About 90% of the physical products in Amazon’s catalog are listed by third-party sellers, according to Wall Street firm Baird Equity Research. However, the firm noted an increase in the portion of first-party inventory within most categories.
“Overall, Amazon-as-seller SKUs increased 26% Y/Y (+44% in non-media categories) with meaningful growth in Cell Phones/Accessories, Home & Kitchen, Appliances and Tools & Home Improvement. We believe these likely represent categories in which Amazon is moving to take greater share, and any shift to 1P from 3P would benefit revenue growth.”
Amazon continues to add to item selection at a rapid pace, with analyst Colin Sebastian estimating a 19% increase year over year. He also estimated that items qualifying for Amazon Prime grew 34% Y/Y, accelerating from +19% in Q1, with 26.8 million items now eligible.
Sebastian sees Fulfillment By Amazon (FBA) as a key lever to drive category and Prime growth.
“Our survey indicates a high rate of FBA adoption among third party sellers, most notably in “Shoes,” “Beauty,” “Jewelry” and “Clothing and Accessories” categories,” he wrote. “Importantly, we see this creating a virtuous cycle of increasing Prime subscriptions, further category expansion and greater unit velocity.”
However, he noted that only 13% of all physical items are eligible for Prime shipping, including 24% of media products and just 9% of non-media products. He said that suggested a “meaningful opportunity” for Amazon and third-party sellers to further expand Prime.
He estimates the number of items listed for sale on Amazon.com at about 240 million, 18.7% higher year-over-year.
Analysts will be studying Amazon’s second quarter earnings carefully when the company releases its report next week.
