Customers spent $453.46 billion online in 2017, a 16% increase from the previous year. For the first time e-commerce sales represented more than 10% of total retail sales at 10.5%. Amazon accounted for 41% of online retail sales.
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Why does Amazon Basics exist? The difference between what Amazon could be making, and what they do make today is why this is interesting. In fact, that difference is why Amazon Basics is not the play it appears to be.
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Customers, and the media talk a big game about manufacturing ethics, and the pressure on local retailers. And then they want a $9.99 t-shirt. Ethical supply chain is good, fast shipping is better, low price is best.
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People do not shop the same on Amazon as on eBay, nor on eBay as in small websites, and neither in small websites as in retail shops. And so people do not buy exactly the same things on Amazon as they do elsewhere.
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During the last three months of 2017 Amazon's revenue from third-party seller services was $10.5 billion. For the first time surpassing $10 billion in a quarter. For the full year it was $31.8 billion. It is easy to misunderstand the scale of Amazon's marketplace since the company reports so little on it. The $31.8 billion in fees in a year is why most analysts estimate it at over $100 billion in GMV.
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The big news story today is eBay announcing that it will stop working with PayPal as its back-end payments service in 2020. Modern marketplaces are bundles of vertically integrated services, payments are a big part of it. eBay independent from PayPal will do better.
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Since June last year Fulfillment by Amazon (FBA) usage has grown considerably. Across all marketplaces the percentage of sellers using FBA has on average increased by 10 basis points, for example on Amazon.com it is up from 58% to 69%.
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“There is this erosion of what it means to be a traditional consumer product brand. Amazon is becoming something like the umbrella brand, the only brand that matters.” If true, one should be building a brand which embraces this.
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eBay marketplace has tens of millions of sellers selling worldwide, but the majority of sales is done by a small pool of top sellers. We estimate that top 5,000 sellers account for 25% of worldwide GMV on eBay.
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What Amazon likes to talk about are rarely the things which matter. Instead Amazon is playing poker by only revealing the hints it wants you to see. Amazon's drones is a head fake.
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