Amazon.com (AMZN) got a much needed helping hand last year from outsiders: the third-party merchants that list their items on the e-commerce giant’s web site.
Those sellers sold 2 billion on Amazon.com last year, double the number in 2013, a bright spot for Amazon as it faces growing concerns about its slowing growth rates and its ability to generate profits.
In October, Amazon reported a widening and worse-than-expected quarterly loss, and gave a sales forecast for the holiday quarter that disappointed Wall Street. The good news for Amazon is that sales by third-party vendors typically offer higher profit margins and allow it to expand its online assortment. Amazon’s results have taken a hit as it developed a mobile phone that flopped, Hollywood-caliber productions and introduced grocery deliveries.
While Amazon no longer breaks out what percentage of revenue comes from outside sellers, the company did say that those vendors moved about 40% of the product volume sold on its website last year, suggesting Amazon sold 5 billion items on the site last year.
Amazon takes a percentage commission from outside sellers when their goods are sold, and collects other fees, such as for storing their items, leading to higher profits than those from products sold directly by Amazon.
And the company put a lot of emphasis on its growing global reach. Worldwide, units shipped by outside sellers rose more than 50% during the 2014 holiday season compared to a year earlier. And of course, Amazon was quick to tout 80% growth in international sales by China and Hong Kong-based sellers. Clearly Amazon has the threat from Alibaba (BABA) on its mind.
