Amazon enjoyed another record-setting year in just about every measure: sales, website visitors, participating sellers and more.
It continues to be the channel that sellers can’t ignore, with unmatched power to drive GMV into the millions.
But while there’s plenty to celebrate at the end of 2019, there’s also more to the story. Here, we’ll zero in on stats that matter most to sellers. Keep reading for a clear understanding of how Amazon got to where it is today and what it’ll take to succeed as a marketplace seller in 2020.
If Amazon were a country, its marketplace would rank as the 50th largest economy in the world after New Zealand and ahead of Qatar. Marketplace sellers earned almost $230 billion in sales this year, up 31% from 2018, making Amazon the largest ecommerce platform in the U.S.
Amazon’s growth stems from its obsession over the customer experience. For decades, the company has redefined customer expectations—and this year was no different.
Most notably, the company turned heads in Spring 2019 when it announced free one-day shipping for Prime members across millions of products. It was the first step in what Jeff Bezos calls a “transition of Prime from two-day to one-day.” And true to character, Amazon let profits take a hit as it aggressively pushed for faster shipping.
“Investors were beginning to get used to the new Amazon of getting better bottom-line upside. Now, we’re back to the old Amazon, which is bottom-line downside but big investments,” wrote one analyst about the company’s Q3 profits. “For short-term investors it’s a bummer, but for long-term investors, they realize that with Amazon these investments usually pay off.”
In 2019, Amazon also milked its annual shopping holidays. Prime “Day” lasted a full 48 hours. Cyber “Five” saw an uptick of daily deals starting well before Thanksgiving and peaking on Cyber Monday. Ahead of Christmas, Amazon mailed out physical catalogs—only the second edition of its kind—to drum up excitement.
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The result? Prime Day sales skyrocketed 71% compared to 2018. And during Cyber Five, our clients chalked up great results:
To quote Bezos from this 2018 Letter to Shareholders: “Third-party sellers are kicking our first party butt. Badly.”
Fast forward to 2019 and the percentage of paid units sold by third-party sellers hovered between 53% and 54%, slightly higher than the average in 2018.
This follows a rocky start to the year, when Amazon purged its supplier list and sent small brands packing overnight to its 3P marketplace. Not long after, Amazon received flack for competing directly with third-party sellers through its own private label (even copycats of brands like Allbirds).
<center><blockquote class="twitter-tweet"><p lang="en" dir="ltr">Amazon is now straight copying Allbirds.<br><br>We have reached "peak cloning" in Silicon Valley.<br><br>There are no rules anymore - if you build a product that works, Amazon or Facebook will copy it. <br><br>People used to care. Not anymore. <a href="https://t.co/73bDMgruMX">pic.twitter.com/73bDMgruMX</a></p>— Jeff Morris Jr. (@jmj) <a href="https://twitter.com/jmj/status/1174736361783300097?ref_src=twsrc%5Etfw">September 19, 2019</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></center>
Despite this, the company claimed a “vested interest” in the success of its sellers.
“Amazon only succeeds when sellers succeed and any claims to the contrary are simply wrong,” Amazon spokesman Jack Evans told The Washington Post in October. He noted that the company invests billions of dollars in digital tools, physical infrastructure and marketing for its site—which all benefits sellers. Any company fees are for optional services, and many have been lowered.
Still, the duality of Amazon’s role as a marketplace and as a private label seller can be felt today. Sellers pay a pretty penny to advertise next to Amazon’s own ads. Categories and marketplace rules are impacted according to the company’s interest in a niche. And many sellers resort to FBA for Prime status or buy box ownership, only to face high fees and unexpected complications with the service.
All this underscores the reality that Amazon is both a lucrative marketplace that sellers can’t neglect, and a place that requires a clear strategy for staying in control. As we’ll dive into next, those who fail to do the latter drop out quicker than is often reported.
Online sellers are signing up for Amazon at a remarkable clip. More than a quarter-million new sellers joined the U.S. marketplace in 2019—an average of 700 every day—making up almost 23% of active sellers.
Amazon’s an intensely competitive, wide-open marketplace. It’s so competitive that many sellers can’t cope. A comparison of stats suggests that 28% of sellers, or 700,000 worldwide, churned from the marketplace between 2018 and 2019.
The sellers who remain today show signs of smaller, shoestring operations:
What derails so many sellers? Despite all the YouTube videos promising fast cash off, Amazon isn’t for the faint of heart. Many new sellers aren’t set up as disciplined companies with a full understanding of the actual costs of doing business or the sustained effort that it requires. Others, including larger brick-and-mortar merchants, often struggle to adjust to the demands and round-the-clock pace of ecommerce (and, uniquely, Amazon).
One of the biggest challenges that continues to take sellers by surprise is Amazon’s volatility: a single policy change can wreak havoc on a seller’s listings. A negative review or mishandling of inventory can tank ODR. As some sellers try to match the speed of Amazon and intensifying customer demands, their sales never reach the point of profitability.
Many sellers are also overly reliant on Amazon:
A single suspension puts them at risk of losing their entire business. And while suspended, they lose access to critical assets like their FBA inventory (unless they’re willing to pay hefty removal fees).
The good news: there are steps any seller can take to avoid this.
Winning on Amazon means staking your claim on Amazon. While in prior years, sellers jumped at the chance to sell online without so much as touching any of the products they sold, today, many more are moving with caution.
The winners not only have the grit to keep up with Amazon's pace of innovation, but are also diversifying and lining up strategies to outwit 99% of sellers. They’re the ones expanding to new channels, like Walmart Marketplace and Google. They’re the ones looking outside of Seller Central for solutions that work faster and better without compromising the security of their data. Finally, they’re the ones fiercely protecting their margins. Whether brand or reseller, they refuse to compete in the race to the bottom and use AI-repricers and data to make profitable business decisions.
Zentail partners with these sellers. Our platform services businesses that want a piece of Amazon’s billion-dollar pie, but refuse to give up control for the sake of convenience. With the help of automation and simplified workflows, you can manage everything from listing to pricing, purchasing to fulfillment, all from one platform. Better yet, every Zentail package includes multichannel tools, entirely for free.
Launch to new channels without having to manage two different seller portals, two different sets of listings or splintered inventory. Enjoy a COM platform that streamlines your operations, and experience the zen of selling online.
Check out these additional 2019 Amazon statistics. You might find a nugget of information that helps to shape your 2020 strategy and steers you in the right direction.