Last week Amazon reported great 2017 Q1 results, stating that “Net sales increased 23% to $35.7 billion in the first quarter, compared with $29.1 billion in first quarter 2016”. But the net sales figure hides the true size of Amazon - Amazon has far bigger reach in retail than commonly understood.
The net sales figure includes everything Amazon sold, but does not include marketplace sales. While many marketplace businesses report Gross Merchandise Volume (GMV) figures, including eBay and Etsy, Amazon only reports first-party sales. Furthermore, net sales includes Amazon Web Services, and various retail services like FBA.
Marketplace sales represent 50% units sold, but Amazon does not disclose total units sold. Without total units sold and GMV it is impossible to know the exact volume of the marketplace. But it is safe to assume that it is at least as big as Amazon’s first-party sales if not bigger.
Retail sales were $22.8 billion last quarter. Thus the marketplace sales are in the range of $20-$30 billion during the last quarter alone. That’s on top of the net sales figure reported by Amazon. So while Amazon is undoubtedly the largest online retailer in the US, it also has the largest marketplace almost completely out of sight.
This is why we think at least 55 percent of US e-commerce growth was done on Amazon. Pushing the opinion of many analysts that by 2021 Amazon will account for more than a half of all US e-commerce sales.
Bloomberg BNA in a recent article “Connecticut Asking Amazon to Disclose Third-Party Sales” said:
“Connecticut has asked Amazon.com Inc. to disclose information on sales facilitated through its marketplace platform, state Revenue Services Commissioner Kevin B. Sullivan told Bloomberg BNA.
The data would help the state collect sales tax from small online vendors hosted by Amazon—and aid in closing a $75 million annual gap created by remote sales, Sullivan said April 26 on the sidelines of an annual Ernst & Young LLP tax conference in New York.”
Regulatory organizations are becoming aware of this misconception, and realizing that introducing marketplace sales tax initiatives is hard when it is unclear how big those sales are.
