The Starren Group
  • Home
  • Amazon Consulting
  • Amazon Retail Partner
  • Amazon Advertising
  • Walmart
  • About Us
    • Contact Us
    • Blog

The Starren Group Blog

Amazon Wholesale & Third Party Internal Debate

6/6/2019

 
Amazon is now pushing wholesale vendors to sell directly - cutting the middle man in the process.
 
More than half of the sales made on Amazon are by third-party merchants. With that in mind, the company is looking to expand its coverage.
 
By cutting back on orders from many wholesale vendors Amazon is pushing them to sell their inventory directly on Amazon. This will not only reduce overhead, in addition, but it can also help open more space in their warehouses and fulfillment centers. Making sure Amazon is able to push a more profitable movement.
The Value Of Amazon:
It's no secret that Amazon has built its business by revolving around scale, and is now in the perfect place to cash in.
 
For years Amazon built its business by offering a broad selection at low prices, keeping their profits to a minimum; making sure its marketplace was growing. As it's share of online sales grow, eMarketer has already predicted that Amazon will take home more than half of all online sales in the U.S.
 
In their years of grown Amazon built a wide network and a loyal customer base. Both being a critical aspect of any growing e-retailer.
 
Evercore ISI, an analyst at Indeed listed Amazon’s third-party marketplace has doubled the value of their personal retail business. Keeping away from the fact that Amazon’s third-party merchants generate approximately one-third of their revenue.
 
Meaning the third-party seller services are significantly higher than Amazon would like. As the company takes a percentage on each sale made on their marketplace, if the seller uses a service such as Fulfilled by Amazon - Amazon stores and ships their items, taking another fee. While the cost of these services is comparatively low, but it's a massive retail business in itself.
 
Removing Additional Costs:
Amazon bears a great deal of cost and risk by offering direct retail. It has to list the products and fulfill the orders while offering free service in exchange for wholesale pricing.
 
This requires more cash on Amazon’s part and pushes their overhead expenses beyond a certain level. While Amazon personnel work directly with vendors, while third-party sellers use Amazon’s automated system.
 
Bottom line is if vendors would become in charge of fulfilling their own orders, or start paying Amazon to do it; it would take a great deal of load off Amazon. Allowing them to expand their fulfillment capacity, while increasing fulfillment services.
 
Finally, it will free up room in Amazon warehouses, and allow them to take on private label products. Offering them higher profit margins, and opening new doors and opportunities for them.

Comments are closed.

    Learn More

    Contact Us to learn more about The Starren Group and how we can help you leverage Amazon to grow your business.

    Archives

    December 2019
    November 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    October 2018
    January 2018
    December 2017
    August 2017
    June 2017
    April 2017
    March 2017
    December 2016
    October 2016

    Categories

    All

CONTACT US
The Starren Group, Inc.
Amazon® and Amazon.com® are Registered Trademarks of Amazon.com. The Starren Group, Inc are independent consultants and are not affiliated with, owned by, nor endorsed by Amazon.com.

All contents © 2023. The Starren Group, Inc. All rights reserved.
NAVIGATE
Home
Amazon Consulting
Amazon Retail Partner​
Amazon Advertising
Walmart
Blog
About Us
Contact Us
Site Map
  • Home
  • Amazon Consulting
  • Amazon Retail Partner
  • Amazon Advertising
  • Walmart
  • About Us
    • Contact Us
    • Blog