Amazon’s third-party marketplace is vast and growing by the day. According to a new report from Marketplace Pulse, an e-commerce analytics company, there are about 2.8 million active sellers currently doing business on the platform — a number that exceeds the population of Chicago.
Because of Amazon’s relatively open process for registering new sellers, scores of others have also joined and later been suspended, stopped selling items or never listed anything to begin with: Per the report, Amazon has added an estimated 3.3 million new sellers since Jan. 1, 2017, which comes out to more than 3,300 per day. Of that number, though, only 60% are currently active.
“Often sellers become active for a day, a week, or month, but then stop,” Marketplace Pulse Founder and CEO Juozas Kaziukėnas told FN. “This is because Amazon often requires additional documentation (ID, bank statements, business license etc.) after starting selling, which they fail to produce. Or they get suspended by Amazon because of bad behavior, so they keep creating new seller accounts.” (FN has reached out to Amazon for comment.)
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Opening multiple accounts without permission is prohibited under Amazon’s terms — a step the company has taken to fend off counterfeiters and other bad actors — so if these sellers are flagged, their new account would likely be suspended, too. It’s common for marketplaces to see sellers sign up and fail to become active or abandon their accounts soon after joining, Kaziukėnas said.
Signing up to become an Amazon seller takes just a few clicks, provided you have a business name, address, telephone number, chargeable credit card, bank account, tax information and $39.99 per month for a professional-level membership. By contrast, Walmart requires sellers to complete an application and wait several weeks for approval to join its marketplace; according to reports, only a fraction make the cut. Target’s marketplace, which launched earlier this year, is invitation-only. “We know guests count on Target to find products they’ll love without wading through endless options,” the retailer said in its announcement, setting itself conspicuously apart from Amazon’s ethos of being “the everything store.”
Third-party sellers have become increasingly central to Amazon’s business model: In 2018, they sold $160 billion worth of merchandise worldwide and accounted for 58% of the company’s sales of physical goods, up from 30% a decade ago. “Third-party sellers are kicking our first party butt. Badly,” CEO Jeff Bezos wrote in his annual letter to shareholders in April. Along with the selling tools and logistics infrastructure the company provides, such as Prime and Fulfillment by Amazon, the ease of signing up as an Amazon merchant is helping drive this growth.
Using automated tools to police sellers after the fact, though, can also have dangerous consequences. A a Wall Street Journal investigation this summer found thousands of listings for products like toys, helmets and medications that were deceptively labeled, banned or declared unsafe by federal regulators, but which Amazon’s algorithms didn’t flag. The company removed most of the listings following the reporters’ inquiries, and when more problematic items popped up in their place two weeks later, they removed those too and said they had improved their tools to prevent the same thing from happening again.
“There are bad actors that attempt to evade our systems,” an Amazon spokesperson told the publication, adding that if a prohibited item should “ever slip through, we work quickly to take action on the seller and protect customers.”
As the marketplace continues to grow, though, will these systems be able to keep up?