FBA, Prime and 3P selling all up at Amazon

By Dan Wilson April 16, 2015 - 2:57 am

One of the problems with assessing the health of the big marketplaces such as eBay and Amazon is that they give so little away in their various reports. That’s why learned independent reports and studies can be so useful.

Here’s an interesting such report we came across yesterday from Baird Equity Research. It’s quite a digestible report but sadly it looks just at the US state of affairs. That said, it’s still vital. You can read it for yourself here, but find below some choice cuts.

Sales on Amazon are healthy and product selection continues to grow and 3P sellers (third-party, marketplace sales) are outperforming Amazon’s own activity it seems year on year. Indeed, the report identifies accelerating 3P inventory growth as a boon for Amazon.

FBA (Fulfilment by Amazon) is doing well too. The report says: “Our survey suggests continued FBA adoption among third-party sellers, as the growth in Prime-eligible items of 47% Y/Y was well above the 19% growth rate of Amazon-as-seller SKUs. This dynamic was most notable during Q1 in the “Cell Phones & Accessories” and “Video Games” categories.”

So FBA growth is fuelling the growth of Amazon Prime. Because more 3P sellers are using FBA, more SKUs are available to Prime buyers who pay the annual $99 subscription and because more buyers like Prime making FBA an attractive service for sellers because it gives them access to Prime buyers. That’s a virtuous circle.

Amazon is clearly doing well and the report, which is meant for investors and share buyers in the first instance, gives Amazon’s stock an Outperform rating.

From a more practical seller point of view it also demonstrates that Amazon, in general, offers ecommerce SMEs a continued opportunity.

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