Discover what are third-party sellers, how 1P vs 3P differs, duties, and how to spot them on Amazon and other marketplaces. Read our clear 2026 guide.
When you’re shopping on a huge online marketplace like Amazon or Walmart, you’ve likely seen the small text near the “Add to Cart” button that says “Sold by” someone other than the marketplace itself. If so, you’ve encountered a third party seller. So, what are third-party sellers? A third party seller is an independent business or individual who sells products on an online marketplace platform they do not own. They are a massive part of modern e-commerce, and understanding what third party sellers are is key for both savvy shoppers and aspiring online entrepreneurs, especially if you’re exploring MVP development services to test a marketplace idea.
These independent sellers are so vital that they now account for over 60% of sales on Amazon’s store, with most of them being small to medium sized businesses. In short, they’ve completely reshaped how we buy and sell things online.
What Are Third Party Sellers, Exactly?
A third party seller is an independent business or individual who sells products on an online marketplace platform (like Amazon, eBay, or Walmart) instead of through their own website. The marketplace acts as a middleman. The seller owns the inventory and sets their own prices, while the platform provides the digital storefront, customer traffic, and payment processing in exchange for fees.
Essentially, when you buy an item “sold by” an external vendor name, you’re buying directly from that seller, not the marketplace company. This business model is incredibly popular. There are about 9.7 million third party sellers on Amazon worldwide, with an estimated 550 new sellers joining every single day.
The term “independent seller” is just another way of explaining what are third party sellers. It emphasizes that the merchant is a separate entity that simply has a contractual relationship with the online platform to use its services. They aren’t employees or a part of the marketplace company. This structure has unlocked huge opportunities for startups and brands. Founders are increasingly leveraging agentic AI to build MVPs faster and validate marketplace ideas with less risk.
This model is so effective that many entrepreneurs now aim to build their own niche platforms. For inspiration, see our Taraki case study, a jobs marketplace that scaled to significant traction. At Bricks Tech, we help founders build custom marketplace platforms that connect independent sellers with buyers, often launching a fully functional app in just a few weeks.
First Party vs. Third Party Sellers: What’s the Difference?
While they both operate on the same website, the way first party (1P) and third party (3P) sellers function is fundamentally different. Understanding this helps clarify what third party sellers are and what role they play.
Inventory Ownership
First Party (1P): The marketplace platform buys products wholesale from manufacturers and owns the inventory itself before selling it to you.
Third Party (3P): The seller retains ownership of their inventory until a customer buys it. The marketplace never owns the stock.
Pricing Control
First Party (1P): The marketplace controls the retail price. The brand that supplied the product gets a wholesale rate.
Third Party (3P): The independent seller sets their own product prices. They have the freedom to adjust pricing to compete or maximize their profits.
The Transaction Flow
First Party (1P): The relationship is Brand → Marketplace → Consumer. You are buying directly from the retailer (e.g., Amazon).
Third Party (3P): The relationship is Seller → Consumer, with the marketplace facilitating the sale. Your contract is technically with the outside seller.
Profit Margins
First Party (1P): Brands earn lower, wholesale margins per unit. The marketplace earns the higher retail margin.
Third Party (3P): Sellers receive the full retail price (minus platform fees), which can lead to higher margins per sale compared to selling wholesale.
This third party model has grown so explosively that these sellers have generated more than $2.5 trillion in sales on Amazon since the marketplace first opened to them in 2000. Many modern platforms thrive by supporting both models. If you’re thinking about starting an online business, our team can build a hybrid e‑commerce platform that gives you the flexibility to sell your own products while also hosting independent sellers.
What Are Third Party Sellers Responsible For?
Being an independent seller means running a small business on a larger platform. Fully understanding what third party sellers are includes knowing their responsibilities. Here are the key duties a third party seller manages.
Pricing and Product Listings: Sellers are in complete control of setting their own prices and creating the product listings, including titles, descriptions, and photos.
Inventory Management: They must source and manage their own inventory, ensuring they have enough stock to meet demand without paying excessive storage fees. Poor inventory management can lead to canceled orders and penalties. Many sellers streamline this with API integrations that sync inventory, shipping, and payments across systems.
Order Fulfillment and Shipping: When an order comes in, the seller is responsible for getting it to the customer. They can either handle packing and shipping themselves or use a fulfillment service offered by the marketplace, like Fulfillment by Amazon (FBA). Either way, they must meet strict shipping deadlines.
Customer Service and Returns: The third party seller is the first point of contact for customer questions, complaints, and returns. They are expected to resolve issues quickly to maintain a good seller rating, as marketplaces often have buyer protection programs that can penalize sellers who provide poor service.
Following Marketplace Rules: Every platform has a long list of policies covering everything from product quality to communication standards. Sellers must follow these rules and maintain good performance metrics to avoid having their accounts suspended. They are also responsible for paying various fees, like referral fees on each sale, which typically range from 8% to 20% depending on the category.
Who Can Become a Third Party Seller?
One of the best things about the third party seller model is how accessible it is. Generally, any individual or business can become a third party seller as long as they meet the platform’s requirements. You don’t need to be a big corporation. This accessibility is a core part of what third party sellers are in the modern economy. The participants range from solo entrepreneurs and small family businesses to major brands that want more control over their online presence.
To sign up, you typically need to provide:
Personal or business identification
A bank account to receive payments
Tax information
The low barrier to entry has fueled a boom in entrepreneurship. In the United States alone, independent sellers on Amazon have created over 2 million jobs. However, to protect consumers, new regulations like the INFORM Consumers Act in the US and similar rules in the EU now require marketplaces to verify the identity of high volume sellers and display their business information.
How to Spot a Third Party Seller on a Product Page
As a shopper, it’s helpful to know who you’re actually buying from. Here are a few simple ways to identify a third party seller and understand what third party sellers are from a product listing.
Check the “Sold by” Information: This is the most direct clue. On the product page, look for text that says “Sold by” and “Ships from.” If the name listed under “Sold by” is anything other than the marketplace itself (like “Sold by Amazon.com”), you are looking at a product from a third party seller.
Look for the Seller’s Profile: The seller’s name is usually a clickable link. Clicking it will take you to their storefront or profile page, where you can see their business information, ratings, and other products they offer.
Note the Difference Between Seller and Fulfiller: Don’t get confused by labels like “Fulfilled by Amazon.” This only means Amazon is handling the shipping from one of its warehouses. The actual seller is still the independent business listed in the “Sold by” field. For example, you might see “Sold by Jane’s Boutique, Fulfilled by Amazon.” Jane’s Boutique is the third party seller.
See “Other Sellers” or Multiple Offers: If a product page shows a box with “New & Used from” or “Other sellers on Amazon,” it means multiple third party sellers are offering that item, often at competing prices.
Knowing how to identify the seller helps you make more informed decisions, check seller reviews, and understand who to contact if an issue arises.
The world of e-commerce is increasingly powered by these independent businesses. Whether you are a consumer or a founder planning your next venture, understanding what third party sellers are is more important than ever. If you’re inspired to build the next great marketplace, get in touch with Bricks Tech for a free consultation to see how we can bring your idea to life. Prefer to learn first? Enroll in our free product course to get a 7‑day, founder‑friendly crash course on planning your MVP.
Frequently Asked Questions About Third Party Sellers
What are third-party sellers?
A third party seller is any independent person or company that sells products through an online marketplace they do not own, such as Amazon, eBay, or Walmart.
Is it safe to buy from third party sellers?
Yes, it is generally safe. Marketplaces have policies, buyer protection programs like Amazon’s A to z Guarantee, and seller rating systems in place to ensure a reliable shopping experience. However, it’s always a good idea to check a seller’s ratings and reviews before making a purchase.
Why do marketplaces allow third party sellers?
Allowing third party sellers massively expands the variety and quantity of products available, far beyond what the marketplace could stock on its own. This wider selection attracts more customers, and the platform earns fees from every sale made by a third party seller. Walmart’s online marketplace, for instance, features over 500 million product listings, largely thanks to its independent sellers.
What are the main advantages of being a third party seller?
The primary advantages are instant access to a massive existing customer base, leveraging the marketplace’s powerful technology and logistics infrastructure, and the potential for higher profit margins compared to selling wholesale.
Can I return an item I bought from a third party seller?
Yes. Most marketplaces require their third party sellers to offer returns that are at least as favorable as the marketplace’s own return policy. If you have an issue, you typically contact the seller first, and if it’s not resolved, you can file a claim with the marketplace.
What are some examples of third party marketplaces?
The most well known examples include Amazon Marketplace, eBay, Walmart Marketplace, Etsy (for handmade and vintage goods), and Newegg (for electronics).