We know that Amazon‘s third-party marketplace plays a significant role in driving profits for the e-commerce giant — in 2017, more than half of all units sold on the site were from third-party sellers. And it looks like merchants are reaping greater rewards, too, according to a new study.
Feedvisor, a company that provides pricing intelligence to online marketplace sellers, surveyed more than 1,200 merchants for its annual “State of the Amazon Marketplace” report and found that 19 percent brought in more than $1 million in annual sales, up from 10 percent in 2017.
The share of sellers generating more than $10 million in revenue also jumped from 1 percent to 3 percent, while those in the bottom bracket — under $250,000 annually — shrunk from 72 percent to 60 percent of the total group.
Despite the impressive results that many have seen from tapping into Amazon’s vast customer base, the merchants surveyed said that they were wary about competition from the retailer itself, a practice that can be devastating for a small business if its prices are undercut by Amazon’s own stock. At 38 percent, this competition topped the list of biggest concerns, followed by high fees (33 percent) and negative customer reviews (32 percent).
The latter concerns are valid: Amazon raised both its Fulfillment by Amazon fees and commissions for apparel and accessories this spring, raising costs for third-party sellers. Bad reviews, meanwhile, can send sales plummeting, which is why some sellers in the Marketplace have turned to paying for fake feedback (a practice Amazon has been cracking down on this spring).
For now, at least, the upward sales trend for merchants seems poised to continue: In Amazon’s first-quarter earnings report, the company said revenues from third-party seller services, including commissions, shipping and fulfillment fees, grew 44 percent to $9.3 billion, accounting for 18 percent of total sales.