Amazon Marketplace- Harder, Faster, Stronger, Better

Amazon.com is steadily becoming the most prominent player in the retail marketplace. During the past few years, Amazon has gradually diminished the gap itself and eBay, and now even starting to grab the lead. In this race Amazon appears to be the winning horse.

How do we know?

Amazon has been growing at an average of 29% each year, for the past 4 years. That’s a staggering statistic, especially given the fact that the #1 marketplace – eBay – has a significant lower growth rate than Amazon.

In fact, Amazon is growing on average 27% faster than eBay (based on monthly GMV calculation). While eBay is struggling to keep its head above the water in terms of growth rate (Q4 2008, Q1 2009, Q2 2009, Q3 2009), Amazon is maintaining  a healthy growth rate of average 28% in the last 12 months (Q3 2008 – Q3 2009). Amazon’s growth is made even more impressive considering the current economic climate.

#1: From Google Insight comparisons, we clearly see how Amazon is closing the gap on eBay’s lead (Q4 2008 is the point where Amazon starts to close the gap).

#2: Here we see a tied battle during the last year. However, in Q4 2009 Amazon actually overtakes eBay when comparing the number of unique visitors to it’s website.

sources:  Compete.com, Google insight

So it appears clear that Amazon is growing faster then eBay, and will probably become the online marketplace retail leader by 2012.

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The question remaining is how does amazon compares to the rest: internet, eCommerce and retail? Well, since Q3 2006, Amazon is growing faster then eCommerce itself (which is growing faster then retail sales).

This is quite a stunning conclusion and I feel it bears repeating: The eCommerce market is growing faster than the retail market…  and Amazon is growing faster than the eCommerce market.

Amazon earnings clearly reflect this trend:

Amazon earnings

Why Amazon?

1.  3^rd Party Marketplaces: Amazon strategy is to lean heavily on 3^rd party merchants who wants to sell their inventory in the Amazon marketplace. Recently, Amazon was smart enough to let 3rd party merchants sell more on it’s marketplace – a good strategy to avert inventory risks during the economy down turn. Now that the economic climate is improving, Amazon can roll back and return to selling more of its own inventory (33% of amazon sales are 3^rd party merchants).

2. Prime Shipping: Amazon’s free shipping strategy has proven to work. Amazon offers free 2-Day shipping on all items that are eligible for amazon prime, and most items are eligible for amazon prime (since most items are amazon items and not 3rd party items).

What Should I Do As A Merchant?

If you’re already selling on Amazon, then we advise you to Win the Buy Box - as this is a key element to increasing your Amazon profile and bringing more traffic your way.

Finally, you can always consult our team of eCommerce experts for additional resources.

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