Amazon Marketplace Is A Real Powerhouse To Many Businesses

Amazon has experienced a lot of success over the years and has earned its self the crown for the best and most successful e-commerce firm in the world. However, this success comes from the strategic diversification of its business ventures with the main one being the online retail business. It also boasts of other businesses such as the Amazon Studio or its Amazon Prime Streaming platform which exists under the Prime umbrella.

The e-commerce business as the key point of focus has allowed people to purchase products from the comfort of their homes or even on the go and then these products are delivered with ease. Fortunately for the company, this has caught on quite well and Amazon owes part of that success to the Amazon marketplace.

Most e-commerce websites are businesses selling their own products online and Amazon does this too. However, it also allows other businesses to use its online platform to sell their own products. This is what Amazon Marketplace is all about and sellers who use it have contributed significantly to the rapid growth of Amazon’s overall online retail business. The company does it so well that customers do not even notice. That is because it treats sales from other businesses on the Amazon marketplace as if they are its own sales and even helps these businesses to handle fulfillment.

This year has specifically been a landmark for the e-commerce giant because it has demonstrated the power of the Amazon marketplace. This is because the number of units that were sold by the sellers on the marketplace outperformed the sales made by the company itself in the second quarter of 2017. This is largely due to the fact that the number of sellers in the marketplace has also grown over the past few years and there are businesses that exclusively sell on Amazon.

Amazon takes pride in the fact that there are other businesses selling on its platform for the growth benefits that they provide. For this reason, it has made it so easy for these retailers to operate on the e-commerce platform and even provides various management tools that help the sellers.

Amazon keeps growing like crazy

The fact that the Amazon marketplace contributed more than half of the total sales on the online retail platform has led to questions about the number of retailers on the platform. A recent report from Credit Suisse estimates that the sellers on the marketplace contribute roughly $135 billion to Amazon’s total sales every year. The sales contribution is expected to grow to $259 billion by 2020. This estimate is based on the fact that more sellers are finding the idea of selling on Amazon extremely attractive due to access to a global customer base. As for the number of retailers currently selling on the online marketplace, Amazon has not disclosed any figures though it is estimated at five million.

Having more sellers jumping on board is great for Amazon but it is also a downside for the individual businesses because it means there is a lot of competition. This could mean that most sellers are often not active or that they have a tough time achieving success on the platform. Earlier this year, Amazon revealed that there are about 100,000 retailers on the marketplace whose total sales amount to more than $100,000 each year.

The number of retailers that make more than $1 million in sales every year is believed to be just 10,000. This is a very small number compared to the estimated millions of retailers that are using the service. These statistics might be discouraging to any firm looking to try out the online marketplace. However, success mainly depends on how well a business is able to leverage some of the tools and strategies that can be used in the marketplace. For example, most of the successful retailers take advantage of Fulfillment By Amazon (FBA) which allows them to avoid handling inventory and instead leave it to the company, thus lowering costs.

Retail arbitrage and private labeling are also some of the tips that businesses use to stand out from the rest of the sellers on the platform. Businesses that want to be successful in the Amazon marketplace can thus take advantage of numerous strategies to boost themselves. Despite the competition, the e-commerce platform is a good bet for starter business due to its ease and the opportunities that it offers.

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Marko Pyhajarvi

Highly experienced business author, speaker, coach and consultant living in London, UK. Addicted to endurance training and trailrunning. Live your life to the fullest.