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FBA Helps Amazon Break a Billion in 3P Merchant Unit Sales

Amazon revealed that its 2 million-plus third-party merchants sold “more than a billion” products worldwide in 2013. What helped Amazon create that new record was its FBA program combined with opening up its holiday deals promotions to third-party merchants for the first time, and cross border trade was also a factor.

Amazon is one of the most secretive companies in the ecommerce space, much to the frustration of those in the industry wanting to know details about the largest online retail marketplace. The biggest revelation in a statement released Thursday was that its 3P sellers sold “more than a billion units worldwide, cumulatively worth tens of billions of dollars.” That’s a record – in 2012, its sellers sold “hundreds of millions” of units worldwide, also worth “tens of billions of dollars.”

Amazon said those couple of million sellers continued rapid adoption of Fulfillment by Amazon (FBA): the number of active Marketplace sellers using the FBA service grew more than 65 percent year-over-year worldwide.

That seems to explain how the number of Amazon’s third-party sellers remains somewhat stable while the number of units they sell continues to grow – sellers can exponentially increase the number of listings on Amazon by outsourcing order and payment processing, fulfillment and customer service through the FBA program.

That point was drive home in Thursday’s press release when it quoted Eli Silver Sakkal, president of Amazing Deals Online, who said his company offered a holiday deal through Amazon on Cyber Monday:

“We sold more than $1,000,000 in product in a single day. Being a Marketplace Seller on Amazon has allowed us to benefit from the technical infrastructure they’ve built up over the years while reaching millions of loyal customers worldwide for a modest cost to us. We have enjoyed an 80 percent increase in units sold on Amazon this holiday season without having to invest a penny in our own infrastructure.”

Another merchant, Tech Armor, said the FBA program “allows us to fulfill a mass volume of orders we just could not fulfill ourselves. Our confidence in the FBA program has allowed us to focus our efforts on promotions and other areas of our business such as maintaining the inventory levels to support strong holiday demand.” It grew its sales on Amazon 70% during the holiday season.

But in order to participate in deals on any marketplace, sellers must offer deep discounts. Tech Armor co-founders Joseph Jaconi and Eric Tong explained why that’s sustainable:

“Providing incredible pricing and deals on Amazon helps us attract new customers and creates a halo effect for our items that lasts well after a promotion,” they said.

Amazon had announced in November it was opening up the holiday deals promotions to third-party merchants for the first time, see EcommerceBytes 3-part interview with Amazon Marketplace Vice President Peter Faricy about that decision. Amazon spokesperson Erik Fairleigh confirmed on Thursday that sellers will be able to offer promotional deals that are approved throughout the year.

EcommerceBytes compared the numbers from 2013 that Amazon released on January 9, 2014, with the numbers for 2012 released on January 2, 2013, and noted the company did not release numbers enabling a comparison of holiday numbers between the two years.

Regarding the most recent holiday season, Amazon wrote: “On Cyber Monday (2013), more than 13 million units were ordered worldwide from Marketplace Sellers on Amazon, growing the total units ordered by over 50 percent year-over-year.”

Last year, it had written, “unit growth solely from sellers in the U.S. (during the 2012 holidays) increased more than 40 percent year-over-year.”

When we asked for unit growth among U.S. sellers during the 2013 holiday shopping season to help us make an apples-to-apples comparison, Fairleigh said, “We elected to present worldwide data this year for the Marketplace Seller Holiday announcement so unfortunately I don’t have that same data point. We did not breakout country specific data this year.”

Meanwhile in Amazon’s statement Faricy said, “It has been an incredible year for Marketplace Sellers including popular brands and businesses of all sizes selling on Amazon. Our customers have told us they appreciate the hundreds of millions of products listed by Marketplace Sellers that range from all types of apparel to a vast selection of electronics items.”

He continued, “Our goal every day is to make selling on Amazon as easy as possible. Fulfillment by Amazon is a wonderful service as it gives all Marketplace Sellers the option of warehousing their inventory in our fulfillment center network. It has been a game changer for sellers because their items become eligible for Prime benefits, which drives their sales and benefits consumers with additional Prime selection.”

Cross-border trade was also an important factor in helping Amazon break unit record sales by 3P merchants. The company revealed that third-party sellers worldwide shipped items to customers in more than 185 countries, and over 480,000 cities. And even more interesting was this data point: Marketplace sellers on Amazon from 89 different countries fulfilled orders to U.S. customers using the Fulfillment by Amazon service.

Other factoids of interest to sellers released by Amazon on Thursday:

  • FBA shipped more units worldwide during the fourth quarter of 2013 than the total number of FBA units combined in all of 2009 and 2010.
  • The number of FBA units shipped worldwide grew more than 50 percent year-over-year during the 2013 holiday season.
  • On Cyber Monday, the number of businesses using Amazon Payments to allow Amazon customers to purchase on sellers’ own websites grew more than 50 percent year-over-year worldwide.
  • Apparel is a fast growing category for Marketplace Sellers on Amazon. The number of FBA units shipped by Amazon doubled in size from 2012 to 2013.
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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). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.