How the 2P Model Works — Amazon Seller of Record Explained

2P Retail Operator vs Amazon Agency: Which Model Is Right?

You Sell to Us.
We Sell for You.

Two fundamentally different ways to outsource your eCommerce. One buys your product. The other sends you an invoice. Here's why that distinction matters more than you think.

Neato buys your inventory, becomes the seller of record, and operates every eCommerce channel from a single infrastructure. You ship us product.

We handle everything else.

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What Is a 2P Retail Operator?

A 2P (second-party) retail operator purchases your inventory at wholesale, lists it under their own seller account, and becomes the seller of record on Amazon and other marketplaces. They handle everything: catalog management, advertising, pricing, fulfillment coordination, and customer service.

The key distinction: they take on inventory risk. If your product doesn't sell, they eat the cost — not you. This creates a natural alignment that's hard to replicate with fee-based models. For a deeper dive, see our complete guide to the 2P model.

What Is an Amazon Agency?

An Amazon agency manages your seller or vendor account on your behalf. You remain the seller of record (or stay on Vendor Central as 1P). The agency handles advertising, content, catalog management, and strategy — but you own the inventory, the account, and the risk.

Agencies typically charge a monthly retainer plus a percentage of ad spend or revenue. Some specialize in specific categories (like Front Row Group in beauty/wellness), while others are generalists.

The agency model works well for brands that want to maintain control and have the internal resources to manage inventory, fulfillment, and account health.

The Alignment Problem

One Inventory Pool. Nationwide.
Every Channel.

This is the crux of the decision. When an agency charges a monthly fee plus a percentage of your ad spend, their incentive is to manage your account — not necessarily to maximize your profitability. Increasing ad spend increases their revenue, even if the marginal ROAS doesn't justify it.

A 2P operator, by contrast, only makes money when your product actually sells at a healthy margin. They're financially motivated to optimize pricing, minimize waste, and drive real sell-through. If a product isn't working, they feel it directly.

"The question isn't who's better at Amazon. It's whose success depends on your success."

This doesn't mean agencies are bad — it means the incentive structure is different, and brands should understand that difference before signing.

Dimension

2P Retail Operator

Amazon Agency

Who owns inventory?

2P Partner

Your brand

Who is seller of record?

2P Partner

Your brand

Revenue model

Margin on product sold

Monthly retainer + % of spend

Inventory risk

Partner takes the risk

Brand takes the risk

Incentive alignment

High — profit tied to sell-through

Moderate — paid regardless of sales

Operational burden on brand

Low — hand off and focus on product

Moderate

(wholesale pricing)

Low — hand off and focus on product

Medium-High — you still manage logistics

Lowest

(Amazon takes most)

Medium-High — you still manage logistics

Account ownership

Partner's account

Your account

Brand control

Shared (contractual guardrails)

High — you approve everything

High

— you approve everything

Typical cost structure

Wholesale price negotiation

$5K–$30K/mo + % of ad spend

Switching costs

Moderate — transition period needed

Low — you keep your account

Low

— you keep your account

When an Agency Makes Sense

One Inventory Pool. Nationwide.
Every Channel.

You want maximum control

stop managing Amazon and focus on product and brand

You have internal resources

1–2 day delivery

the 2P partner buys inventory, freeing up your cash

Your margins are thin

and need a seamless transition.

You're testing Amazon

a partner that handles Amazon, TikTok Shop, and D2C together

You're in a niche category

with established products and reliable supply chain

When 2P Makes Sense

One Inventory Pool. Nationwide.
Every Channel.

You want to offload operations

You need capital efficiency

You want aligned incentives

You're leaving Vendor Central (1P)

You want multi-channel

You're a CPG brand

For a detailed comparison, see 2P Retail Operator vs Amazon Agency.

The Bottom Line

No Rev-Share.
No Management Fees.
No Surprises.

The math is simple: brands working with Neato's 2P model see +198% average growth, a 96.3% Buy Box rate, and zero brand declines.

If you're evaluating specific partners, check our comparison of the top Amazon accelerators, see how Neato compares to Pattern, or dive into the definitive guide to the 2P model. Leaving Vendor Central? Our 1P to 2P transition guide covers the process step by step.

Neither model is universally better. But for CPG brands doing $5M+ that want to scale without adding headcount or operational complexity, the 2P model offers a level of alignment and simplicity that agencies structurally can't match.

The math is simple: brands working with Neato's 2P model see +198% average growth, a 96.3% Buy Box rate, and zero brand declines.

If you're evaluating specific partners, check our comparison of the top Amazon accelerators, see how Neato compares to Pattern, or dive into the definitive guide to the 2P model. Leaving Vendor Central? Our 1P to 2P transition guide covers the process step by step.

Talk to Neato

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Talk to Neato

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Case studies

Based on Neato's portfolio of 1P-to-2P transitions:

Wiley Wallaby

+168%

Year-over-Year (YoY)

Earth Animal

+204%

Year-over-Year (YoY)

Dot's Pretzels

+121%

Avg Brand Growth

illy Coffee

+137%

Chargebacks

This show what happens when your partner's profit depends on your sell-through.

FAQs

What is the difference between an Amazon agency and a 2P accelerator?

Is a 2P partner or an Amazon agency better for CPG brands?

For CPG brands doing $5M+ in revenue, a 2P partner typically delivers better outcomes because the economics of consumable goods reward operational efficiency and volume. You eliminate the agency fee overhead, offload inventory risk, and get a partner who loses money if your product doesn't sell. That said, agencies can be the right choice for brands that need to maintain full account control or are testing Amazon at a small scale.