Amazon always wins :)
Parth Parikh, FRM
Finsire | FinShiksha | A Junior VC | ex-Fidelity Investments, ICICI Bank, Accenture | NMIMS | FRM
We generally hear a lot about 3P sellers at Amazon, and recently they raised concerns about Amazon being unfair to listing and pricing.
So in this post, I will try and put my arguments around that using numbers.
And if you want to understand Amazon's Business, you should go through this post (Companies Simplified - Amazon).
What are third-party sellers?
Anyone who wishes to sell products through Amazon.com
Something like below - like Spigen selling mobile accessories through Amazon.
Also, do check the list of the biggest 3P sellers on Amazon.
How big are they?
Oh, they are pretty big for Amazon. More than 60%+ sales are by 3P sellers.
Look at the share of 3P sales since 1999. (have taken just seven years for comparison)
These are 3 Party Sales (GMV) Figures through Amazon
Total Sales Value by Amazon in 2020 ~500 Bn (out of which 3P Sales ~300 Bn)
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Why is 3P Segment important to Amazon?
But that's not where the matter ends.
3P sellers want to reach the maximum customers. Amazon provides reach, but then they want to get noticed, so they spend on Ads.
Amazon provides them with the Ad Inventory too :)
You see the "Other" line item in the above snapshot - that's Ad revenue :)
So, what's happening here?
And now you know why sellers are furious :)
Finance Analyst | Equity Research | Financial Modeling | MBA
3 年very well explained
Product Management | GTM | Monetization
3 年Really insightful on how amazon growth strategy