Featured Article from Wired.com
While most of us still think of Amazon as a company that sells stuff, its transformation into a company that sells other people’s stuff might be more complete than we thought.
Amazon doesn’t report the total value of the merchandise sold through its sites and apps. Last year, the company sold more than $51 billion in stuff itself. But that figure does not include the value of barbecues, kayaks, USB cables and myriad other products sold through Amazon by third-party sellers, from which the company earns only a commission.
That has not stopped Amazon-watchers from trying to guess the total value of stuff sold via Amazon, whether by third parties or Amazon itself. And some of them have reached a striking conclusion: Third parties sell at least as much dollar-wise on Amazon as Amazon does, if not more.
During its most recent earnings call, Amazon CFO Tom Szkutak said that third-party sales accounted for more than one-third of the “product units” sold through Amazon during the previous quarter. Taken alone, that figure would seem to suggest that more of the money flowing to Amazon goes to purchase merchandise directly from Amazon.
But ChannelAdvisor CEO Scot Wingo argues that the average price per unit sold by Amazon comes in much lower, since so much of what Amazon sells directly is small-ticket media items such as books, movies, music and videogames. Amazon divides its sales into two big categories — media and “electronics and other general merchandise.” The bulk of third-party sales fall under the second category, Wingo says, where products have a higher average price.
Breaking down that mix, Wingo believes the value of everything sold by third parties on Amazon during the last three months of 2012 comes in at around $20.5 billion — more than $2 billion higher than Amazon’s own.
The bottom line here, is more entrepreneurs like you and I are selling on Amazon every
day. In our opinion it is the #1 home business model in America. It is hard to argue
with the facts!