Amazon reveals how third-party sellers are kicking its butt on sales as part of small business charm offensive


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  • In a letter to shareholders last month, Amazon CEO Jeff Bezos said third-party sellers are growing at a faster rate than its first-party business. “To put it bluntly: Third-party sellers are kicking our first party butt,” he said.
  • In a new report, published on Tuesday, Amazon said its sellers in the US earned as much $90,000 a year from selling on its stores.

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Jeff Bezos introduced Amazon’s annual letter to shareholders last month with a set of data that spanned the past 10 years and which showed how Amazon’s independently sellers are outpacing its main business. “To put it bluntly: Third-party sellers are kicking our first party butt. Badly,” he wrote.

The data showed that sales from third-party sellers now make up for more than 58% of the physical gross merchandise sold on Amazon. These sales have grown from $0.1 billion in 1999 to $160 billion in 2018.

Read more: Jeff Bezos says independent sellers on Amazon are ‘kicking’ the online retail giant’s ‘butt’ in sales

According to a new report published by Amazon on Tuesday, these small and medium-sized businesses – which include self-published authors, people who have started delivery businesses under Amazon, and developers that are building Alexa skills – now number nearly 2 million total.

And on average, these sellers in the US, are earning as much as $90,000 a year from selling on its stores, creating 1.6 million jobs around the world, Amazon said.

Amazon has been touting the success of its third-party selling platform to show its commitment to helping small businesses grow, especially as its business model is accused of being a major contributor in wiping out other modes of retail.

“Since 2011, we’ve invested tens of billions to help SMBs succeed working with Amazon,” Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a statement to the press. “Amazon is inspired by the type of courage and inventiveness that makes entrepreneurs tick. And our customers benefit from the products, books, videos and skills they produce.”

It’s also a profitable area of business for the company. According to The Seattle Times, in 2018 Amazon pulled in nearly $43 billion in commissions and fees for fulfillment, shipping, and other seller services.

Its role as both a direct seller and a platform for other merchants has also drawn criticism. Most recently, by Sen. Elizabeth Warren, who accused Amazon of using the data from its top sellers to create its own private label products. This practice would “knock out” competition, she said.

Amazon denied this in a statement to Business Insider. A spokesperson said: “Amazon does not use individual sellers’ data to determine which private label products to launch. Private label products are a common retail practice, and Amazon’s private label products are only about 1% of our total sales.

“This is far less than other retailers, many of whom have private label products that represent 25% or more of their sales. And independent sellers continue to see record sales on Amazon, growing to more than half of all sales on Amazon today.”

SEE ALSO: Elizabeth Warren doubles down on Amazon for ‘crushing’ small businesses

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