In Amazon's annual letter to shareholders, Bezos notes: “Third-party sellers are kicking our first party butt. Badly.”
to shareholders, CEO Jeff Bezos noted that third-party sellers account for more sales on Amazon than Amazon's first-party retail business, and that they have for several years.Bezos even said,"Third-party sellers are kicking our first party butt. Badly." This shows how outside merchants are thriving on Amazon, but their success is positive for the firm as well, even if it appears to be behind.
Third-party merchants racked up $160 billion in physical gross merchandise sales on Amazon in 2018, accounting for 58% of Amazon's sales. This is a steep jump from 1999 when third-party sellers made up just 3% of Amazon's physical gross merchandise sales — worth just $.1 billion — meaning that the segment saw a compound annual growth rate of 52% during that stretch.
Bezos attributed some of these merchants' success to Amazon including them in valuable programs and providing useful tools. He noted that Prime and Fulfillment by Amazon made shopping with third-party sellers better for consumers, while tools for inventory management, payments, shipping, and more gave them capabilities that both made them attractive and more efficient.Impressive sales from third-party sellers actually benefit Amazon's business and perceptions.
Having a strong base of third-party sellers boosts Amazon's selection and revenue. By serving as a marketplace for many quality sellers, Amazon can add more products consumers might want, increasing the
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