paul Sonneveld
Yeah, I think you already started getting into the pricing things are really interesting because I've got some comments here from our audience who really want to get to the pricing topic. So I think you're definitely doing what our audience wants here. We have some really good points. I wanted to just go back to the broader thing around deciding where you range your product on the 1P side or the 3P side? Clearly, economics plays a big role. You know, but it must be other factors as well, right? Well, I'm keen to understand, what are those other considerations that you throw in there?
Stephan Putter
So, I mean, if you want, I'll compliment on that point, Paul. So basically, we try to make it as simple as possible. We're deciding what ASINs go into each platform, right? So you have your core ASIN that lives in 1P, and then you have your pack sizes, your bundles, your variants that might go into 3P because those are products Amazon won't even buy from you anyway. So what we're trying to do is, how do we define a model which prevents cannibalisation? So if we have your core low ticket product that you know has plenty of demand in the market and that can capitalise on a profitable level, even advertising at an upper funnel level, I'd put that directly into 1P. I wouldn't even experiment with that in 3P.
Now, when you have these bundles, these packs, these varieties of alternative creative products, put those into 3P. Those depend more on your lower funnel, right? Those are the ones that maybe have a lesser of a conversion rate. from the start, that need a little bit more of experimentation, that you want to generate that demand from the get-go, those go into 3P&R experience. What we try to avoid really is just really prevent having the same SKU on 1P and on 3P. You can have variants of each other. Because typically, Amazon is not going to have five different versions of the same product, maybe if there are variants of colour or of size. But if you have a product that's a variant pack, that's probably going to live better in 3P, okay? And you mentioned something about profitability, right? There are just price points that are going to be able to exist in 1P that can't exist in 3P. And that's one of the main factors as well.
Paul Sonneveld
I just want to pick up on a small point there. You mentioned, because I've heard this before, but I've never thought about it enough, I think. You don't want to have the same ASIN range across 3P and 1P. You can have variants, different variants, right? Different child of the same parent, perhaps, but not the same ASIN. Now, to some of our audience, this may sound counterintuitive, right? Because it's like, isn't 3P like the perfect backup strategy? You know, I've got my stock ready to go. And if Amazon runs out, that's sometimes the chatter that you hear, right? So, can you explain just a little bit more on why that is, maybe a bad idea?
Stephan Putter
Yeah, so we've seen in our own experiences is if you have the same competing product on 1P, like the exact identical ASIN on 1P and 3P, that's going to generate some, from a strategic commercial standpoint, it's generated some friction with the 1P team, for example, right? We've had this discourse, this message sometimes that even says, hey, you can't have a 3P account active if you have 1P, which we know isn't really true, but they're going to mention it. And if they see a top-selling product, for example, we're working right now. I'm not going to disclose too much information, but we're working with a personal hair brand in Mexico, personal care brand in Mexico. Their demand on 3P was targeted around a thousand fifteen hundred units a month.
And going into 1P, that demand was scaling up to four or five thousand units. I don't want to give Amazon 1P an incentive to look for other distributors or other suppliers to source that product especially if it's a key winner, especially if it's a core product. I want to differentiate right? If I already have a winning product with Amazon and they're already my customer in a certain sense, let's find ways to drive that value forward let's see how we can really have a synergy in funding discounts for that product, how we can get top of page vendors and how we can incentivise them to really push that product with us. And on 3P let's focus on generating leverage to bring those new products onto 1P.
But in our experience, especially when we're working with some of these multinational brands, it just creates a lot of conflict. And the moment that for one reason or the other, the buy box goes into 3P, anything that goes beyond a restock or a lack of stock issue that just creates a lot of commercial conflicts. And the first thing that Amazon does in our experience is if they're not taking care of me as a customer, I'm going to find alternatives. And so we just try to prevent that friction. If you have a large catalogue, it's much more feasible, right? If your operation depends on ten or twenty SKUs, that's when it can get a bit more staggered.
Paul Sonneveld
Makes sense. Absolutely. Anything you want to add to that, Sebastian?
Sebastian Barrios
Yeah, I'd say it really comes down to the individual product, not the brand. So it's one product, one source of supply. And there's a filter, right? But the first question in it isn't the one people expect. It's not price, it's not margin. It's whether you can forecast this product yourself. So, independently of what Amazon tells you. Because a product is only a first-party candidate when you can build your own forecast, and it actually holds up.
So we'd say never to rely only on Amazon's forecast or their JVP targets. Build your own and use theirs to cross-check. So compliment, don't just comply. If we can forecast confidently, it isn't ready for the purchase order and payments, right? And after that, it gets simpler. So we have four steps I'd like to go through. Number one, proven products with stable velocity, right? Go to the first-party. That's where the selling machine rewards consistency. Number two, new launches. And I believe Stephan already mentioned some of these new launches, seasonal variants, and anything experimental that stays in third-party. That's your lab.
Then you graduate the winners with the evidence in hand. So you walk into the vendor conversation with data instead of hope. Number three, I'd say is price point. And it usually surprises people, which way because low ticket items, eight to ten dollars are often unprofitable in third party. Once that fulfillment fees loading, but they really do work in first party because Amazon absorbs the fulfillment economics, right? Same for anything heavy or bulky. That's, I believe, one of the clearest places first party still earns its seat, right? And number four, price sensitivity. This one decides more cases than people expect because if a product is map critical, if you've got physical retail accounts with price match closet, putting it in first party hands, Amazon the pen. And that can cost you more off Amazon than you can gain off it or on it, I mean.
Paul Sonneveld
Thank you, Sebastian. I hope people quickly wrote those four things down. We'll probably get this turned into a bit of a blog after. So don't worry too much if you missed his four points. But there are four excellent points to think strategically about where things go. By the way, just a quick timeout here. A lot of people are leaving us questions and comments. Just kudos to and a shout out to John for his questions and to Sam. I will get to that towards the end, by the way. If you've got other questions, make sure you put them in the chat now. And also just shout out to Stephen. I know Stephen's jumping in there to answer a bunch of questions, which is great, too. So thanks, guys. We'll get to them very, very shortly. And feel free to ask us more.
OK, so. An obvious question that sort of popped in my head, right? Okay, so hybrid, best of both worlds, sounds great. But I know I need to do content, I need to do A+, I need to do advertising, you know, promote my brand. Like, I'm a bit overwhelmed by, do I have to do this twice now, right? Like, do I have to run two advertising accounts? Do I have to do all my content? Like, where are, are there any benefits, any, what do I call it? You know, do I have to duplicate everything, or is some of this shared, and therefore I can save time, effort, energy and maybe capitalise on my previous efforts?
Stephan Putter
Yeah, for sure.
Paul Sonneveld
How would you answer that question, Stephan?
Stephan Putter
I mean, when it comes to content and advertising, I think it's when you have one brand and one content standard, right? But you need to have two advertising strategies. And that's how the channels reinforce each other instead of cannibalising. So, I mean, in our experience, first-party products are your upper funnel workhorses. They have a higher conversion. You know, higher conversion means you can afford broader targeting. You can focus on broader category terms, awareness plays, people who've never heard of you, because that's more of that traffic which actually converts.
In a third party, you run more on your lower funnel. You focus more on retargeting, on defensive branded terms, on conversion promotions. This is where your pricing control lets you close a deal. And so I would differentiate mainly on the advertising side. But on content, I mean, you do need to have one brand store and one A-plus standard, one visual identity, because the final customer beyond Amazon as your customer in 1P, should never sense that there are two operating models behind the storefront. They actually shouldn't perceive that you have 3P and that you have 1P. But you have to know the control difference.
On 3P, brand registry locks your content, right? Your titles, your bullets, your images, they're yours alone. On 1P, Amazon's merchandising team has the final say. They can override you. So your most content-sensitive products, that would almost even be an argument for third party. If you're trying to transmit a very specific message for a certain product or a certain brand, you need to be careful to either make sure Amazon 1P doesn't modify anything or that you lay that groundwork, that framework with them to make sure they don't put their hand in there. And here's the thing. So, I mean, it's two channels that don't build trust in the same way, right? I mean, on the first party, you have sold by Amazon is the trust. You're basically borrowing Amazon's credibility.
On the third party, you're building your own. So you have to sequence them. So whilst the brand entering a new market can use borrowed trust, it needs to build its own trust when it goes into a format like repeat. So if I were to summarise my spiel or my speech, it's, your content strategy should be basically in unison, should be one for your brand. Your advertising strategies have to be completely different. And I would use my 1P advertising strategy as an upper funnel push, which you know is going to be more profitable than if you did it on 3P. And on 3P, I'd focus on the lower funnel and on conversion.
Paul Sonneveld
Love that take, that is a great take. I haven't heard someone explain the difference in evidence advertising strategies in that way, so very helpful and insightful, really, really good. Hey, I'm gonna ask you guys one more question, and then I'm gonna open up to the floor because I do want to get to our audience questions. I feel like I, you know, I've sort of agreed to do that. So, last question from me before we open up to the floor, is hybrid for everyone just because you have the option of doing 1P and 3P right? Does it always make sense to do hybrid or have you seen clear cases where you'd say you know what, you just need to be one hundred percent on 1P or one hundred percent on 3P you know hybrid is just in your specific case, I'm talking from a brand perspective here, a customer perspective. In your specific case, it does not make sense. Are there these edge cases or scenarios? And if so, what are they?
Stephan Putter
Yeah, I mean, I think that it depends on a few factors, right? And most of these factors I consider to be internal. I think hybrid is for the team that has the bandwidth to really analyse every single aspect of the operation. It doesn't mean you need to have two architects, but that you have one architect with the proper team for each channel and that maybe has a full supervision of what's going on but that can designate the roles to each part of the process.
So i mean a very clear point for 1P and it's something we've actually seen from quoted from from MerchantSpring, right? and that any of the things that you don't push back or fight on with Amazon on different deductions and stuff you're never going to see them back but you don't have a dedicated team reviewing that everything that Amazon is paying you from 1P you don't have those like live audits you don't have that constant supervision and a constant pushback, you're probably going to lose a lot of money.
So if you can't dedicate that bandwidth, it's difficult. If you don't have a broad catalogue, if you're looking at four, five, ten, or twenty SKUs, maybe hybrid isn't the model for you. I would stick to maybe a 3P, push it down there, get some validation, get some market exposure in which you can amplify that catalogue and try more of a hybrid model. And it also comes down to what's your advertising budget? If you have a very focalized advertising budget and you can't really designate one to each platform, that means you're going to underperform in both.
So if you can't really have a full strategy to attend when it comes to investment, to catalogue, to content, and to auditing each platform individually, you're probably not going to reach your potential on any of them. So that's mainly how I would look for who it is or for who it isn't, right? And it also depends a lot on your, I'm sorry that I keep going, but there's a lot of things coming in, right? And when it comes to cash flow, there's a very different process on getting paid thirty, sixty, ninety days net to getting paid on a fourteen, fifteen day basis.
There's a very big difference on sacrificing retail margins for wholesale margins if you can't really scale that process because you don't have the right inventory structure. So I think it really goes around through your operational capabilities, your catalogue size, your budget size, your team bandwidth, and making sure that the architect behind your Amazon project has full knowledge of both processes, but that has the team that reports to him that can really attend both platforms on their own. I'm not sure that's answering your question, Paul.
Paul Sonneveld
I think it's super useful because a lot of it is driven around internal constraints and where you are as a business, and to what extent have you got the capacity, the financial considerations around cash flow are super important as well. If you need a quick turn in terms of your cash cycle, then 1P probably isn't the answer for you. Cool all right. Let's, we're at the half an hour mark, so we're almost out of time. So I'm gonna throw some questions at you guys; these are usually the better questions.
So I'm gonna start with a question from John here. He asked this question. Oh actually, no, I'm going to start with Sam. Sam was first. Thank you, Sam, by the way. I know your question has been up there for a little while. I'll read it out as well because it's a long question. So Sam's saying, I've had several seller accounts gated from adding specific branded items that are also in the Vendor Central catalogue, usually about three to six months after selling that brand's vendor SKUs on the 3P account. How can we prevent this? And if they are restricted, how do we get that restriction removed?
Stephan Putter
Okay. So what we've seen is that there's this kind of unofficial rule. And sometimes Amazon, when they see that you have the potential to take away sales from their 1P, they're going to block some of those 3P initiatives. I mean, the grey hat tactic or the green light tactic that we've seen a bit in Mexico is how do you differentiate your vendor from your seller account? How do you make sure that you have different business information for each of them? How can you kind of cut that vinculation between both platforms and make them seem as independent businesses? That can also include from creating your accounts from different IP addresses. But the thing is, once that Amazon flags that you're the same person, the same company, that's when a lot of the restrictions comes in.
So the quickest win we've found for that, and we've actually just implemented it with a couple of accounts in Mexico because they're booming on Amazon 3P, right? And then they want to start on Amazon 1P or vice versa, is try and differentiate your business visibility from 1P and 3P and make sure that you don't give the 1P team a reason to flag you. There's a lot of jealousy here, right? There's a lot of conflict. There's a lot of friction. Once they see a threat to their 1P business, to their profit margin. And once that vendor account manager was assigned to that account sees that you can affect his internal KPIs, he might find internal blockers to push on you. So try and differentiate your business registration between 1P and 3P that's been the quickest fix so far we've been able to push.
Paul Sonneveld
Sorry, muted. That's the live show issue, the microphone muting. That's a great answer, actually. Some real kind of good tactics there. So obviously, I wouldn't be able to officially endorse any of those, but interesting for consideration.
Sebastian Barrios
I just want to go back to Sam's question. To get an existing restriction lifted, go through brand registry with brand authorisation letter for your own selling entity. Sometimes it clears up, and it doesn't because the block is in an error. It's really Amazon protecting its own retail offer. So which is why I'd spend the effort on the catalogue architecture instead of the appeal.
Paul Sonneveld
Thanks for that additional clarification there, Sebastian, that's great. Now, I want to go back to I want to go back to some other thread. I'm just reading through the comments here. And there's a bit of a thread around the ASIN selling both on the vendor and the seller. Specifically, John has been asking a few questions here. So his initial question was, I'm not going to get you to answer this one because I think we have. Or where is it? Yeah, I think that's it. But I'm gonna ask a follow-up question. This one here, and thanks for all your questions, John that's really, really great because you know these are the questions all of you guys are wrestling with right on a day-to-day basis.
So John's saying, guys, you're saying it's not good to sell a specific ASIN for both 1P and 3P. It's the question I was asking you, Stephan, and prioritise only asin that already has the you know evidence of sales velocity and sell only in 1P etc. But if you want those asins only in 1P How do you handle Amazon stop to stop ordering those ASINs? Like for example, around profitability? I think it's probably the other way around here. So if you only want your products in 3P for profitability reasons, right? Maybe Amazon makes great net PPM, but your margin is terrible on 1P. How do you prevent them from actually ordering that product? I'm going to assume, John, that that was your question here. If not, feel free to drop another comment, and I'll get the right question out.
Stephan Putter
Okay. So just to really understand the question, it is on why is it better just focus that one ASIN on 1P and not have it active on 3P as well? That's the main question.
Paul Sonneveld
No, I think we've answered that. I think it's more around how do you stop Amazon from ordering products if you really want the product to be on 3P? How do you prevent them from ordering the products on the 1P side and make terrible margin?
Stephan Putter
I mean, if you wanted to go into that kind of crap scenario, right, where the profitability is non-existent, I think there's a lot of ways to do so. I mean, obviously, maneuvering on the cost of the products and the price listing that can automatically make the algorithm shut down in that sense. If you push on 3P products at a much lower price point to earn the buy box eventually, then Amazon is going to stop getting those purchase orders in 1P specifically, because it won't be profitable for them either. That's going to trigger that crap as to specific non-profitable products. We stop ordering it. Those are kind of some of the grain line tactics as in how do you incentivise 1P to stop ordering a product you don't want them to order?
Now, the issue is you can do a lot of manual technical implementations, like shutting down the product in your Amazon vendor, mentioning that you don't have the inventory available. But sometimes Amazon even overwrites that, right? So, what we've seen in very specific scenarios that could work is push that product on 3P, sacrifice a bit of margin on it, drop the price, make sure you win the buy box to a point that Amazon has to lower that market price and that their algorithm will slow down the purchase order rate because it isn't profitable on the sellout front.
You have to be careful because if you mobilise too much of that on 3P and it's not profitable, you can lose a lot of money. But these are some of the topics that I would love to deep dive on one-on-ones because these are things that also vary through different categories, through different category restrictions, through different packs. If you have a one-pack product that Amazon is selling and you can sell that three-pack on 3P or that two-pack and 3P and generate more volume and more conversion, that's also going to slow down the rate of sales on the sellout and maybe incentivise Amazon to bring down the purchase orders. So those are a couple of high-level ideas to give you the best answer. I would probably need to go into your account and kind of deep dive on all the data.
Paul Sonneveld
Yeah, thank you for that, Stephan. Can I just say, unfortunately, we're out of time here. But I think our audience, I'm just literally, I'm struggling to keep up with the comments here, guys. So thank you so much, both across LinkedIn and YouTube. I just want to shout out to Sam, Steven, and John. We've got Monica. We've got actually a couple of usernames from YouTube as well. And Jesus as well. So thank you guys for giving all of your questions. We haven't got to all of them.
I'm going to politely ask Stephan and Sebastian, maybe just to go through the comments on LinkedIn and write some responses as well for what we haven't done yet. But you know also as Stephan said and i'm sure sebastian would agree um if anyone's interested in exploring this further because the devils and the details sometimes the answers are very kind of category specific or vendor specific i really encourage you to to get in touch with these guys which you know might as well ask you now like what is the best way of getting hold of you guys and maybe scheduling a follow-up conversation if there's value there.
Stephan Putter
So I think if you just contact us at our emails, and I think they've popped up here on the podcast at some point, we'll be happy to write down our contact details on the link directly. And you can also reach us out through LinkedIn. We're very accessible in that sense. If it has to be a call or a meet, we're just happy to join and help. And we focus this on day-to-day to make sure you have the best strategy, be it 1P or 3P.
Paul Sonneveld
Awesome, yeah, I'm just putting up, Sebastian's email as well here. All right, so yeah, just email these guys. As you can see, they're a wealth of knowledge. So make sure you hit them up and get all that knowledge out of them. I mean, I'm sure it'll be a super useful conversation. So yeah, awesome. All right, we need to wrap up, unfortunately, at the end of this, but it's been a fantastic episode, super interactive. I've learned I've covered this topic a few times, but I've learned a whole range of new things today.
So I want to thank you, Sebastian, Stephan, thank you first of all for just being generous with your knowledge sharing the hacks sharing your perspectives. I really appreciate that, and it's it's great for our you know vendor community as well. So thank you so much and you know I look forward to bringing you on as guests on one of my another upcoming episode because we've got so much other stuff to talk about but for now, we have to say goodbye thank you so much.
Sebastian Barrios and Stephan Putter
Thank you, Paul.
Sebastian Barrios
Thank you for having us.
Paul Sonneveld
Thank you. All right, everyone, we're at that time where you know we're at the end, and we're about nine minutes over time, so uh we do have to wrap up. Thank you so much for watching live. If you enjoyed this episode, keep an eye out for the recording; it will go out to everyone who's registered for this episode. In the next twenty-four hours or so, feel free to forward it on to your colleagues or anyone else in your network who could really benefit from this content. And of course, if you're looking for other content, you feel free to go to merchantspring.io, our resources section, where we've got an extensive library of vendor-focused episodes, like this, covering a whole range of topics, so go and check that out. That is at merchantspring.io for now. Goodbye until next time, take care.