Amazon Shifts Strategy to Support Third Party Sellers
Updated: Dec 11, 2020
Great news for the ALGO Online Retail Community! Third-Party FBA sellers.
Digiday released an article via Hilary Milnes discussing how Amazon adjusted its strategy over the past few years to support and invest in third party sellers. The company recognized that they make more money letting other people sell products on its marketplace rather than directly selling to customers itself.
According to eMarketer data, Amazon’s Third Party marketplace accounts for about two-thirds of the online retail giant’s overall sales. In 2017, the direct sales grew 21 percent to $70.4 billion, while the marketplace sales grew 41 percent to $129.5 billion. The marketplace sales continued to increase significantly through 2018 and 2019.
Amazon’s Third Party marketplace is thriving because more people are learning how to sell on the platform thanks to resources like ALGO’s Online Retail Mastery Course. These resources are teaching small-business owners, big brands, and resellers like us the best Amazon business model to reel in profits.
This marketplace trend influenced Amazon to shift its focus. Amazon is now allocating resources towards third-party sellers that used to only be available for wholesale vendors.
The company is providing more e-commerce features and capabilities such as:
- Subscribe and Save (automated repeat purchases)
- Early Reviewer Program (Prompts reviews from a seller’s first buyers)
- Automated coupons
- More reporting tools (lost buy box percentage)
Elaine Kwon, former Amazon vendor manager who currently consults brands selling on the platform said, “Almost all of what I call Amazon’s ‘innovation dollars’ are being reallocated to the marketplace side to help expand it in every category possible.”
The third-party marketplace growth potential is unlimited because everyone around the globe can sell products on Amazon. However, their direct selling retail business is limited by how many vendor managers they can hire to manage their wholesale accounts.
In 2018, Amazon made two major changes to back their reallocation of resources. The company pulled vendor managers off their smaller wholesale accounts and launched its Marketplace Growth program.
The new program offers a more personal support system by assigning an account manager to third party sellers. Amazon charges sellers $2,500 or $5,000 a month depending on how much revenue the seller totals per year.
Sellers often complain about not having a support outlet to turn to for issues such as glitches, rule changes, and wrongfully suspended accounts. The Marketplace Growth Program shows that Amazon wants to make third party sellers’ lives easier.
Amazon’s changes provide third-party sellers with more access to resources and support to help grow their business. The different features, such as the Subscribe and Save capability, are beneficial tools that sellers can immediately use.
The Marketplace Growth program is a step in the right direction to provide sellers with more than a generic self-service support system. Amazon is shifting its strategy to grow the third-party marketplace and support communities like ALGO.
The future of FBA third party retail has never looked brighter. This is the third party retailer's decade for selling on Amazon. Take advantage of the opportunities. Amazon was thinking of you when making these changes.
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