The Amazon Marketplace Opportunity

Posted on Thu, July 28, 2016 in eCommerce Tips, by Corey Thomas

The 800 Pound Gorilla

Do you have an ecommerce store? If you do, you know all about the juggernaut that is Amazon.com. The Seattle-based company has accelerated the growth of online shopping by convincing millions of shoppers to forgo the lines and crowds and buy from the comfort of their home. Amazon’s marketplace is the 800-pound gorilla of ecommerce.



What does that mean for your business? How can your site compete with a marketplace that accounted for over a quarter of all online sales and for more than half of all online sales growth in 2015?




The Marketplace

To start, we have to identify what it is that Amazon is doing so successfully, and how your business can benefit.

An important difference between your website and Amazon’s is that Amazon.com is a marketplace. Amazon allows millions of companies to sell products right alongside one another. Amazon isn’t the only marketplace doing this, it’s at the core of all online marketplaces. Hop on eBay.com, Newegg.com, Jet.com, or dozens of others, and you’ll see various strategies to bring sellers and customers together to make a sale. The key distinction for Amazon, however, is their powerful Network Effect.

Network Effect – for the Customer and Seller

Let’s unpack that Network Effect first from the customer’s perspective. For $99 per year an Amazon Prime customer gets access to free two-day shipping, video content, the convenience of skipping the store, no hassle returns, free music, free apps, and much more. The convenience and speed of shipping alone make the offer compelling to customers. Now instead of running around to 3 or 4 stores, customers can get everything they need all from one place. Each of these features creates a greater experience for the customer, and in Amazon’s mind, making the customer happy is key.

Now for the company selling the products. When selling on Amazon, each company has access to millions of potential customers, something many of them would otherwise never have access to. In addition, depending on the sales method used, a company can leverage Amazon’s world-class fulfillment network to ship items all around the world. Combine that reduction in warehousing and logistics overhead with an improved customer experience with the help of Amazon’s customer service, and companies are freed up to focus their attention on the most critical parts of their business.

Both of these groups act as two sides of the same coin, helping to ingrain online shopping, especially Amazon’s marketplace, into our everyday lives.

What Does It Mean For You?

Now for your business. Because Amazon is a marketplace, you have the opportunity to sell your products to millions of customers. Amazon’s marketplace is an opportunity for you to diversify your customer base and accelerate your growth. This is becoming especially important as shoppers change their search habits from the traditional Google search and jump right on Amazon when searching for products – in fact, over 44% of shoppers in 2015 began their searches for products directly on Amazon, while only 34% used search engines and the remaining 22% went directly to company websites.

Interested in learning more about how to start selling on Amazon.com? Check out the next article in our Amazon Accelerator Series: How to Sell on Amazon.com to learn more about how to make this marketplace work for you. Selling strategically on Amazon is one of our core competencies at GRAYBOX, so if you have immediate needs that are more complex than we've been able to cover in our series of articles please get in touch - we want to hear what your challenges are and see how we can help!

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Sources:

https://www.internetretailer.com/2015/12/23/amazons-growth-accelerates

https://export-x.com/2015/12/11/how-many-products-does-amazon-sell-2015/

https://www.internetretailer.com/2015/10/08/amazon-beats-other-e-retailers-capturing-more-product-search

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