60% of Amazon Sales are by Third Parties

Amazing how Amazon makes it so difficult to do business there given how big the numbers are.

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3PS is making big gains that’s up 5% from 2021, and a 16% increase since 2015.

Amazon employees have every right to fear us. And why they are trying to stop us with nefarious plans like NSFE and Seller Support…

Braveheart

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After amazon botched fba during the early days of covid, and let fmb sellers like myself make 4 years worth of income in 4 months (we had to enable vacation mode each night to stay on top of things), and the continuance of fba completely batching easy things like check-ins, this is not a shock to me.

Fba has become in my eyes, mostly overseas sellers and usa sellers who have their business optimized for distribution. They handle amazon like any large retailer purchasing from them. It works for them, not for me!

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IMO that number provides little information.

I see lots of 3P offers which are not or only marginally profitable. I see low ticket items and entire categories that are not worth the effort of Amazon to offer.

There are 3P sellers who are innovative and desirable, and run strong businesses, and there are 3P sellers who have no strategy, cannot do arithmetic and are only trustworthy in a police state.

The Amazon fee structure makes them profitable for Amazon but as more of them use FBA, it becomes questionable that without a fee increase Amazon can afford the overhead to continue to support all of them.

At some point there will be a flight to quality. Hopefully, there will be some quality 3P sellers still using the venue.

Which at 60% of sales, put Amazon in a precarious position. Anything over 50% really makes being very democratic with Third Party Sellers in Amazon’s best interest. Were I AJ, I’d be very nice to 3PS right now, and behind the scene working feverishly to bring that number down. Can’t be having the inmates running about the machines how to go about their jobs.

Yes it does, but the demise of this portion of the seller community is inevitable.

The better strategy might be to soak these sellers and extract revenue from them as quickly as possible with the lowest overhead costs/

Remember that Amazon’s marketshare can only go down from its peaks and the level it is at, a situation which applies to may companies which are leaders in their markets.

Being at the cash cow stage in business life, the goal is to extract the greatest profit for as long as one can, reducing the costs of operation as one does.

The fact that we are 60% doesn’t necessarily mean we’re selling more, it could also mean that we’re selling the same, but that Amazon is selling less, giving us a bigger percentage of the overall pie.

This statement was annoying, and so typical of Amazon:
He added that “advertising was a strong growth during the quarter at 23%, and that is continuing to hold up very well in an environment where perhaps the underlying sales of products is slowing.”

Of course advertising is picking up as sales slow down, because the more desperate people get to make sales, the more power Amazon has to play sellers against each other and force them to pay more and more in advertising fees in order to “win” the sale. :angry:

I’d be curious to know what the breakdown is between Prime members and other shoppers on Amazon. I’ve noticed some listings where I’m the only FBM seller, that seem to sell less when an FBA’er holds the Buy Box than when I did. I’m looking at only one or two data points, but still, it makes me wonder.

I wonder sometimes how many sales I am losing from buyers who only use Prime and often refuse to buy from 3P sellers. Way off Amazon, the general public despises 3P sellers according to the hundreds of comments I have read online.

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My experience as a (small time) seller who refuses to use FBA is that it could be the opposite.

Way off Amazon, the general public despises 3P sellers according to the hundreds of comments I have read online.

I’m not sure that’s as true as it once was, although people certainly do, and should, despise the endless international (mostly Chinese, but not all) scammer sellers.

As an example, I can see a product that I might sell several of in a day. Then an FBA seller joined in, claiming to have only 1 - although I know that might be a limit they set of how many can be purchased at once rather than their actual stock - and it’s sat there and not sold for like a week. Now they show they have 2 in stock, which leads me to think the “1” was a true quantity and not a ‘limit of 1’.

So the FBA listing is selling slowly, but when I have them in stock, they move quickly. It’s just an interesting observation, of how well FBA sells vs FBM and how it might have changed over the years.

What I think would be interesting is out of that 60% of sales, what is the breakout of individual sellers?

What I mean is how much of those sales are attributed to what percentage of sellers? Is the top 10% of sellers responsible for 50% of that 60% of sales? If that is true it would make sense to make it difficult to sell on Amazon. Why deal with the problems of the remaining 90% of sellers to only get that additional 10% ?

I really have no idea what that breakout is but it would really be interesting to know.

Good Luck,

TJB

I am not sure if many buyers appreciate the difference between Chinese sellers and US sellers.

Maybe Amazon should offer to Flag the Country of origin of the goods, as well as Flag the Country of origin of the seller. Sort of like those small business, and other sorts of flags.

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Probably more like the old 80/20 rule.
20% of the sellers do 80% of the sales representing the 60% referenced.

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I am not sure if many buyers appreciate the difference between Chinese sellers and US sellers.

Sad, but true, although they do on eBay so hopefully the knowledge will spread with time.

A while back, I sold a popular item on eBay that was heavily counterfeited by the Chinese, and I got lots of messages from buyers asking me if I was selling the real thing. So they are definitely aware of the problem over there.

Maybe Amazon should offer to Flag the Country of origin of the goods, as well as Flag the Country of origin of the seller.

That would go against Amazon’s ‘do what we tell you and don’t question it’ mentality they’ve worked so hard to build. If buyers thought about what they were doing, they wouldn’t buy from the scum sellers with 20% or less positive feedback.

Or this guy (although credit for creativity, I suppose)

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I think it depends on what you sell and how saturated the category you sell in is.

If we were FBM, I would imagine our sales would be down somewhere in the neighborhood of 85-90%. In my world, you’re FBA (and same day / next day eligible) or your dead.

In my world, you’re FBA (and same day / next day eligible) or your dead.

You know, it’s interesting. One of the articles linked here, I forget which one, quoted Andy as saying they were going to focus on getting things to customers even faster. Which we see on the site now, with the new 4-hour windows -

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But I continue to question if that matters to customers. Personally, the only thing I need/want/appreciate getting within a few hours of ordering is groceries.

I believe that many people realized during COVID, that home delivery was very convenient, but didn’t need to arrive within 2 days. I have long delivery times (5-8 days) on some of my offers and it doesn’t stop people from ordering.

Obviously, on Amazon, if they say fast delivery matters, and give the BB to the fastest offer, then you have to offer it as you say. But it’s only because Amazon thinks it matters, the customers might not care at all if all the choices were 5-day delivery. :woman_shrugging:

I think @Pepper_Thine_Angus mentioned that he takes advantage of Amazon’s ‘save the environment’ offer to combine all his Prime orders into a single weekly shipment.

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The odds are overwhelming that the Pareto Principle or 80/20 rule applies. 20% of the sellers make 80% of the sales. Anyone with a business degree or extensive experience would gravitate to it as an explanation.

I’ve been seeing this for at least 2 years. Wonder if it was rolled out geographically???

And the sellers that maintain the kind of inventory that allows this to happen will be rewarded with higher organic ranking. It’s already clearly part of the algorithm. Will probably become more important.

The fact that Amazon initially pulled back on future capacity of the outward forecasted months and then jacked it higher than the initial March number is another sign.

The environment will be just fine and does it really matter? Those same trucks are rolling on by instead of stopping every single day anyway. E-commerce, whether the orders are combined or not is better for the planet. It’s one vehicle (albeit a gas guzzler) driving around with hundreds of peoples stuff in it vs. hundreds of cars out buying this stuff in B&M. That’s a simplistic view but it’s gotta be helping although there’s still an awful lot of traffic out there…

In the words of the great George Carlin - “The planet is eventually going to shake us off like a bad case of fleas”. “It’s not the planet that’s ■■■■■■ - it’s humans!”

The category we sell in, people want it right now… 97% of our FBA orders are shipped within 12 hours, 30% within 2 hours.

Those other 3% are non-prime members or are going to HI, AK, or PR.

And the sellers that maintain the kind of inventory that allows this to happen will be rewarded with higher organic ranking. It’s already clearly part of the algorithm. Will probably become more important.

But only to Amazon? The question I continue to have is, do buyers really care? I know Amazon’s selling the story that they do (they have to, since it’s what Prime is built around), but is that reality anymore? I’m just one grain of sand in this giant ocean, but my observations say Amazon is wrong, that buyers don’t care all that much.

The environment will be just fine and does it really matter?

My point was that people are willing to combine their orders and wait for them, it wasn’t about the environment, per se.

The category we sell in, people want it right now… 97% of our FBA orders are shipped within 12 hours, 30% within 2 hours.

I find that rather surprising. I’m not into supplements, but aren’t these types of things something people take on a regular basis, so they order the next supply before they run out of what they have on hand? It doesn’t strike me as an urgent, must have right now, type of thing, am I wrong?

However fast FBA fills your orders doesn’t necessarily equate to how urgently buyers need the product. If I were paying for Prime (I don’t), I would opt for 1-day delivery if the cost were the same as 2-day or 4-day because, why not? That doesn’t mean I need it in one day, or care if I get it in one day.

You left out the biggest threat to the platform/3PS that comes in the form of inept sellers and hucksters selling stolen goods.

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I’m not so sure the “rules of business” apply here. Online sales is a different game as the entry requirements are far less than traditional business models. There are many, many more sellers that can survive and thrive in this model that would not have made it in a brick and mortar, retail model.

What I mean is you can do online sales with very little overhead. You don’t need to pay $20k a month in rent to get foot traffic. You can run a business out of your house/garage that gives you enough income to survive. Sure, those sellers aren’t doing $20 million a year in revenue but there are millions of them and those numbers add up fast.

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