One agency managing advertising. Another handling content. A freight broker coordinating FBA inbound shipments. An internal coordinator whose entire job was keeping the three vendors aligned. That was the Amazon stack a director of eCommerce at a specialty food brand described to me last quarter. Her Amazon business was growing at 11% year-over-year. Her management overhead was growing at 40%.
She wasn't doing anything wrong. She was operating the way most brands operate on Amazon — hiring specialists for each function and stitching them together. Her question wasn't "Is my agency bad?" It was "Is there a fundamentally different way to structure this?"
That's the right question. And the answer requires understanding two very different operating models: the Amazon agency model and the 2P eCommerce model.
Defining the Models
An Amazon agency is a service provider. You hire them to manage specific functions — advertising, listing optimization, storefront design. You remain the seller of record. You own the inventory. You own the account. The agency advises and executes within boundaries you set, and you pay a management fee (typically a flat retainer plus a percentage of ad spend or revenue).
A 2P partner like Neato operates differently at the structural level. The 2P partner purchases your inventory at wholesale — takes physical and financial ownership. The 2P partner becomes the seller of record on Amazon. They manage the entire operation: listings, advertising, fulfillment, pricing, brand protection. You ship product to Neato. Neato handles everything else.
The structural difference isn't subtle. It changes who bears risk, who makes decisions, and where accountability lives.
The Decision Framework
Dimension 1: Risk Allocation
Factor | Agency Model | 2P Model |
|---|---|---|
Inventory risk | Brand bears 100% | 2P partner bears it |
Advertising spend risk | Brand funds it, agency manages it | 2P partner funds and manages it |
Pricing risk | Brand sets price, agency may advise | 2P partner owns pricing decisions |
Stockout/overstock risk | Brand manages inventory planning | 2P partner manages inventory planning |
Account suspension risk | Brand's account, brand's problem | 2P partner's account, 2P partner's problem |
This is the most consequential difference. In an agency model, every dollar of risk sits on your balance sheet. The agency's downside is limited to losing your account. In a 2P model, the partner has purchased your inventory — they're financially motivated to sell it profitably.
One of our partners in the licorice confectionery space carried $800K in Amazon-specific inventory risk before switching to Neato's 2P model. Seasonal demand swings, storage fee exposure, liquidation losses on slow movers — all on their books. Under the 2P structure, that risk transferred entirely.
Dimension 2: Operational Complexity
Choose an agency if: You have or want to build internal Amazon expertise. You have a dedicated eCommerce team that can manage the agency relationship, interpret reports, make strategic decisions, and hold vendors accountable. You see Amazon as a core competency worth owning.
Choose a 2P partner if: Amazon is important to your business but isn't your core competency. You'd rather allocate your team's attention to product development, retail partnerships, or brand building. You want Amazon handled, not managed.
The operational burden in an agency model is chronically underestimated. At Neato, when we onboard brands transitioning from agencies, we consistently find internal teams spending 15–25 hours per week managing the agency relationship — reviewing reports, approving campaigns, troubleshooting listing issues, coordinating inventory. That's a half-time employee dedicated to managing a vendor who was hired to reduce your workload.
Dimension 3: Control vs. Outcomes
Agencies offer maximum control. You approve every campaign. You set every price. You decide every A+ Content layout.
2P partners optimize for outcomes. You set brand guidelines and strategic guardrails. The 2P partner makes the thousands of daily operational decisions — bid adjustments, pricing responses, inventory allocation — that determine performance. You get reporting and transparency, but you're not in the weeds.
Neither is inherently superior. But the desire for control often masquerades as a desire for good outcomes. If you're approving every ad campaign because you don't trust your agency to make good decisions autonomously, the problem isn't that you need more control — it's that you need a partner you trust enough to delegate to.
Dimension 4: Economics
Cost Component | Agency Model | 2P Model |
|---|---|---|
Management fee | $5K–$15K/mo | Embedded in wholesale margin |
Advertising spend | Brand-funded | 2P partner-funded |
FBA/referral fees | Brand pays | 2P partner pays |
Internal team costs | Required | Minimal |
Inventory carrying cost | Brand bears | 2P partner bears |
Total cost visibility | Multiple line items | Single wholesale transaction |
The comparison isn't apples-to-apples, which is exactly the point. You're comparing two different business model structures, not two different fee schedules.
Dimension 5: Brand Protection
In the agency model, your agency might monitor for unauthorized sellers and send cease-and-desist letters. But enforcement is ultimately your responsibility. The agency flags; you fix.
In a 2P model, the partner is the seller of record and has direct standing to file IP complaints, report listing violations, and manage Buy Box competition. Because the 2P partner's revenue depends on owning the Buy Box, they're intrinsically motivated to police the channel aggressively.
A premium coffee brand we work with at Neato had 17 unauthorized sellers on their top ASINs when they came to us. Their previous agency had flagged the issue quarterly in reports. Within 90 days of transitioning to our 2P model, we had it down to two — both authorized retailers selling through legitimate channels.
When an Agency Is the Right Choice
You have strong internal eCommerce talent and want a specialist to augment, not replace, your capabilities.
You want to own the Amazon account and data directly. In a 2P model, the seller account belongs to the partner. Some brands have strategic reasons to own their account.
Your product category has unique dynamics requiring deep specialization (e.g., regulated categories like supplements or medical devices).
You're building toward bringing Amazon fully in-house and the agency is a transitional step.
When a 2P Partner Is the Right Choice
Amazon is a significant revenue channel ($10M+) but not your core business focus.
You're experiencing or anticipating 1P termination and need a turnkey transition.
You're frustrated by the management overhead of coordinating multiple Amazon vendors.
You want someone with financial skin in the game — a partner whose profitability is directly tied to your sell-through.
Brand protection is a critical concern and you need a partner with both the incentive and standing to enforce it.
Your leadership team's attention is better allocated elsewhere. Every hour your VP of Sales spends managing Amazon is an hour not spent on retail expansion or product development.
The Hybrid Question
Some brands ask: "Can I use an agency for some things and a 2P partner for others?" In theory, yes. In practice, this creates the same coordination overhead the 2P model is designed to eliminate. If your 2P partner manages your Amazon business, layering on a separate agency for a subset of functions creates conflicting incentives and duplicated effort.
The cleaner question: do you want to own and manage your Amazon operation (with agency support), or do you want it handled (with a 2P partner)?
How to Evaluate Either Option
Step 1: Request client references in your category. Not testimonials — actual references you can call. Ask about the first 90 days, communication quality, and what went wrong.
Step 2: Understand the economics in detail. For agencies, get a full fee breakdown including performance bonuses, ad spend minimums, and contract terms. For 2P partners, understand the wholesale pricing structure. (Talk to our team →)
Step 3: Assess the transition plan. How they plan the first 30/60/90 days tells you more about operational quality than any pitch deck.
Step 4: Evaluate the team, not just the company. Who manages your account day-to-day? What's their experience? What's the account manager-to-client ratio?
Step 5: Define success metrics upfront. Revenue growth, profit margin, Buy Box percentage, advertising efficiency, brand protection outcomes — agree on what you're measuring and how often.
FAQ
Can I switch from an agency to a 2P partner mid-year?
Yes, though timing matters. The cleanest transition points are at the end of a quarter or before a major selling season (not during). Most 2P partners, including Neato, run a parallel onboarding so there's no gap in operations. Budget 30–45 days for a full transition.
Do I lose control of my brand on Amazon with a 2P partner?
No. You retain brand ownership, trademark rights, and approval authority over content and creative. The 2P partner operates within brand guidelines you establish. Think of it as a licensed operator, not a franchise.
What's the typical contract length for each model?
Agency contracts typically run 6–12 months with 30–60 day cancellation clauses. 2P partnerships tend toward 12–24 months because the partner is making inventory investments that require a longer time horizon.
How does a 2P partner make money?
The 2P partner buys inventory at wholesale and sells at retail on Amazon. The margin between wholesale and retail — minus operating costs (advertising, fulfillment fees, storage) — is the partner's profit. The partner only makes money when products sell, creating natural alignment with your goals.
