In May 2019, Amazon's first-party online sales dipped below 50% of its total sales figures. The online retail giant, which brought in close to $59 billion in quarterly net sales in the first quarter of 2019, has seen a shift toward third-party seller services, which the second-largest piece of the pie that quarter.
To sell on Amazon, retailers have two basic choices: become an Amazon vendor or sell through a third party. Selling offers several tangible benefits worth understanding as you decide how to jump on board with Amazon sales.
Partnering with a third party seller means gaining a partner who knows the marketplace intimately. They know how to get your brand's message in front of the most people, obtain high page ranking for common search terms, and utilize Amazon's paid marketing tools. This shortens the learning curve as you adjust to a new sales platform.
You likely have a Minimum Advertised Price (MAP) policy in place. Unfortunately, if you become an Amazon vendor, it's worthless. Amazon will not sign it. In addition, Amazon uses a "race to zero" approach, constantly pushing prices lower to remain competitive, even at the expense of profit margins. When you sell through a third party selling service, you can hold your seller to your MAP and stay profitable.
For most vendors, Amazon pays every 90 days. The timing of payment depends on your selling partner's terms, but it's almost always sooner than 90 days when you sell through a third party service. This keeps the cash flowing.
Finally, partnering with a third party seller means you can sell in America, Canada, Mexico, and the European Union. Expanding your product into a global market potentially expands your income. As an Amazon vendor, you're limited to selling to American buyers only.
Amazon continues to lead the online retailers in terms of volume and overall sales. Working with a third party selling service lets you capitalize on that, without falling victim to the "race to zero" mentality of Amazon-controlled selling.
Are you looking for a third party selling partner to take advantage of these benefits? Download our selling guide that provides practical tips for maximizing your partnership.