Amazon Marketplace sellers are reaping more revenue and growing their organizations as a result of selling through Amazon, though the potential for direct competition with Amazon itself is a top concern for many, according to the Feedvisor report, "The State of the Amazon Marketplace 2018."
Regarding revenue, the percentage of sellers making more than $250,000 annually through Amazon Marketplace grew from 28% last year to 40% this year, while the base of sellers pulling in more than $1 million in revenue increased 9%.
The report, based on a survey of 1,200 Amazon Marketplace sellers, also found that the number of sellers who also sell on eBay is shrinking, while the number of sellers on Walmart is increasing.
Despite well-understood risks, such as the possibility for heated price competition and the potential for direct competition with Amazon, selling through the e-commerce giant appears to be well worth the effort for many sellers.
Revenue is growing among the most prolific sellers and the number of sellers employing 50 or more people increased by 5% this year, while the number employing between one and five people declined by 10%. That suggests the smallest sellers likely have hired more employees too. However, that group employing five or fewer people still represents the vast majority of Amazon Marketplace sellers, about 74%.
Many sellers still sell exclusively or predominantly through Amazon, with 47% of those surveyed saying the marketplace channel accounts for between 81% and 100% of their revenue. That said, there is increasing evidence that those who sell elsewhere in addition to Amazon are starting to explore even more new sales channels as the universe of marketplaces continues to expand. That expansion appears to have hurt eBay, as the survey found that 52% of Amazon Marketplace sellers said they currently sell on eBay as well — about 13% less than said so last year.
Instead, those sellers seem to be turning to Walmart and Walmart-owned Jet.com, which were listed as separate marketplaces in the survey, but together were mentioned by 25% of those surveyed (17% for Walmart, 8% for Jet) as being an additional sales channel. In 2017, their combined share was just 17% according to the report. That seems like an endorsement of Walmart’s recent online acquisitions and endeavors, including its clear effort to boost marketplace sales, even as Jet may be relying less on such sales.
The report also suggested that sellers are leveraging the benefits of capabilities like Fulfillment By Amazon to grow their own bottom-line. About 30% of sellers who sold at least 60% of their inventory through Amazon were able to achieve between 21% and 30% profit margin. Seller-Fulfilled Prime is another opportunity that many are looking to leverage, according to the survey.
At the same time, these marketplace sellers continue to be wary of how some competitive movement by Amazon itself into their markets could affect them in the future. About 38% list "Amazon competing with me" as their biggest concern, while others listed marketplace fees (33%) or negative feedback from customers (32%) as their top concern.
The big question any seller faces in deciding to sell through Amazon is, "Are we doing a deal with the devil?" That’s nothing new, and the risk may only be increasing as Amazon continues to expand its own private-label offerings across all types of segments. Yet, there’s also evidence sellers can succeed and grow their own enterprise with help from the Amazon Marketplace channel. Either those sellers have managed well against the risks, or perhaps the devil just hasn’t come to collect yet.