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Third-party (3P) selling on Amazon - statistics & facts

Business lore has it that Jeff Bezos started Amazon as an online bookshop in a Seattle garage in the mid-90s. In the three decades that followed, Amazon has grown to be one of the top tech companies, and cemented itself in the industry as the leading online retailer and go-to marketplace for businesses looking to sell their products. Today, more than half of the paid units of Amazon is attributed to its third part sellers and the company accrues more and more new sellers each month. Over the course of 2020, there were over 190,000 new sellers added on Amazon's marketplace in the United States.

First-Party, Third-Party and Fulfillment by Amazon

Amazon offers businesses first-party (1P) and third-party (3P) selling models across its platform. Usually, a first party seller is a wholesale vendor that sells its inventory to Amazon, and Amazon itself acts as the owner of the sold product, managing pricing as well as shipping and returns processes. Amazon as an 'online retailer' operates on this basis. Third-party selling on the Amazon platforms is enabled by Fulfillment by Amazon (FBA). Third-party seller brands participating in FBA still act as the retailer, own the product, and control the pricing of their products. Shipping, storing, and returns of goods, on the other hand, are managed by Amazon. In return, Amazon charges commissions, shipping and related service fees. This is how Amazon becomes an 'online marketplace'. Through these services Amazon earned about 80.4 billion U.S. dollars in 2020. In the most recently reported quarter, the year-on-year growth in sales generated through third-party seller services was at its highest, at 60 percent.

Marketplace sellers are a lucrative business for Amazon, and not just for the catalogue of products they bring along to the platform. After sales generated through its online stores, which roughly totalled 200 billion U.S. dollars in 2020, third-party seller fees and commissions constitute the second highest revenue stream for Amazon. In comparison, Amazon Web Services (AWS) earned the company 45 billion U.S. dollars in revenue, while subscription services e.g. Prime generated 25 billion U.S. dollars in 2020.

Business benefits of selling on Amazon

There are about two million estimated sellers on Amazon marketplace in the United States. It is not unusual for businesses to adopt a hybrid model and sell both as first-party vendors and use the Amazon marketplace as a third-party seller. According to a recent survey conducted with U.S. brands, more and more businesses selling on Amazon adopted both 1P and 3P approaches, up from 49 percent in 2019 to 59 percent in 2020. With Amazon marketplace presence also came revenue growth and generation. One-third of small and medium-sized businesses taking part in a survey in 2019 reported a revenue growth between 25 and 50 percent thanks to selling on Amazon. Another survey revealed that about four in ten businesses selling on Amazon attributed between 26-50 percent of their e-commmerce revenues to Amazon sales. For another 40 percent of businesses, up to 75 percent of e-commerce sales was generated through sales made in Amazon stores.

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Businesses selling on Amazon

Amazon

Other interesting statistics

Third-party (3P) selling on Amazon - statistics & facts

Business lore has it that Jeff Bezos started Amazon as an online bookshop in a Seattle garage in the mid-90s. In the three decades that followed, Amazon has grown to be one of the top tech companies, and cemented itself in the industry as the leading online retailer and go-to marketplace for businesses looking to sell their products. Today, more than half of the paid units of Amazon is attributed to its third part sellers and the company accrues more and more new sellers each month. Over the course of 2020, there were over 190,000 new sellers added on Amazon's marketplace in the United States.

First-Party, Third-Party and Fulfillment by Amazon

Amazon offers businesses first-party (1P) and third-party (3P) selling models across its platform. Usually, a first party seller is a wholesale vendor that sells its inventory to Amazon, and Amazon itself acts as the owner of the sold product, managing pricing as well as shipping and returns processes. Amazon as an 'online retailer' operates on this basis. Third-party selling on the Amazon platforms is enabled by Fulfillment by Amazon (FBA). Third-party seller brands participating in FBA still act as the retailer, own the product, and control the pricing of their products. Shipping, storing, and returns of goods, on the other hand, are managed by Amazon. In return, Amazon charges commissions, shipping and related service fees. This is how Amazon becomes an 'online marketplace'. Through these services Amazon earned about 80.4 billion U.S. dollars in 2020. In the most recently reported quarter, the year-on-year growth in sales generated through third-party seller services was at its highest, at 60 percent.

Marketplace sellers are a lucrative business for Amazon, and not just for the catalogue of products they bring along to the platform. After sales generated through its online stores, which roughly totalled 200 billion U.S. dollars in 2020, third-party seller fees and commissions constitute the second highest revenue stream for Amazon. In comparison, Amazon Web Services (AWS) earned the company 45 billion U.S. dollars in revenue, while subscription services e.g. Prime generated 25 billion U.S. dollars in 2020.

Business benefits of selling on Amazon

There are about two million estimated sellers on Amazon marketplace in the United States. It is not unusual for businesses to adopt a hybrid model and sell both as first-party vendors and use the Amazon marketplace as a third-party seller. According to a recent survey conducted with U.S. brands, more and more businesses selling on Amazon adopted both 1P and 3P approaches, up from 49 percent in 2019 to 59 percent in 2020. With Amazon marketplace presence also came revenue growth and generation. One-third of small and medium-sized businesses taking part in a survey in 2019 reported a revenue growth between 25 and 50 percent thanks to selling on Amazon. Another survey revealed that about four in ten businesses selling on Amazon attributed between 26-50 percent of their e-commmerce revenues to Amazon sales. For another 40 percent of businesses, up to 75 percent of e-commerce sales was generated through sales made in Amazon stores.

Other interesting statistics

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