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Should Amazon's third-party sellers worry about Amazon?

Written by Tom Ryan

Source: Amazon.com

Many sellers on Amazon Marketplace are heavily reliant on the platform and yet their top-three fears all concern the e-tail giant. According to a survey of 1,600  third-party sellers on Amazon.com from Feedvisor, the biggest worry was of the e-tailer taking away their privileges, 52 percent. That’s followed by high fees on the platform, 50 percent, and Amazon competing directly with them, 45 percent. Coming closely behind in fourth was negative feedback/reviews from customers, 42 percent. The vast majority of Amazon merchants sold less than $250,000 annually and had just one to five employees. Over 60 percent of sellers in the survey indicated Amazon comprises over three-fifths of their sales, and nearly 50 percent said Amazon made up 80 percent to 100 percent of their sales. The heavy concentration for third-party sellers isn’t so surprising given that Amazon has for many consumers become the first site to search when looking to make a purchase. Amazon Marketplace also appears to be an easy place for sellers to find success:
  • Over 50 percent of the sellers surveyed have only been selling on the marketplace for two years or less;
  • The most popular promotion method for Amazon sellers is Amazon Sponsored Products, which is used by 60 percent of respondents. That’s followed by social media, 42 percent; product listings, 36 percent; andAdwords and/or search marketing, 25 percent.
  • Sellers using FBA (Fulfillment by Amazon) were found to enjoy higher margins than those using Fulfillment by Merchant (FBM).
Still, sixty percent indicated they planned to expand into other marketplaces in 2017. Outside of Amazon, 65 percent said they sell on eBay and 60 percent from their own site. E-commerce channels such as Rakuten, Walmart and Jet ranked less than 10 percent. Asked where they want to expand, the top answer was Walmart and "my own website," both 29 percent; followed by Shopify, 28 percent; eBay, 23 percent; Jet 22 percent; and etsy, 13 percent.

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