“There are currently more than 2 million sellers on Amazon worldwide” is the most common description of the Amazon Marketplace. However not only is it not true - there are more than 5 million marketplace sellers, and it is growing fast since over 3,000 new sellers join every day - this figure is also irrelevant. 2 or 5 million, those sellers are not all selling. And few of them have built a business around selling on the Amazon marketplace.
In Who Are the Two Million Amazon Marketplace Sellers we wrote about the true size of the marketplace, concluding that Amazon’s own estimate of “100,000 sellers with at least $100,000/year in sales” is likely the one most representative.
We estimate that 25% of Gross Merchandise Volume (GMV) on Amazon.com marketplace is through just top 1,000 sellers. In other words, only one thousand businesses generated 25% of Amazon.com marketplace GMV.
More than a half of GMV is through just a bit more than 6,000 sellers. Top 10,000 Amazon.com sellers account for 57% of GMV.
This was done by calculating the total number of seller feedback reviews, and then calculating the number of top sellers it would take to account for each percent. The resulting distribution highlights that while technically there are millions of sellers, most of the sales are done by the top few thousand.
Feedback reviews isn’t a direct representation of sales volume, but it is the only public metric to measure the activity and size of the marketplace by. While for any two sellers the percent of customers to leave a feedback review after a purchase is going to be different, grouping all sellers into one pool averages those differences out. The assumption is that feedback reviews distribution roughly matches GMV distribution.
The distribution is even more condensed in the international Amazon marketplaces - top 1,000 sellers account for 38% of feedback on Amazon.de in Germany, 39% of feedback on Amazon.co.jp in Japan, and 41% of feedback on Amazon.co.uk in the UK.
During Ebay’s Q4 2016 earnings call Scott Schenkel said that “about 80% of our GMV is through B2C sellers that do over $10,000/year and the rest is 20% that’s less that.” Amazon hasn’t made similar comments. Yet the meaning behind Scott’s metrics is that on eBay the millions of one-off sellers account for 20 percent of GMV, while the majority of it comes from a small group of business sellers.
There are millions of marketplace sellers, and no doubt the goal of any marketplace is to enable as many sellers as possible, both big, and small. Yet the 80/20 rule (officially called the Pareto principle) states that “for many events, roughly 80% of the effects come from 20% of the causes.” Intuitively the same can be expected of e-commerce marketplaces, and the data seems to agree.