Amazon.com (AMZN) divulged that its 2 million third-party vendors sold a record 2 billion items worldwide in 2014.
The number of items sold increased two folds from the prior year, although the number of Amazon sellers remained unchanged.
Third Party Vendors
Amazon offers a marketplace for third-party vendors to sell new and used items directly to customers along with the retailer's products.
The third-party sellers gain as Amazon takes care of the transaction process. Amazon profits from its ability to provide additional products to its customers than it could otherwise. Amazon earns money by charging a commission on each product sold.
The Numbers
Amazon announced that its Fulfillment by Amazon (FBA) service is highly valued by the third parties. Through the service, sellers can have Amazon store and ship their products directly, gain from Amazon Prime shipping and tap into Amazon's customer support.
In 2014, the number of sellers using the FBA service jumped 65% from 2013.
Amazon also initiated and extended other services last year to facilitate third-party vendors. The Amazon Seller app for iOS and Android enables sellers to list items for sale, take care of orders and deal with inventory.
In November last year, the company further added Growth Guarantee to its Amazon Payments feature that assures sellers a reimbursement of service fees if they do not witness an increase in sales.
Amazon hasn’t commented on profit margins but it did reveal that based on the category of the item sold, it charged a certain fee.
According to Amazon, sellers who provided special holiday deals witnessed as much as 400% increase in unit sales during the holiday season.
On Cyber Monday, sellers sold more than 16 million units worldwide, while orders through Amazon Payments augmented over 60% from the prior year.
According to Amazon, it has sellers in more than 100 countries, with China and Hong Kong-based sellers increasing 80% year over year.
However, Amazon Sellers have not been content with Amazon’s service throughout. The fee hike in 2013 led several sellers threatening to withdraw. In Dec 2014, Amazon infuriated a number of sellers yet again after it refused to reimburse them for a pricing anomaly caused by third-party software, which caused one seller to lose £10,000.
Amazon currently holds a Zacks Rank #5 (Strong Sell).Better-ranked stocks in this industry include Autobytel Inc. (ABTL), Geeknet, Inc. (GKNT), and Mercadolibre, Inc. (MELI). All of them carry a Zacks Rank #2 (Buy).
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