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Amazon VP Discusses Merchant Solutions and Holiday Outlook

In Part Three of our interview with Amazon Marketplace Vice President Peter Faricy, he discussed solutions for third-party merchants and the outlook for holiday sales. In Part One, Faricy discussed how for the first time sellers can showcase their products on Amazon’s holiday promotion shopping pages. In Part Two, he provides an update on collectibles, wine and fine art, clothing and other popular categories and responds to questions about Amazon’s interest in offering vintage clothing and handmade goods. (Links to Parts One and Two are found at the bottom of this article.)

Advertising on Amazon

EcommerceBytes: I wanted to cover advertising. As you started off by saying, sellers are very eager to promote their products to shoppers. Is there anything new you can add about Amazon’s ad programs for sellers? I know you have a couple of different programs. Anything new or that you want to call out?

Peter Faricy: One that I don’t know if it’s already made your radar screen, but one that’s very popular with sellers is called sponsored products. I don’t know if you’re familiar with how this works, but it’s the equivalent of a seller being able to buy a sponsored link within Amazon search results. I happened to pull one up as you asked that question, I just typed “bluetooth speakers” into the search box. You’ll get a page of Amazon search results. If you were to page toward the bottom of those search results, the last three results are sort of in a gray box by themselves with a title that says “Sponsored Products from Amazon Sellers.” I talked to a seller this morning who happens to be selling a bluetooth wireless speaker. He’s doing very well, he’s been very successful. He’s not one of the three that’s listed in the sponsored section, but I know the sellers who are in the Sponsored Products find it to be a great feature to call attention to their products.

EcommerceBytes: And those are not going outside of Amazon, but you still have the advertising program where you can advertise your off-Amazon products, but the Sponsored Products, the sponsored ads, are actually just another way to bring attention to your Amazon listings.

Peter Faricy: Exactly. I’m taking a look at bluetooth speakers. It looks like there are hundreds of bluetooth speakers, maybe thousands as I take a look at the search results here. For a seller who really wants to draw more attention to their products, the three that are listed here, Ina, are really interesting. All three of them have great customer ratings. There’s two four and a half-star ratings and one five-star rating. And then all of them look like they’re using FBA. They’re all Prime-eligible. To me, that’s a very smart move by these sellers. The number-one piece of feedback I get from sellers is how popular Sponsored Products are.

Amazon Login and Pay

EcommerceBytes: When you do have your own website as a merchant, there is some flux going on, especially with Google Checkout being retired. What should sellers know about Login and Pay, because that’s something new from Amazon?

Peter Faricy: It’s a great opportunity (for sellers) to enable here, just in the U.S., a hundred million customers to more easily access their own website. It’s a great program; I really love it. I happened to be on a plane flight a few a few weeks ago and I used it for that GoGo inflight wireless service. It now enables you to continue working all flight long. With GoGo it was fantastic because it recognized me as an Amazon customer. I hit one click to purchase. I had to retype in my password and I was done. It was really fantastic.

EcommerceBytes: So there’s no rest for the weary even on a plane trip… In terms of any challenges with online payments, I would think that with Amazon Login and Pay, it’s more a matter of offering customers one more way to pay. I’m not of the opinion that Amazon has the ability to dominate on a third-party website where a merchant is selling goods. It doesn’t sound like Amazon is there yet in terms of being the number-one payment option for merchants. Do you see it growing? What is the main benefit to a merchant?

Peter Faricy: I think the main benefit is, overnight in the U.S. you give super convenient and easy access for over a hundred million customers to pay in a very trusted way on your website. The number one thing in payments, at the very top of the list, is trust. Customers have come to trust that when they pay for things on Amazon, that’s a trusted, high quality experience. The sellers I’ve spoken with who have this on their site, their feedback has been very positive, because customer trust is also important for them on their own site, and the fact that customers can conveniently checkout that easily is incredible. I think it’s got great growth potential because it does something that’s special for the retailer but also great for customers.

EcommerceBytes: I think at this point if you’ve already got your website up and you’ve already got your payments options, I don’t think it’s something that a lot of (sellers) think about, but I think it’s certainly something that’s worth considering. Because it’s a new program, it hasn’t had time to sink in. But perhaps with Google Checkout being retired, there’s an opportunity there.

Peter Faricy: I think you’re right. I think you’re on to something. We’ve done a really good job of telling sellers all the different services we offer on Amazon, Fulfillment by Amazon being the most popular. But I think we’ve got to get the word out about how great Amazon Login and Pay is, because it’s a great product. If you have your own website, to me, you need to have a number of payment options for customers. Certainly I would put this at the top of my list if I was running my own website.

The Outlook for Holiday Sales

EcommerceBytes: Finally we’re in the holiday season, where things are gearing up. There has been some concern expressed by your competitors about economic conditions that could affect this year’s growth rate, looking at the fourth quarter. Is there something third-party sellers on Amazon should know about this year’s holiday sales expectations?

Peter Faricy: We’re very excited about the holiday season. I think in the conference call we had, we gave guidance for our sales expectations. The growth for the fourth quarter, we gave expectations of growth somewhere between 10 and 25%, which is terrific. You might remember last year during the holiday season, sellers on Amazon grew their unit sales by over 40%. We know sellers have had a great holiday season last year, and now when you add in the ability for them to run these new promotions this year, I think the sellers I’ve spoken with are very optimistic about the holiday season.

EcommerceBytes: I want to make sure I understand, because you threw out a statistic. Last year sellers grew unit sales by over 40 percent. So in other words what you’re saying is, in 2011, there were X number of unit sales made by third-party sellers. In 2012, that number grew by over 40%.

Peter Faricy: That’s 100% correct. That 40% growth is terrific. The feedback I got from sellers I spoke with last year after the holiday season, they were very pleased with that growth. This holiday season, when you think about all the improvements we’ve made for sellers across the platform, but in particular this ability for them to run these holiday deal promotions, I think many sellers are very excited about the holiday season.

EcommerceBytes: Well, I think I would be happy to grow revenue 40% each year, although I know that’s not what you’re saying, it’s unit sales, but 40% is a lovely growth number for sure. The reason I really wanted to clarify it is there is another statistic out there that I wanted to differentiate between another 40% number, which is Amazon paid unit sales, 40% of those come from third-party merchants.

Peter Faricy: Exactly. That is also correct. It happens to be the same number. That is our most recent number released in Q3. Over 40% of unit sales on the Amazon platform come from third-party sellers. As you know, that percent has continued to increase each of the last quarters over the last four or five years and maybe beyond. Sellers continue to have great success selling on the Amazon platform.

You can find Part One of our interview with Amazon Marketplace Vice President Peter Faricy where he discusses how sellers can showcase their products on Amazon’s holiday promotion shopping pages, and Part Two where he discusses collectibles, clothing and other popular categories and answers questions about vintage clothing and handmade goods.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.