As the e-commerce industry continues to grow at a rapid pace, there is one undisputed king of the retail jungle: Amazon. Putting this into better perspective is a recent Business Insider report, which culled data from a Slice Intelligence study on e-commerce, finding that half of all e-commerce sales from 2016 came from Amazon. According to the study, the e-tail giant raked in 53 percent of all online orders over the past year, with other merchants competing for the remaining 47 percent.
Amazon’s projected growth for 2017 is somewhere in the realm of 60 percent of all online sales, which is not too far off from where it stood in 2015, according to Fortune. The primary reason why Amazon is able to routinely outdo its competitors is fourfold: Selection, pricing, low cost or free shipping and easy returns. Combined, these elements create the perfect recipe for e-commerce success.
The Amazon Seller Universe
The backbone of Amazon is its strong and growing seller base which Tech Crunch says now exceeds 2 million sellers worldwide. As of 2014, these merchants combined to offer more than 2 billion items on the marketplace. Of interest is that the majority of these sellers are also selling on multiple sales channels, which can create a data conundrum when they try to consolidate their numbers, plan marketing campaigns and grow the customer relationship.
A Web Retailer survey of 1,500 Amazon sellers found that 77 percent of Amazon sellers are also selling on multiple sales channels. These sales channels include: Online marketplaces, webstores and brick-and-mortar stores. Roughly 25 percent of the sellers host their own webstore, with the Shopify (35 percent) and Magento (32 percent) shopping carts being the most commonly used. The remaining 32 percent of sellers are using other sales channels that include: BigCommerce, WooCommerce and Volusion.
About 43 percent of all Amazon sellers have at least one more sales channel, with about 25 percent selling on two or more channels and 7 percent selling on three or more. Enter the $1 million plus bracket, and 30 percent of sellers are listing products one or more sale channels.
Sellers Pay Steep to List on Amazon
For the cross-channel Amazon seller, things can get complicated. In order to meet their bottom line on Amazon, they’ve got to pay for their Individual Seller or Pro Merchant account, plus any sales percentage fees that Amazon charges for transactions – which ranges from 8 percent to 20 percent per transaction, depending on the product being sold and its category, according to Amazon. If they are using Fulfillment by Amazon (FBA), they can tack on another 8 percent to 15 percent in fees. This is notwithstanding the cost of shipping and returns, either.
When a seller must factor these fees into their operating cost, they also will want to compare what they are selling on their other sales channels. For example, a personal computer sold at their Shopify store won’t incur the 6 percent Amazon fee, or the additional pick-and-pack fees and added fees for FBA services, nor will it be mandated to honor certain shipping prices and returns rules. Naturally, the profit margin is generally greater for the retailer when a product such as this is sold on their webstore channel instead, even after factoring credit card processing fees (which range from 2 percent to 3 percent) into the equation.
The Data Pinch of Cross-Channel Sellers
Perhaps the biggest hurdle facing online retailers who sell on Amazon and multiple other sales channels is the data pinch. Amazon is a proprietary marketplace which doesn’t have a vested interest in sharing API integrations with other sales channels, like a shopping cart, a social channel or another marketplace such as eBay, Jet and Rakuten. This can leave retailers with a pile of paperwork and hours of analytical work each week, where they are forced to manually compare and consolidate analytics, reporting data, charts and trends between their multiple warehouses—all the while not having a way to really connect with customers and grow the relationship.
This is why some retailers are exploring their options with e-commerce CRM. Emerging providers offer a cross-channel Amazon CRM that works with multiple sales channels. These newer breeds of CRM offer similar functionality to traditional systems, but are e-retail focused. Retailers are able to better assess customer data with multi-channel reporting and a variety of other features that help them identify trends, patterns, shipping preferences, returns history and more.
As I have previously reported, “Integrators will become the new hub for e-tailers, namely because they will merge data from all sales and social channels, including cloud services, hybrid cloud applications and even light client applications.”
Putting these multichannel numbers in better perspective is a recent report by Forrester Research that forecasts $1.8 trillion in cross-channel sales for 2017. With the right software and marketing plan in place, wise retailers can remain a step ahead of the competition with their Amazon store and their other sales channels.