Friday, August 3, 2018
3rd Party Sellers Generate Over US$22 Billion Every Year for Amazon
3rd party sellers generate over $22bn in revenue every year for Amazon.
It feels like evvveryone is hopping on the Amazon train. With one-hour delivery, massive Whole Foods discounts, and near-instant drone delivery (coming soon), there's a lot to be excited about.
While every new feature Amazon rolls out generates massive news coverage, there is another side of Amazon's commerce platform that flies relatively under the radar. Fulfilled by Amazon (FBA)-- where thousands of independent shops, manufacturers, and distributors sell their own products directly on Amazon— has spawned a blossoming ecosystem where entrepreneurs are thriving.
FBA was born out of Amazon's own hyper-efficient fulfillment centers, which manage billions of items owned and sold by Amazon. Instead of purchasing new products themselves, Amazon allowed anybody to ship their products directly to their fulfillment centers. Items purchased by customers are fulfilled by Amazon, who takes a percentage of the sale.
FBA grew quickly: outside sellers accounted for 45%+ of all orders on Amazon in 2015. 😮
The Fulfilled by Amazon Ecosystem
Some businesses are thriving in the Fulfilled by Amazon ecosystem:
3rd party sellers: The most obvious category. Entrepreneurs selling goods through FBA, from paperbacks bought at yard sales to lip balm mass ordered from China, generate over $22bn in revenue every year.
Take Harsha Atluri, who sold over $200k working nights in college:
“Some sellers go directly to manufacturers or sign distributor agreements, but that's difficult as a solo operation. I source products from Craigslist, yard sales, thrift shops, and online auction sites.”
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