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Study Reveals Inside Scoop on Amazon Marketplace and Why Its Sellers are Keeping Their Options Open

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Despite its command of the e-commerce space, most Amazon sellers are still trying to diversify their options.

In a new study by algorithmic commerce platform Feedvisor on the state of Amazon’s marketplace, merchants’ shifting selling habits show that many have plans to expand into other marketplaces this year.

“Amazon will continue to be a dominant force in the retail industry. However, these expansion plans reveal that Amazon sellers recognize the value of diversifying their e-commerce presence,” Feedvisor CEO Victor Rosenman said. “While many Amazon merchants sell exclusively on the platform, this year’s shift in expansion plans illustrates the evolving state of online marketplaces, and indicates that sellers are looking to new avenues for business growth.”

Who are Amazon’s sellers anyway?

Most Amazon sellers are in the Southern part of the United States (33 percent) and in the West (33 percent), with California topping the list as the state with the most sellers.

Nearly half of Amazon’s sellers are new to the platform too. More than half of the 1,600 sellers Feedvisor surveyed have been selling on Amazon for less than two years, while just 18 percent have been selling on the platform for more than five.

Amazon’s sellers also have relatively few employees—84 percent have five employees or fewer, as many of these sellers use Fulfillment by Amazon, which means Amazon handles the bulk of their logistics and they don’t need their own employees to do it. Just 2 percent of those surveyed have more than 50 employees. Sixty-five percent of sellers sold less than $250,000 on Amazon last year, and that number grew to 72 percent this year. One-tenth of Amazon sellers, however, managed annual revenues upward of $1 million.

When it comes to what they’re selling, private label goods play a “strong” role on Amazon for merchants, according to Feedvisor. Thirty-two percent of sellers offer at least some private label items, and for 18 percent, that’s all they sell.

Most seller’s sales are coming from Amazon

Nearly 50 percent of sellers use Amazon almost exclusively, and the platform makes up between 80 percent and 100 percent of their sales.

For those selling elsewhere, 65 percent said they sell on eBay, two-fifths on their own company website and less than 10 percent on sites like Walmart and Jet.com.

But here’s why sellers are looking past Amazon, and where they’re headed

Walmart—despite still being a small percentage of these sellers’ sales—may start to see the uptick in e-commerce share its been avidly going after.

Survey respondents said this year they plan to expand to sites like Shopify, eBay and Jet, but Walmart led the charge with almost 30 percent of respondents saying they’d focus their online sales there.

“As Amazon continues to evolve, sellers on the platform need to evolve as well, otherwise they risk losing revenue and their competitive edge,” Rosenman said.

Amazon sellers are looking to put their eggs in other e-commerce baskets because of three main fears, all of which have everything to do with Amazon itself and nothing to do with customers or competition from other sellers.

Fifty-two percent of sellers worry that Amazon will revoke their selling privileges, while others noted Amazon’s high fees as their next biggest concern. The third threat sellers feel they’re facing—which isn’t unfounded considering Amazon’s venturing into pretty much all spaces, including apparel in a big way—is that Amazon might start to compete with them directly.

“Respondents reported various business goals for 2017, but the vast majority plan to increase their online presence even more,” according to Feedvisor. “Of those who responded, nearly 60 percent of sellers are planning to expand to other platforms, half will be adding private label products to their portfolios, and 44 percent expect to expand globally. Not surprisingly, just 4 percent of sellers have plans to open a brick-and-mortar store.”

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