With the ever evolving industry of business and eCommerce, relationship between suppliers and the clients they serve is important. There are various types of suppliers, but two models have emerged as the cornerstones of supply chain dynamics: the 1P (first party) supplier and the 3P (third party) supplier. Understanding the differences between these two supplier types is essential for businesses looking to optimize their supply chain strategy; and the way they sell to their business partners. In this article, we’ll talk about the difference between a 1P vs 3P supplier, advantages, and the key differences between them.
TL;DR (too long, didn’t read)
- 1P Supplier relationship: eCommerce platform acts as reseller, while vendors acts as distributors/wholesalers
- 3P Supplier relationship: you are the reseller, and you use the eCommerce marketplace to directly sell to customers.
- In a 1P supplier model, the eCommerce platform buys your products and sells them to a wide range of customers.
What is 1P Supplier in eCommerce
A 1P supplier relationship means the eCommerce business acts as a reseller, and the vendor acts as the distributor/wholesaler supplier in the marketplace.
Technically, the online store takes on the role of selling the products online, while the supplier’s main role is to provide those products. This way, the eCommerce marketplace can choose what it sells, set the prices, and create the overall shopping experience for customers.
The supplier, on the other hand, is responsible for making sure the online store has enough products to sell. They may also help with things like storing and delivering the products to customers.
This setup is like a partnership where both the online store and the supplier have important roles. The online store uses its website to reach customers, while the supplier makes sure there are enough products available.
In the end, this arrangement lets customers shop conveniently and find various products in one place. It also helps the online store build its brand and earn the trust of its customers.
Advantages of being a 1P Supplier Model
Now that we’ve uncovered the roles of being a 1P supplier in an eCommerce marketplace, we’ll talk about the advantages.
Cost Efficiency
When an eCommerce platform takes on the role of a 1P supplier, it takes on a pivotal position in the product supply chain. One of the advantages of this role is the ability to exert direct control over the products it offers to customers. This control extends from the initial selection of products to their pricing, presentation, and overall quality.
This ensures a high level of quality and consistency, which can be crucial in maintaining a positive brand image and customer trust; especially with B2B customers and clients.
A Solid Sales Channel
One of the standout advantages of becoming a 1P supplier for an eCommerce platform is the establishment of a dependable and steady sales channel. This channel becomes a reliable stream of revenue for the vendor.
In a volatile business landscape, where uncertainty and seasons often play a significant role in the volatility, having a predictable sales channel offers a sense of stability for 1P Suppliers. Vendors can anticipate and plan for sales forecasts, which can be especially valuable in managing finances, production, and inventory.
Reduced Marketing & Acquisition Costs
Building a customer base from scratch can be an expensive and time-consuming endeavor, involving marketing campaigns, advertising, and outreach efforts. However, as a 1P supplier, you inherit the platform’s established audience, which has the potential to translate into substantial savings on customer acquisition costs.
As a 1P supplier partnering with an e-commerce platform, one of the substantial advantages lies in the cost savings associated with marketing and customer acquisition. By leveraging the e-commerce platform’s existing customer base, you can significantly trim the expenses typically incurred on marketing efforts.
Brand Exposure
Partnering with an established eCommerce platform (like Shoppable Business) offers more than just a sales channel; it presents a remarkable opportunity for brand exposure and grounds for boosting reputation. The brand exposure derived from such a partnership goes beyond mere visibility. It carries a significant boost to your brand’s credibility.
Enhanced E-Inventory Management
One of the significant advantages of the 1P supplier model in e-commerce is the ability to implement advanced e-inventory management. With real-time visibility into inventory levels, 1P suppliers can make data-driven decisions, ensuring that products are readily available to customers. This proactive approach allows for efficient order fulfillment, demand forecasting, and optimized inventory control. As a result, 1P suppliers can maintain product consistency, minimize carrying costs, and provide a seamless customer experience.
What is 3P Supplier in eCommerce
With a 3P supplier model, you are the seller and you sell products directly to customers via the eCommerce marketplace.
When you operate as a 3P supplier, you become the seller, responsible for listing, marketing, and selling your own products directly to customers through an eCommerce marketplace.
In this model, the eCommerce platform serves as a virtual marketplace where multiple 3P suppliers, vendors, sellers like you can offer a wide range of products.
Unlike the 1P model, where the marketplace owns and manages the products, in the 3P supplier model, you retain ownership and control over your product listings.
As a 3P supplier, you have the freedom to set your product prices, create your product descriptions, and manage your inventory. This flexibility enables you to develop your brand identity and tailor your marketing strategies to align with your unique business goals.
Advantages of a 3P Supplier Model
Scalable Environment
B2B e-commerce platforms offer an incredibly scalable environment for 3P suppliers. This scalability empowers you to adapt swiftly to market dynamics and customer preferences. As a 3P supplier, you have the flexibility to adjust your product offerings in response to changing market demands. If you identify a surge in demand for specific products or services, you can readily expand your product lines to meet this demand.
Cheaper Overhead Costs
E-commerce platforms take on vital operational tasks such as inventory management, order fulfillment, and even customer service. By outsourcing these responsibilities, you can trim the associated overhead expenses.
This cost reduction allows you to focus on other core business activities. It frees up financial resources that can be utilized into development, marketing efforts, or improving the quality of your products and services.
Social Trust
Participating as a 3P supplier in a reputable B2B eCommerce platform (like Shoppable Business) can significantly boost your brand’s credibility and trustworthiness. In a B2B landscape, especially with eCommerce, businesses are more inclined to do business with 3P suppliers on these platforms, as they trust the platform’s vetting process and the quality of products offered.
Your brand and products listed on a trusted platform acts as valuable marketing, which can lead to increased customer trust and confidence in your offerings.
Compliance
The importance of compliance especially in the B2B landscape is paramount. In a B2B eCommerce platform – like Shoppable Business, suppliers undergo vetting and verification processes to ensure services and products are 100% authentic avoiding scam and fraud. On the other hand, B2B eCommerce provides official, BIR guaranteed sales invoice and receipts to make compliance easy for B2B customers.
Reach into the B2B Market
3P suppliers are presented with a distinct advantage: the ability to offer a wide variety of products. This diversity is strategic for 3P suppliers seeking to thrive in the B2B space.
B2B 3P suppliers can appeal to a broader spectrum of business customers. Each business customer may have unique needs, preferences, and industry-specific requirements. The ability to provide a comprehensive range of products allows 3P suppliers to tailor their offerings to cater to the distinct demands of different customer segments within the marketplace. Whether it’s office supplies, industrial machinery, software solutions, or specialized equipment, a diverse product range enables B2B 3P suppliers to address the multifaceted needs of various businesses.
Become a 1P Supplier or 3P Supplier in Shoppable Business
Shoppable Business is a B2B eCommerce marketplace in the Philippines that enables brands and businesses to sell their products online. Whether you’re a 1P supplier looking to act as a distributor to customers, or a 3P supplier looking to expand their reach to millions of potential customers; you can join and partner up with Shoppable Business as a verified, vetted supplier to B2B customers.
Why Sell to Shoppable Business as a 1P or 3P Vendor?
Shoppable Business enables resellers to sell more online and offline through our technology and customer base. This allows 1P and 3P suppliers like you to reach new business customers through our platforms and grow your business.
Shoppable Business is the fastest growing B2B online channel in the Philippines. You can start selling for free! Enjoy ZERO commission fees for your first P500,000 sales (limited time offer only).
Why Become a Seller in Shoppable Business
- Access to a large customer base – giving businesses the opportunity to expand their reach and increase sales
- Increased visibility and brand awareness – a platform for businesses to showcase their products/services and potentially attract new customers
- Pay by Invoice – 30-60 Days Payment Terms
- Shoppable Financing – Get up to P20M (1-12 months payment terms)
Why Become a Buyer in Shoppable Business
- The Ultimate Platform for Procuring Branded Products in Bulk w/NO MOQ at Wholesale & Factory Direct Prices
- 35+ product categories
- Save company time and money – Customized orders, RFQ for specific quantities, bundles, configuration, Track their orders, view purchase history
- Compare Quotes easily
- Guaranteed BIR Certified Sales Invoices/Receipts
- Pay by Invoice – 30-60 Days Payment Terms
- Shoppable Financing – Get up to P20M (1-12 months payment terms)
Conclusion
With B2B transactions becoming more great and dynamic in eCommerce, becoming a 1P or 3P Supplier in a trusted B2B eCommerce marketplace has a set of advantages your business can utilize to expand your reach and grow your business exponentially.
From doing business with business customers, to digitizing your product catalog, and streamlining your store online, it equips you with technology to scale your business further.
What are you waiting for? Become a 1P supplier or 3P supplier and start selling by creating an account on Shoppable Business today!
