The Wall Street Journal reports that Amazon said this week that "third-party merchants were responsible for 2 billion items sold last year, double the total in 2013, even as the number of such businesses held about steady compared with the prior period at 'more than 2 million'."
To put that into context, the third party sales represented more than 40 percent of the items sold on Amazon's site during 2014.
The Journal writes that "Amazon profits from outside sellers by taking a percentage commission when their goods are sold, as well as other fees, such as for storing their items. Some analysts believe the profit margin is higher on many items sold by outside parties than those sold directly by Amazon."
To put that into context, the third party sales represented more than 40 percent of the items sold on Amazon's site during 2014.
The Journal writes that "Amazon profits from outside sellers by taking a percentage commission when their goods are sold, as well as other fees, such as for storing their items. Some analysts believe the profit margin is higher on many items sold by outside parties than those sold directly by Amazon."
- KC's View:
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It always has been explained to me that third party sales is one of Amazon's real competitive advantages in its competition with Walmart. Think of it - two million businesses are selling product through Amazon, which makes its site a lot more robust than it would be otherwise. Amazon competes with those companies on price when it wants to, and doesn't when it doesn't want to. The result is a dynamic pricing model that is, well, dynamic.
Yet another reason that Amazon should not be underestimated.
