THE STATE OF THE AMAZON MARKETPLACE 2018 - A REPORT BASED ON A SURVEY OF 1,200 AMAZON SELLERS - Feedvisor
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
THE STATE OF THE AMAZON MARKETPLACE 2018 A REPORT BASED ON A SURVEY OF 1,200 AMAZON SELLERS
02
We know that it can be complicated to run a successful business on
Amazon. At Feedvisor, we are intimately familiar with the cadence
of Amazon’s algorithm and use the data that we compile to help
sellers make smarter decisions to improve their businesses in real
time.
“The State of the Amazon Marketplace” reveals pain points, plans for
the future, strategies, and growth figures of over 1,200 Professional
sellers in an effort to help you evaluate your performance and keep
tabs on how Amazon is evolving over time.*
We hope that you will extract the insights that mean the most
for your business and use this resource as a reference point for
INTRODUCTION achieving your 2018 goals.
With an 8% increase in competition on Amazon from last year,
we can interpret that more sellers are changing their prices more Dani Nadel
frequently, researching and scouting for new products more CMO & General Manager, Feedvisor
efficiently, optimizing their marketing strategy to more closely align
with their business goals, and automating business processes in
order to focus on increasing profitability.
With Amazon expected to continue its relentless growth, it
is important for third-party sellers to keep their finger on the
e-commerce leader’s pulse. However, it is even more important for
them to understand the habits and priorities of the other sellers
that they cohabitate with on Amazon’s marketplace. This will grant
sellers visibility into their performance, identify where they have
room for development and improvement, and uncover tools and
practices that other sellers are utilizing in order to operate and
*Numbers may have been rounded up to the nearest percent. The survey
perform at scale.
was distributed to the same database as 2017.
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R
03
SELLERS SCALE TEAMS TO MEET DEMAND
AND FUEL GROWTH
Last year, 84% of Amazon businesses that were surveyed employed
one to five people. However, that number dropped ten percent
to 74% this year and the number of businesses with 50 or more
employees increased by 5%.
This means that with increasing distribution demands and sales
thresholds to hit, high-volume Amazon operations are realizing that
they need to hire more employees to keep up with their business
pace.
NUMBER OF EMPLOYEES
More than 100
4%
51-100
3%
11-50
10%
6-10
10%
1-5
73%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R
04
AMAZON SELLERS ARE IN EVERY STATE, WITH
HEAVY CONCENTRATION IN CERTAIN AREAS
In the United States, California remains the top state for Amazon
sellers, where 13% of survey respondents are based. However,
sellers are not confined to one specific region of the country. Other
top locations include Florida, New York, Texas, and New Jersey.
Additionally, nearly one-fifth of Amazon sellers that were surveyed
are located outside of the U.S., revealing the true global nature of
the marketplace.
SELLERS’ LOCATION BY STATE SUCCESSFUL SELLERS HAVE GLOBAL AMBITIONS
VT
WA 0.2% ME
2.8% MT ND 0.6%
0% 0.1% MN NH Nearly 37% of surveyed retailers are currently selling outside of the
OR 1.7% WI NY 0.6%
1.3% ID SD
0.2%
1.3% MI 5.7%
MA
U.S. In addition to this, another 26% plan to expand outside of the
0.5% WY 1.9%
0.4% IA
PA CT 1.0% U.S. in 2018, revealing that online sellers are making it a priority to
NE 2.2% 0.6%
0.6% OH
NV IL NJ
1.2% UT
0.5% IN 2.3%
2.0% 1.4% WV 3.4% increase their businesses’ presence and visibility on a large scale.
CO MO 0.2% VA DE
1.4% 2.5% KS KY 1.3% 0.8%
CA 1.5%
13.1% 0.7% 0.7% MD
NC
OK
TN 2.0% 1.7% Outside of the United States, the U.S. hosts a large Amazon seller
AZ AR 1.3% SC
3.0%
NM
0.2%
0.6% 0.6%
GA 0.4% base and is where 24% of respondents are selling from. The runner-
MS AL 3.0%
TX
0.1% 0.9% up is Canada, which is where 7% of the respondents’ companies
LA
5.1% 0.3% are based.
FL
6.7%
19% of seller respondents are located outside of the U.S.
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R
05
AMAZON’S E-COMMERCE DOMINANCE
CONTINUES TO GROW
Last year, $178 billion of revenue went through amazon.com alone,
making it the largest e-retailer in the United States, responsible for
more than half of e-commerce growth.*
Once again, nearly 50% of our respondents sell almost exclusively
with Amazon, with revenue from the massive e-commerce
marketplace accounting for 81-100% of their sales.
PERCENTAGE OF E-COMMERCE REVENUE FROM
AMAZON SALES
81%-100%
47%
61%-80%
13%
41%-60%
10%
21%-40%
12%
1%-20%
18%
*Source: CNBC
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R
06
OTHER MARKETPLACES USED BY AMAZON SELLERS
52%
My Own Website 34%
17%
17%
EBAY LOSING GROUND AS TOP CONTENDER Brick-and-Mortar 10%
Store
BEHIND AMAZON
8%
While Amazon remains the leading marketplace for third-party 5%
sellers as it tackles uncharted growth territory, eBay has lost notable
ground over the last year. 52% of surveyed Amazon merchants are
also selling on eBay in 2018, which is down from 65% in 2017. 4%
Interestingly enough, over that same time period, Walmart and
4%
Jet’s combined share has grown from 17% to 25% and aligns with
Walmart’s renewed investment in e-commerce and consumer
preferences. 4%
Lastly, respondents that sell on their own website in addition
to Amazon decreased from 39% in 2017 to 35% in 2018. This 3%
suggests that sellers are becoming increasingly Amazon-centric
and shifting away from their personal online storefronts because
2%
they simply cannot hold a candle to Amazon and the profitability
they experience on the marketplace.
No Other 20%
Channels
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R
07
OTHER MARKETPLACES SELLERS PLAN TO EXPAND
TO IN 2018
36%
27%
26%
My Own Website 25%
24%
9%
SELLERS ARE EAGER TO EXPERIMENT ON
WALMART.COM Brick-and-Mortar 7%
Store
7%
With their efficient distribution network and vast brick-and-mortar
geographical footprint, Walmart has made exceptional strides since
2017. The company has established even more of a presence than 6%
last year, with 36% of seller respondents planning to sell through
this channel in 2018 versus 29% in 2017.
6%
Additionally, respondents plan to expand to channels outside of
Amazon, such as eBay, Shopify, and their own websites. 5%
3%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R
08
SELLERS’ MAIN CATEGORY ON AMAZON
Home & Kitchen 18%
Health &
Personal Care
9%
Clothing &
9%
Accessories
Books & Movies 8%
Toys & Games 7%
Sports &
Outdoors
6%
Electronics 6%
Beauty 4%
HOME AND KITCHEN REIGNS AS TOP Grocery &
Gourmet Food 4%
PRODUCT CATEGORY Tools & Home
Improvement
4%
Pet Supplies 3%
There is practically no limit to what can be sold on Amazon’s
Office Products 3%
marketplace today – there are even certain flammable or toxic
items that are approved for FBA in limited quantities. Patio, Lawn &
Garden 2%
However, Home & Kitchen items (bedding, bath, furniture, wall
Automotive 2%
decor, cleaning supplies, storage and organization, and more) are
the most popular items for survey respondents to sell, with nearly Arts, Crafts, &
Sewing 2%
one-fifth of them actively selling in that category.
Baby
Products 1%
The Health & Personal Care and Clothing & Accessories categories
inched up to tie for the second place position, closely followed by Jewelry 1%
the Books & Movies category, with nearly 9% of sellers engaging in
Cell Phones &
each category. Accessories
0.7%
Other 8%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R
09
SELLERS BUILD MOMENTUM IN THE
MARKETPLACE
Based on our survey, sellers have become more profitable on
Amazon. These merchants take a risk by joining the constantly
changing marketplace and — although confronted by sales lifts and
drops, inventory challenges, and competition — are finding success
amidst the noise.
The ratio of sellers with annual business revenue higher than $250K
SELLERS’ ANNUAL REVENUE
has increased. Last year, this category included 28% of merchants
and increased to 40% this year, while only 60% of sellers were below
$10M+
the $250K threshold versus 72% in 2017. All of this information
3%
reveals that high-volume businesses are rapidly expanding.
$6M-$10M
Specifically, the number of lucrative, million dollar sellers has
1%
skyrocketed, with Amazon sellers over $1 million gaining 9% of
growth versus last year. The number of multimillion-dollar sellers
$2M-$6M
also increased from last year, moving from 1% of sellers in 2017 7%
to 3% in 2018, revealing that these power sellers have established
strategies, tactics, and business processes that have allowed them $1M-$2M
to increase their profits and maintain that growth as they scale and 8%
move forward.
$500K-$1M
9%
$250K-$500K
12%
Below $250K
60%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R
10
FBA PROFIT MARGIN
Below 0%
7%
2%
0-5%
12%
6%
6-10%
15%
10%
GREATER PROFIT POTENTIAL EXISTS WITH 11-20%
FULFILLMENT BY AMAZON 18%
25%
21-30%
For any profit margin above 11%, seller respondents that are over 25%
60% Fulfillment by Amazon (FBA) always edge out sellers that are 30%
majority Fulfillment by Merchant (FBM).
31-50%
For example, nearly one-third of sellers who sold at least 60% of
17%
their inventory via FBA saw a 21-30% profit margin, compared
20%
to 25% of sellers who sold more product on their own via FBM.
Additionally, one-fifth of FBA-dominant sellers are experiencing a
Over 50%
31-50% profit margin.
7%
Understanding the profit and potential of your product catalog 8%
is critical to e-commerce growth and sustainability. It also helps
sellers decide where to invest their resources, roll back prices, and
increase advertising spend.
Sellers with 0-59% FBA Sellers with 60-100% FBA
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R11
INTEREST IN PRIVATE LABEL E-COMMERCE SELLERS ARE HESITANT TO EXPAND THEIR
IS GROWING MAP-BASED INVENTORY
Amazon is now selling more than 70 of its own private label brands, For 20% of survey respondents, less than 20% of their catalog are items
with the biggest push coming in the clothing, shoes, and jewelry subject to MAP, or Minimum Advertised Price. This is the lowest price
categories. With the rapid expansion of the e-commerce giant, sellers that a retailer can advertise the product for sale.
have observed that private labels are immensely popular amongst
millennials who mainly care about two aspects of an item: its quality Given there are penalties for advertising below MAP, and the
and its price. Retailers and brands alike are responding by creating manufacturer can pull their products from a seller’s store and prevent
their own private label brands. them from selling those items again, sellers are hesitant to expand into
full catalogs that are subject to MAP.
Last year, 68% of seller respondents did not make any revenue with
private label brands. This year, that number dropped to 44% of
sellers. With that, we are seeing a dramatic increase in private label
PERCENTAGE OF SKUS SUBJECT TO MAP
selling amongst Amazon sellers year over year. Our data also shows
that adding private labels to their product mix is the second highest
Over 95%
priority business goal for sellers in 2018, with 38% of sellers selecting 10%
it as an initiative.
81-95%
4%
PERCENTAGE OF SELLERS’ REVENUE FROM PRIVATE LABEL
61-80%
5%
41-60%
Over 80% Revenue from 8%
Private Label
30% 21-40%
44% 8%
1-79%
Revenue from Private Label 1-20%
20%
Don’t Sell Private Label
26% 0%
46%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R12
SELLER-FULFILLED PRIME IS A VAST
GROWTH OPPORTUNITY
With an estimated 100 million Amazon Prime subscribers today, sellers
are eager to gain access to this extensive audience as they are more
than twice as likely to shop online daily than non-Prime customers.
Currently, one-third of all surveyed sellers are utilizing Seller-Fulfilled
Prime in some form. We expect to see this number increase over the
next year as more sellers decide they want to reap the benefits of
attracting more Prime customers.
PERCENTAGE OF SELLERS’ SKUS SOLD AS SFP
23% 0%
1-59%
9% 68%
Over 60%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R13
SELLERS’ BIGGEST CONCERNS
Amazon Competing With Me
38%
Marketplace Fees
33%
Negative Feedback/Reviews From Customers
32%
High Storage Fees
28%
Amazon Taking Away My Seller Privileges
24%
Other Sellers Selling My Items
22%
DIRECT COMPETITION WITH AMAZON IS A Refunds
PROMINENT CONCERN 19%
ASIN Hijacking
19%
Complicated Fees
Last year, Amazon sellers’ greatest concern was getting their seller
19%
privileges revoked. However, that concern decreased amongst sellers
that responded by 28% versus last year. Difficulty Understanding How Much Money I’m Making
15%
Taking its place as the top concern amongst sellers (40% of respondents
Difficulty Understanding Amazon Reports
agreed) is competing with the industry-leading behemoth, Amazon,
14%
on its marketplace. Competition with Amazon is fierce for both the Buy
Gated Items
Box and private label.
13%
This concern was followed closely by marketplace fees, negative Negative Feedback/Reviews From Sellers
feedback and reviews from customers, and high storage fees. 11%
Violating MAP
9%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R14
Surveyed merchants with sales over $2 million are more likely
SELLERS ARE LOOKING TO PROVIDE
to choose their products based on what is popular in a specific
DIFFERENTIATION THROUGH SCOUTING marketplace, by analyzing market trends, and what their competitors
are selling.
On the other hand, merchants selling below $250K are more likely
As expected, how sellers research and scout for new products varies
to look for items that are cheap to buy and sell at a higher price,
greatly by their size and sales volume. The most popular response
that are popular in a specific marketplace, or that are random and
amongst a nearly equal number of respondents with various sales
they think will sell.
volumes is to scout by looking for unique items with little or no
competition – which allows them more room to win the elusive Buy
Box at the onset.
SELLERS’ SCOUTING METHODS BY ANNUAL SALES VOLUME
50%
45%
42% 41%
40% 39% 39%
35% 35%
34%
32% 32%
30%
25% 24% 25%
23% 22%
20% 20% 20%
17% 17% 18% 17%
15% 14% 14% 15% 15% 15%
12% 12%
10% 9% 9% 10%
8%
5% 5%
3% 3% 2%
0%
I base my I look for I base my I look for items It’s random; My distributors Trade Shows By estimating By looking at By working By using
decisions on unique items decisions that are cheap whatever I source things market size market trends with a a software
what’s popular with little on which to buy but sell come across for me and consultant solution
in a specific competition products my at a high price that I think I suggest I sell
marketplace competitors can sell them
are selling
Sales Below $250K Sales Between $250K-$2M Sales Above $2M
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R15
The popularity of Amazon Sponsored Ads particularly amongst
private label sellers is extremely evident. 92% of surveyed sellers
that bring in over 80% of their revenue from private label rely
PRODUCT LISTINGS ARE BECOMING A
heavily on this advertising method.
GREATER AREA OF FOCUS
PRIVATE LABEL SELLERS’ PROMOTION METHODS
Although more than half of the survey respondents utilize Amazon Amazon Sponsored Products
Sponsored Ads as their main advertising medium, product listings 62%
moved up to the number two spot in 2018, with 38% of sellers 81%
promoting their products through focused and succinct product Product Listings
37%
listings. For the survey respondents, having accurate, sharp, and 40%
attention-grabbing product copy is more important than promoting
Social Media
their items on social media. 38%
33%
SELLERS’ PROMOTION METHODS AdWords and/or Search Marketing
18%
19%
Amazon Sponsored Products
54% Google Shopping
12%
Product Listings
13%
38%
Social Media Display or Banner Ads
8%
35%
10%
AdWords and/or Search Marketing
A+ Content
21%
7%
Google Shopping 9%
14%
Native Advertising
Display or Banner Ads 5%
10% 4%
A+ Content
Print Advertising
9% 6%
Print Advertising 3%
5%
Advertising Agency
Native Advertising 3%
4% 2%
Advertising Agency
2% 1-79% Revenue from Over 80% Revenue from
Private Label Private Label
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R16
This reveals that high-volume sellers have realized advertising is a
HIGH-VOLUME SELLERS ARE SEEING
focus for Amazon and learning how to effectively manage marketing
BENEFITS THROUGH ADVERTISING campaigns and promotions can prove to be extremely profitable.
Additionally, over half of sellers (55%) with an annual revenue of
under $250K spend less than $1,000 per year on advertising. Over
We asked sellers how much they spent annually on advertising. For
seller respondents with an annual revenue over $2 million, 12% three-fourths of sellers with an annual revenue between $250K and
spend more than $1 million annually, which is a 5% increase from $2 million spend less than $50K per year on advertising.
the percentage of sellers who spent over $1 million annually last
year.
SELLERS’ ADVERTISING COSTS BY ANNUAL SALES VOLUME
60%
55% 55%
50%
45%
40%
35%
30%
26%
25% 24%
23%
20% 20% 19%
18%
15% 14% 14%
12% 11% 12%
10% 9% 9% 10% 10%
6%
5% 4%
2%
0.3% 1% 0% 0.3% 1%
0%
$1M+ $500K-1M $100K-500K $50K-100K $20K-50K $5K-20K $1K-5K Below $1K
Sales Below $250K Sales Between $250K-$2M Sales Above $2M
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R17
Use of scouting software is still popular among sellers of all sizes,
SELLERS LEVERAGE SOFTWARE TO SUCCEED
but for the two buckets above $250K we saw large increases in
ON AMAZON use versus last year, which demonstrates that scouting popular
products that will convert rapidly is still a priority. The use of
repricing software increased by sellers in all three buckets,
Three-quarters of high-volume sellers (over $2 million in annual particularly those that sell anywhere between $250K-$2M per year,
sales) that were surveyed utilize inventory management software as they experienced a 15% increase versus last year.
and nearly that same number of sellers utilize order management
and shipping software, which are both being used more now than Lastly, more smaller sellers are utilizing software. For the Amazon
last year. It is clear that sellers with larger-scale operations tend merchants who sell less than $250K per year, use of analytics
to spend more money on software to help them automate certain software and assortment review software drastically increased (by
business functions. 27% and 45%, respectively). This reveals that even sellers who are
still finding their way on Amazon are using software to highlight
and draw out analytics and refine their product offering.
SELLERS’ SOFTWARE BY ANNUAL SALES VOLUME
80% 75%
72% 72%
70% 67% 61%
60%
53% 53%
50% 50%
46% 49% 49%
44% 46% 44% 44%
47%
43%
40% 39% 38%
31%
30% 24% 36%
23%
20%
17% 11%
10% 10%
8%
0%
Shipping Order Inventory Finance Listing Repricing Scouting Analytics Assortment
Software Management Management Management Software Software Software Software Review
Software Software Software Software
Sales Below $250K Sales Between $250K-$2M Sales Above $2M
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R18
WEBINARS ARE THE FAVORED RESOURCE
FOR INDUSTRY KNOWLEDGE
CATALOG EXPANSION IS THE KEY TO
DRIVING PROFITABILITY
We asked sellers how they stay informed about the e-commerce industry.
Webinars are still the leading source for industry knowledge, with more than
half of the sellers surveyed choosing webinars as their top choice. Webinars
We asked Amazon merchants what they think can help increase their
are great educational offers that appeal to customers and prospects alike
revenue on Amazon. Nearly half of the respondents answered that their
and can double as an effective content marketing tactic.
strategy would be to sell new products. This is why sellers put such strong
emphasis on scouting – if they are the first to sell a new product, more In 2017, blogs and Facebook tied as the second choice for industry
often than not this helps their sales performance throughout the year. knowledge. This year, blogs and conferences tied as the runner-up,
Other sellers’ methods included optimizing their advertising budget and revealing that maintaining a blog with fresh content and engaging with
understanding the market and their competition. other sellers at community-based events, conferences, and workshops
are top of mind for sellers when it comes to best practice education and
learning from other sellers.
SELLERS’ STRATEGIES TO INCREASE REVENUE
Selling New Products
INDUSTRY KNOWLEDGE RESOURCES
44%
Optimizing Advertising Budget Webinars
13% 54%
Blogs
Understanding Market Competition 30%
8%
Conferences
Optimizing Fulfillment Methods 30%
7% YouTube
25%
Increasing Inventory Control eBooks
6% 24%
Understanding Amazon Reports Networking Events
22%
4%
Facebook
Implementing New Software 22%
3% Friends
16%
Receiving More Frequent Day-to-Day Alerts
LinkedIn
2%
6%
Other Twitter
14% 4%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O R19
SELLERS PURSUE AMBITIOUS GOALS IN 2018
The majority of online retailers want to increase their online presence this
year. The goal of diversifying to other platforms is still number one, but this
decreased 21% versus last year, revealing that many seller respondents
are Amazon-centric and focused on perfecting their selling process on
the marketplace before broadening their scope to other e-commerce
platforms.
32% of respondents want to add private label products to their catalog
and 30% want to sell globally with Amazon. Not surprisingly, only 14%
of sellers have plans to hire more people, as many businesses focus on
keeping a lean operation and hiring temp workers during holiday and
peak seasons.
SELLERS’ PLANS FOR 2018
Diversify to Other Platforms
38%
Add Private Label Products to My Portfolio
32%
Sell Globally With Amazon
30%
Use Additional Fulfillment Methods
21%
Launch My Own Website
17%
Use New Business Software
15%
Hire More People
14%
T H E STAT E O F T H E A M A ZO N M A R K E T P L AC E 2 0 1 8 © F E E DV I S O RMAXIMIZE YOUR
AMAZON POTENTIAL
Feedvisor is the pioneer of algo-commerce – the discipline of using
big data and machine-learning algorithms to make business-critical
decisions for online retailers.
Feedvisor’s award-winning repricer and data analytics solution is the
gateway to maximizing your Amazon success.
“ Our business has been with Feedvisor for over 4 years. Feedvisor is
truly a remarkable and evolving company. While its algo AI repricer
is their superstar, it is their team of intelligent and passionate
GET STARTED NOW
people that will propel your Amazon business to the next level. ”
CHUN TOM
BBEAUTY2U FEEDVISOR.COM 1.917.338.4800 INFO@FEEDVISOR.COM
FEEDVISOR DRIVES RESULTS: “ Feedvisor cares about my success in ways that other companies
don’t. I always get actionable intelligence from everyone that I
work with at Feedvisor. Insights that you can do something with.
34% 37% 28% You don’t have to go digging for it. ”
increase in increase in increase DON WINCKLER
revenue profit margins in sales ROCK RIDGE SALESYou can also read
