Amazon Investing more than $15B in 3rd Party Resellers – what does it mean to you?
Updated: Feb 18
Amazon is doing some serious investment in a rapidly growing sector of its eCommerce platforms. The effort is being spent in digital tools to assist third-party sellers and to stem off counterfeiters off the platform – making it a the-all-and-be-all marketplace for everyone.
This push can be considered as a course correction after the Wall Street Journal had found that the platform sells thousands of products through independent sellers that are either labeled wrong, banned or determined unsafe by regulators. If this space is to grow, better tools to identify these 3 categories have to be in place, especially after the Wall Street Journal found over 4000 items that fit the three categories. To maintain control during that growth, it has become a priority to firm up the execution of these tools.
Where do these third party resellers come from?
With the demand coming from online shopkeepers tying into the Amazon platform, it ports all their products onto Amazon with a third party reseller account. This is now creating thousands of resellers, but the porting of the products into the platform is the issue. Business owners that have a Shopify, Magento, or other eCommerce platforms can tie into this marketplace.
The tools that need solving for the resellers.
With reseller accounts being issued out to businesses that own their own eCommerce stores, large lists of products can be imported into Amazon’s marketplace. Product titles, descriptions, images have to now be filtered for authenticity, correct wording/consistency with other vendors selling the same product and find the counterfeits being pushed into the platform.
This is no simple matter as third party resellers struggle through the import process through these filters, at the same time, previously imported products (vetted) are baselines in which the import is being compared to. In some cases, appeals need to be made to reconcile these products, which is creating a significant effort on all sides to reach a successful import.
Counterfeiters being taken head-on.
Fighting fakes is a difficult matter. The vetting process takes place at the business level, if legit, the auditing of “virtual” products and determining which ones are fakes from authentic products. Project Zero is Amazon’s project to combat this issue, this has been rolled out this year using Artificial Intelligence to machine learn and identify counterfeit products.
Protecting authentic products and third-party resellers.
Amazon’s profit model through third-party resellers is leverage of its platform and marketplace to offer a greater reach for these resellers. According to Amazon, 58% of all physical gross merchandise sold on the platform came from third-party resellers. On Prime Day, which is Amazon’s big sale event, the third party resellers grossed over $2B in sales hitting a new record. The third-party resellers that sell over $1M/yr have grown over 20% in the past year on a worldwide basis.
This is good news for all third party resellers, as the tools will make it easier for authentic vendors with authentic products. However, the competitive landscape on the platform is going to be fierce, but for those that focus on cost, logistics, and customer experience and ensure they deliver a quality product will prevail and grow faster than the competition.