Amazon Marketplace

Amazon Marketplace is an e-commerce platform owned and operated by Amazon that enables third-party sellers to sell new or used products on a fixed-price online marketplace alongside Amazon's regular offerings. Using Amazon Marketplace, third-party sellers gain access to Amazon's customer base, and Amazon expands the offerings on its site without having to invest in additional inventory.

Overview

Items purchased on Amazon from third-party sellers are either fulfilled by the merchant (FBM)[1] or fulfilled by Amazon (FBA).[2] FBM goods are kept in the third-party seller's inventory, and shipping and customer service are handled by the third-party merchant. FBA goods are stored in Amazon's fulfillment centers, and shipping and customer service are handled by Amazon.

Amazon charges its third-party merchants a referral fee for each sale which is a percentage of the sales price. Additionally, sellers using FBA must pay additional fees which include a pick, pack and weight charge.

As of 2020, third-party sales on Amazon accounted for 54% of paid units.[3] In 2016 Amazon.com aided more than 10,000 sellers[4] to generate more than $1 billion of annual sales. The incredible ease of creating an Amazon account[5] has led to massive increases in third-party sellers joining the platform, with over 1,000,000 sellers joining in the year 2017 alone.[6]

There are three major paths third-party sellers can take on Amazon. Wholesale, private label and retail arbitrage.

The Amazon Seller Central help section provides sellers on the Amazon Marketplace with guidelines and answers to frequently asked questions.[7] Despite the existence of this help section, a recent study has shown that 50 percent of surveyed sellers incorrectly believe that it was not possible to directly ask buyers for product reviews.[8]

If an Amazon Seller has an active registered trademark for their brand that appears on their products or packaging and can verify themselves as the rights owner or the authorized agent for the trademark, they can apply for Amazon Brand Registry.[9]

Amazon has an internal search algorithm (A9) that works almost in the same way as those of Google or Bing. The algorithm analyzes search queries that users enter in a search bar and selects the most relevant offers from brands with a good track record.[10]

Criticism

Amazon's dispute resolution policies and practices for Marketplace have drawn criticism from many sellers. The Verge has reported that many fear a complaint lodged against them with Amazon more than they would an actual lawsuit. Among their specific complaints are that policies are vague and contradictory, that buyers are often taken at their word and thus businesses are forced to admit and correct wrongdoing for perceived or minimal shortcomings rather than contest the complaint since there is no other way to get reinstated. Rules meant to protect sellers have also been weaponized, with many merchants devoting their energies to getting competitors suspended or removed from the site entirely.[11]

On July 3, 2019, the 3rd U.S. Circuit Court of Appeals ruled against Amazon.com Inc., stating that the online retailer can be held liable under state law for third-party sales on its portal.[12]

Suspension

Amazon takes a zero-tolerance stance on what it calls seller performance. Amazon suspends seller accounts, sometimes indefinitely.

Suspended sellers are prohibited from opening a new seller account.

Suspension reasons
  • Seller Performance: This is where Amazon deems a seller to be performing under its required standards.
  • Product Performance: This covers products that may have been reported to Amazon for quality issues.
  • Delivery Performance: This covers both dispatch and delivery timescales.
  • Counterfeit Reporting: If a product is reported as a counterfeit, Amazon removes selling privileges until further inquiry is completed.

Non-suspension restrictions

Sometimes Amazon may restrict certain sellers items or ability to sell without suspending the whole account.

  • Staging Status: This is where a seller is newly launched and or Amazon wants to temporarily restrict the seller's ability to sell items without suspending the account. Sellers often report their account appearing to be in vacation mode and unable to re-activate their listings.
  • ASIN Creation Privileges: Sellers are able to create new items for sale on Amazon without any supervision. Any seller found to be abusing this functionality has what Amazon considers the privilege removed.

See also

References
  1. "Guide to Amazon FBM". IO Scout.
  2. "Guide to Amazon FBA". IO Scout.
  3. "Amazon: third-party seller share 2020". Statista. Retrieved 12 December 2020.
  4. "Amazon's Third-Party Sellers Had Record-Breaking Sales in 2016". Fortune.
  5. Valdez, Julia (12 June 2018). "How to Set Up Your Amazon Seller Account". AMZ Advisers.
  6. Dunne, Chris (2017-12-14). "Amazon Has 1,029,528 New Sellers This Year (Plus Other Stats)". FeedbackExpress. Retrieved 2019-02-21.
  7. "Amazon Seller Central: Help for Amazon Sellers". Amazon.
  8. Checketts, Cory. "50% of Amazon Sellers Don't Realize They Can Ask Buyers to Leave a Product Review". Seller Labs. Retrieved 7 January 2018.
  9. "The Incredible Benefits of Amazon Brand Registry | Skyrocket Your Sales". Converting Copywriter. 2018-11-27. Retrieved 2019-06-06.
  10. "Beginner's Guide for Amazon SEO in 2020". Clever Solution. 2020-05-18. Retrieved 2020-05-25.
  11. Dzieza, Josh (December 19, 2018). "Prime and Punishment: Dirty Dealing in the $175 Billion Amazon Marketplace". The Verge. Retrieved January 16, 2018.
  12. "Amazon can be held liable for third-party seller products: U.S. appeals court". Reuters. Retrieved 3 July 2019.
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