As online sales boom, the number of third-party sellers on Walmart and Amazon continues to grow. The growth of independent sellers in the marketplace isn’t slowing down anytime soon. Driven by strong online sales , independent or third-party sellers as a segment are expected to grow by triple digits next year. However, anyone looking to get in on the game needs a clear strategy and understand the challenges they face.
At the start of the 2020 holiday shopping season, a four-day period between Black Friday and Cyber Monday, the online giant had $4.8 billion in sales from independent sellers alone , according to Amazon’s financial report released last February. Walmart’s marketplace swelled to 70,000 independent sellers last year and is on track to grow 146% by the end of next year, according to data provided to Reuters by Marketplace Pulse.
Michael Bennett, co-founder and managing director of Envoy , said Amazon ’s third-party marketplace “has provided business owners with a fantastic opportunity for many years to reach millions of online shoppers around the world and increase brand awareness.”
“Business owners and individuals new to the world of e-commerce are scrambling to set up their accounts to private label or move their web or physical stores to Amazon,” Bennett said. “There are over 6 million third-party sellers on Amazon, with more than half selling in North America. Amazon is rapidly expanding its reach internationally, and will soon see additional surges in other markets.”
While the opportunity is ripe, anyone looking to become a third-party seller needs a sound business plan and a clear strategy.
Entrants into the independent selling space of the market must also be aware of these challenges . “E-commerce sellers on Amazon and Walmart are often caught off guard when faced with the policies, fees, and approval processes enforced by these platforms , ” Bennet explained . “Before diving in, it’s imperative to research the categories you sell in, dial in your fees and bottom line numbers, and be ready to pay per click.”
Mousumi Behari, digital strategy practice director at Avionos, said the third-party seller market is growing rapidly, “generating $25 billion to $39 billion in profits in 2020 on Amazon alone. The initial growth was driven by the online shopping boom fueled by the COVID-19 pandemic; however, the current market will continue to grow as consumers increase their reliance on the convenience of e-commerce.”
As for other challenges, Behari said one of the biggest hurdles third-party sellers face “ is standing out in the marketplace competition. Amazon has over 2.5 million sellers, a number that can be daunting for someone trying to make money . ”
The market prospects are good and independent sellers are about to usher in explosive growth , but there is still a long way to go to become an excellent independent seller.
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