Amazon has added 295,000 new sellers in 2021 as of March 21 according to Finbold. The figure equals 3,734 new third-party sellers joining the platform daily or 155 per hour. The new sellers leverage Amazon’s popularity and extensive tools to reach more customers. Based on the current rate, approximately 1.4 million new sellers will potentially join the Amazon marketplace by the end of the year.
A breakdown of new sellers shows a majority joined through the United States marketplace accounting for 26% (76,769). At least 29,798 new sellers have joined the Indian website representing 10.1% of the total Amazon marketplace additions in 2021. Elsewhere, the Canadian marketplace onboarded 22,088 new sellers.
Leveraging on established platforms
For sellers, Amazon presents the broadest reach possible for their products based on the e-commerce giant’s popularity. The new sellers come in the wake of the company’s surge in users catalyzed by the COVID-19 outbreak. The enacted lockdowns meant that most consumers turned to e-commerce service providers for essential commodities. Amazon benefited greatly from having established structures. Therefore, most sellers sought to ride on the popularity, especially in the U.S.
The shift to e-commerce resulted in most retailers in severely hit areas to turn to popular marketplaces to reach more customers. Interestingly, two new sellers joining per minute explain Amazon’s position in helping third-party sellers crack the new online market. The new sellers potentially represent smaller enterprises that are looking to kickstart their growth. Leveraging on established platforms like Amazon helps small sellers drive awareness. In addition, the company provides exposure to a new customer base that sellers could not access on their own.
Furthermore, Amazon enables sellers to expand to new markets without investment. Sellers generally need to establish an in-market supply chain while taking advantage of Amazon’s world-class logistics. Notably, Amazon’s fulfillment procedure enables the company to manage inventory, storage within its facilities, shipping, and customer service on behalf of sellers.
Facing the competition
Moreover, due to the ease of doing business on the Amazon marketplace, the new members face stiff competition from fellow sellers. This translates to a wide range of options for consumers. However, the competition not only growing from fellow sellers but also from Amazon itself.
The increase in traffic brings in more customers for sellers. On the other hand, competition from Amazon presents a risk for sellers since the company also sells its private-label brands, sometimes at lower prices. For new sellers’ products to rank high, they must buy Amazon ads and bid for the top position. However, this does not guarantee the products will be sold.
There is no doubt Amazon has an enormous opportunity for value creation for sellers on its marketplace. However, relying on Amazon’s brand name alone cannot guarantee increased sales for third parties. Therefore, the growing number of sellers must think strategically about how to deal with Amazon, both now and in the future. There is always a risk of failing to capture a fair share of the profit from the partnership with Amazon.