Amazon’s 3rd party business

July 16, 2007

Marketplaces ChannelAdvisor By ChannelAdvisor

Amzn_services2It’s a slow summer in eBay-ville.  eBay does announce earnings this week and we’ll have a preview/post announcement summary.  Before we get there though, a big trend this summer seems to be a measured acceleration in Amazon’s 3rd party business.

As I’m talking to sellers that are on Amazon Seller Central, ever since Amazon changed some policies and how the “buy box” is treated, 3rd parties (typically SMBs) are seeing a material pick up in their Amazon businesses.  I suspect Q2 was very strong for Amazon on this front and I also suspect that this line of business is much more profitable than the old ‘retail, buy/ship books’ part of the biz.

Sellers are particularly excited about Q3 thanks to Mr. Potter. While Amazon has stated they will sell HP7 at break-even/slight loss, the number of buyers coming through the store to find and order HP7 should have a nice trickle through to 3rd parties.  Some sellers have products are are great HP tie-ins (video games, etc.), but others believe just the added foot traffic will spill over into more CE items, apparel, etc.  It will be interesting to watch this trend and we’ll be reporting on Amazon’s Q2 results in addition to eBay here at ES.

Finally, sister-blog, CSE Strategies, reported recently a new Amazon offering called Product Ads.  Based on what we’re guessing they are, this will allow sellers that aren’t even in Amazon’s programs to buy PPC ads on Amazon. This would be a great ‘middle tier’ offering between marketplace/SellerCentral for sellers that, for example, didn’t make it into the jewelry category, to be able to advertise on Amazon anyway.  I also think it will be a heck of a better buyer experience than the AdWords they splat in the Amzn SERPS.