Third-Party Sellers on Amazon Are Outselling Amazon
Any reality-TV contestant will tell you that being too good at something is going to make you massively unpopular. Downplaying your wins is the way to go if you want to mitigate the chances that a target will be placed on your back.
Amazon seems fully aware of this tactic with Jeff Bezos’ most recent shareholder letter, which stated: “”Third-party sellers are kicking our first-party butt. Badly.” The company just doesn’t seem to know it’s already the villain of the retail show.
Amazon’s deflection to look at third-party sales, which have grown from $0.1 billion in 1999 to $160 billion in 2018 according to the numbers Bezos released, doesn’t tell the whole story. The company makes more money when it relies on third-party sellers than it does when it makes its own sales.
In the shareholder letter, Bezos touches on some of the ways Amazon is assisting third-party sellers (“tools that help sellers manage inventory, process payments, track shipments, create reports, and sell across borders”) but its help goes far beyond that.
There’s a new Marketplace Growth program that gives sellers an account rep who advises them on all aspects of business. The company also lets sellers participate in Fulfillment by Amazon, which doubled sales for small to medium businesses on the site in 2018. Amazon also lends money to third-party sellers.
So don’t believe what Amazon says so much as what it does when it comes to figuring out who’s really winning this game.