There is nothing warm, cuddly and community-oriented about Amazon: it is a ruthlessly efficient logistical machine. But then most business people are not in ecommerce to make friends. They're there to make money. And Amazon appears to do a better job of helping them do just that. JL
Advertising Age reports:
eBay charges about 10% of each item's final sale price, Amazon takes 15% in most cases, with additional fees for storage and packaging. Sellers say Amazon is worth the extra expense to achieve greater sales and that it's cheaper to let Amazon handle logistics than do it themselves.
EBay's once-loyal merchants are moving more of their business to Amazon, saying they get more for their money by selling merchandise via the web retailer.
Amazon's pool of merchants doubled to about 2 million in 2014, while the number of sellers on eBay has remained flat at 25 million in the past two years. Businesses that at first set up online storefronts on eBay say they're surprised how quickly sales surge on Amazon once products appear on both sites.
The move to Amazon, which boasts a bigger user base and offers more ways to ship merchandise, poses a threat to eBay, which pioneered the idea of an Internet marketplace where merchants big and small could hawk wares.
"We saw sales drop 10% on eBay and gain 10% on Amazon," said Chance Knapp, CEO of Vivo Technology, a laptop parts and accessories business, about a few product lines he moved last year. "It was like customers were actually shifting from eBay to Amazon."
EBay is already under pressure, chalking up lackluster holiday-quarter sales and suffering a marketplace traffic slowdown that CEO John Donahoe blamed on changes in the way Google handles shopping-search results. EBay is spinning off its PayPal division this year after pressure from activist investor Carl Icahn, who lamented sluggish gains in the online shopping division.
Moving storefronts doesn't come cheap. Amazon charges a premium for its logistics services, which include storage, packaging and ensuring products are shipped in a timely manner. Both companies have complex price formulas that vary by product category. While eBay typically charges about 10% of each item's final sale price, Amazon takes 15% in most cases, with additional fees for optional storage and packaging.
Many sellers say Amazon is worth the extra expense to achieve greater sales volumes and that it's cheaper to let Amazon handle logistics than do it themselves.
ChannelAdvisor Corp., a Morrisville, North Carolina consulting company that helped 3,000 merchants sell $6 billion in merchandise last year, saw the migration to Amazon from eBay begin last year. Slowing sales growth on eBay encouraged sellers to move inventory to Amazon, and the gap widened, according to Scot Wingo, ChannelAdvisor's CEO.
By the last three months of 2014 -- critical for retailers because of holiday shopping -- ChannelAdvisor saw its clients' Amazon sales rise 33% from a year earlier, compared with 5% growth on EBay."EBay remains a good part of the business, but it's on life support and the growth is on Amazon," Mr. Wingo said.
Chris Matsakis, president of daily-deal site DealGenius.com in Chicago, said that as recently as 2013 sales on eBay exceeded those on Amazon's marketplace. Last year, his revenue via Amazon grew fivefold, and are now four times greater than sales on eBay, he said.
"We're seeing significant growth on Amazon where eBay has sort of plateaued," Mr. Matsakis said.
Amazon -- which also sells goods from its own inventory of products, not just from third-party retailers, such as eBay's marketplace -- attracted 174.9 million unique visitors in the U.S. in February, 46% more than eBay, according to ComScore Inc.
EBay remains the leading marketplace, measured by the number of sellers, which has remained steady at 25 million for the past two years, according to Ryan Moore, a spokesman for eBay. He declined to comment on any sales shift, referring instead to Mr. Donahoe's previous statements on revenue growth.
Amazon, based in Seattle, had more than 2 million merchants at the end of last year, up from more than 1 million at the end of 2013. Still, Amazon's logistical support services and larger customer base make it attractive to sellers with high sales volumes of quick-moving inventory, while eBay remains more favorable to small sellers of collectibles and specialty items.
Amazon, which has 270 million active buyers compared with eBay's 155 million, has had a third-party marketplace since 2000 and started offering Fulfillment by Amazon in 2007. Some sellers have been wary of Amazon, since it can also be a retail competitor.
The shift highlights the value of Amazon's paid membership model and its investments in distribution. Amazon boasts tens of millions of customers who pay $99 a year for fast delivery, as well as offering online music and movies. Merchants are willing to pay Amazon more to access those shoppers and have Amazon handle and deliver their products.
"You can draw a pretty straight line to the success and popularity of Amazon Prime," said Gil Luria, an analyst at Wedbush Securities Inc. "People who used to shop all over the place are now doing most of their shopping on Amazon."
Three out of four merchants using the Fulfillment by Amazon warehousing, packaging and shipping service reported annual sales growth of 20%, according to a recent survey by Amazon. More than 40% of all products sold on Amazon comes from third-party merchants who pay Amazon a cut of each sale, said Tom Taylor, Amazon's VP-seller services. Those sellers are increasingly paying Amazon extra to handle storage and shipping, he said.
"Sellers benefit from the confidence that customers have in Amazon, while tapping into Amazon's world-class fulfillment resources, global selling expertise and customer service," Mr. Taylor wrote in an e-mail interview.
A key benefit to selling on Amazon is prolonging the holiday shopping season, merchants said. EBay sales tail off about a week before Christmas, while sales on Amazon remain strong for several more days because customers are confident gifts will still be delivered in time, merchants said.
EBay's marketplace revenue growth of 6.4% in 2014 trailed the industry's growth rate of 22%, according to eMarketer. That's a key challenge facing Devin Wenig, who will become CEO of EBay after the company spins off PayPal.
"EBay has lost its sight," said David Epstein, e-commerce director for Watchwarehouse.com based in London, which has also seen sales on Amazon overshadow those on eBay. "EBay doesn't think as a retailer, but Amazon does because so much of its business is retail."
No comments:
Post a Comment