Weekly Loop: The Amazon Threat

 

Weekly Loop #03

THE AMAZON THREAT

Amazon’s marketplace has provided a huge opportunity for thousands of online sellers and proven a challenge for local retailers. As Amazon continues to grow revenue sources, there’s less need to turn a profit in any single area, allowing Amazon to invest for the long term, often at a short term loss.

With the over 60% of new ecommerce spending going to Amazon, their dominance is on the rise, attracting more online merchants to their marketplace. By acting as the middleman, Amazon has been able to collect a huge amount of data while preventing brands from gaining access to customer info.

With over 100 private label brands of their Amazon, there’s little doubt that Amazon sees a huge long-term opportunity to replace many third-party brands, increasing their profits.

It’s something we’ve been watching closely, and we advise sellers to get everything they can out of marketplaces, while working to establish standalone online shops with direct access to customers.

Recommended Links

Each week, we read and watch articles, blog posts, videos, infographics, books and more related to ecommerce. We share some of our favorites links on Twitter, Facebook, and LinkedIn.

In our weekly updates, we pare the links down to our favorite seven links from the past week.

Have a suggestion of something in to include? Get in touch.

 

 

— Amazon is quickly growing its private label business and many consumers are likely unaware – or unconcerned. It certainly poses a threat to third-party private label sellers.

“Amazon now has for sale on its online marketplace approximately 100 private brand labels, 60…introduced during the past year.”

Amazon and its private labels: the once and future “frenemy” of brands?
noreply@blogger.com (Neil Wilkof) The IPKat

“The year is 2025: “Is Amazon good or bad for brands”? If you have been the owner of a successful brand (unless you are Amazon), you may squirm, or worse, at the answer.”1

 

— The “Amazon Tax” as previously described on Stratrechery, continues to take a slice of ever more spending. Now, states, cities and school districts will spend at $5.5 billion in the coming years. 

   “Amazon won a nationwide contract last year to supply up to $5.5 billion in commercial items for states, cities, and school districts”

Amazon Is One Step Closer To Taking a Cut on Literally Every Economic Transaction
David Dayen In These Times

“In other words, Amazon landed a contract where they will offer worse service at a higher price than independent supply stores. “Amazon waltzed into this sector and secured a contract not by out-competing, but by using its power and pull,” Mitchell says.”2

 

— Like it or not, Facebook is the place to go to get the most eyeballs via social media. Here’s a rundown of how to advertise successfully. 

“90% of social media users are on Facebook –– which is significantly higher than the other platforms”

The Complete Guide to Advertising on Facebook: Strategies That Convert [in 2018]
Matt Pompa The BigCommerce Blog

“In total, you have:

Facebook Shop: Where your Facebook fans can shop on your fan page and from which your dynamic product ads pull, as well as your Instagram Shopping catalog.
Facebook Marketplace: Where you can engage in Etsy-like peer-to-peer selling without the fees. In addition, Facebook’s recent Marketplace update bring in Instagram-like recommendation features to expand your store’s reach.
Facebook Dynamic Retargeting Ads: Where you can retarget users who landed on your site with similar products to what they viewed, and in which Facebook uses an algorithm to pull the products from your feed that have the highest engagement (must be using Facebook Shop for this to work).
Shopping on Instagram: Where followers can shop tagged items in your Instagram post (must be using Facebook Shop for this to work)
Shopping on Stories: Where followers can shop tagged items in your Instagram stories (same thing, must be using Facebook Shop for this to work).  “3

 

— A rundown of some of the more established decentralized marketplaces, including OpenBazaar, which we’ve written about previously. There’s not much traction currently among decentralized marketplaces with no effect traditional ecommerce marketplaces – yet. We’re watching closely. 

“Most of the more robust decentralized marketplaces…built on Ethereum, with notable exception of OpenBazaar”

Top Decentralized Marketplaces That Use Blockchain Technology ⋆ Crypto New Media
By covfefe Crypto New Media

“Probably the most well known decentralized marketplace for online buying and selling is OpenBazaar. You can list whatever you want and pay in 50+ different cryptocurrencies (originally, they only accepted Bitcoin) with no transaction fees. You’ll need to download a program on your computer to use it, as this is to make OpenBazaar as free from centralized bodies as possible.”4

 

—Like South Dakota, Alabama will begin collecting sales tax from out of state businesses selling to Alabama-residents this fall. 

“the change…comes in the wake of a Supreme Court ruling that allows sales tax assessments even on businesses that aren’t located in a state”

Alabama will start collecting online sales taxes Oct. 1
Leada Gore | lgore@al.com Real-Time News from Birmingham

“Alabama will start collecting online sales taxes on Oct. 1.
The change – which comes in the wake of a Supreme Court ruling that allows sales tax assessments even on businesses that aren’t located in a state – means shoppers will be paying more when they click and buy.”5

 

— Looking to attend an ecommerce conference? Here’s a rundown of some 9 of the best. 

“nine of the top ecommerce expos worldwide and what you can expect from attending them”

Don’t Miss These Top Ecommerce Conferences in 2018
Kaleigh Moore The BigCommerce Blog

“One of the best ways to keep current with trends in the market is by attending ecommerce conferences. Not only are they great for listening to motivational speeches by executives from the world’s largest retailers, these events provide excellent networking opportunities that can help your business grow.”6

 

 

 

 

  1. http://ipkitten.blogspot.com/2018/07/amazon-and-its-private-labels-once-and.html
  2. http://inthesetimes.com/article/21287/amazon-local-procurement-contract-sweetheart-deal/
  3. https://www.bigcommerce.com/blog/facebook-advertising-guide/
  4. https://cryptonewmedia.press/2018/07/09/top-decentralized-marketplaces-that-use-blockchain-technology/
  5. http://www.al.com/news/index.ssf/2018/07/alabama_will_start_collecting.html
  6. https://www.bigcommerce.com/blog/ecommerce-conferences/

Andrew @ EcomLoop
EcomLoop founder. I've worked in ecommerce since 2005, beginning with my own ebay store. I've run multiple independent ecommerce businesses on Magento, Joomla, and more recently, Shopify and WooCommerce. I believe marketplaces should be looked at as a sales channel and that all independent businesses should strive to build a direct connection with their audience for long-term success.

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