After Jeff Bezos sat on the call and got grilled by Congress for antitrust allegations, Amazon reported the largest increase ever for its marketplace sellers. How is this figure calculated? Amazon’s revenue from transaction and fulfillment fees was up by 53% in Q2 of 2020, amidst the worst financial crisis since 2008-09.
On July 29, 2020, Jeff Bezos was called into a congressional committee to testify and defend Amazon.com, Inc. against antitrust allegations, his first time doing so. The Amazon CEO was questioned on his company’s distribution network, and whether it posed a threat to small businesses in the United States.
The following day, Amazon reported the largest revenue growth for its fulfillment segment, meaning that more 3rd-Party sellers were selling more. This is likely due to an increase in demand, sellers, and fees. Because of the COVID-19 pandemic, more buyers flocked to the guarantee behind the orange checkmark and blue “prime” lettering. In addition to this, we can also attribute this spike in revenue to an increase in the number of sellers. With the increase, it is also apparent that competition is rising to maintain control of the Buy Box and increase sales for your storefront. In the past year, fulfillment and referral fees have increased across all categories, thus decreasing the seller’s margins.
Our sentiment moving forward is that Amazon will continue to be the leading online platform for retail sales, however, we do foresee Walmart becoming a major player with their new partnership with Shopify and their own fulfillment service called Walmart Fulfillment Services, or what we like to call “FBW.” Altogether, the “corona-conomy” has allowed for 3rd-party sellers to increase online sales, however, with Amazon wanting to increase their own revenue, it has come at the cost of decreasing margins.
Recent Comments