Amazon’s Shrinking Reliance on Top Sellers

As the overall Amazon marketplace GMV expands, top sellers represent a shrinking percent. More of the sales come from a broader set of sellers than the top sellers outpacing the rest. The data indicates that it is getting harder for large sellers to continue growing because it is getting easier for new sellers to start selling.

One way to measure marketplaces is the GMV concentration by the top sellers. Specifically, the number of sellers that contribute a given percent of the overall volume. On Amazon, that can be modeled using seller feedback reviews. Sellers on the Amazon marketplace receive feedback reviews from customers after a purchase. Providing feedback is optional, and the percentage of customers who leave a seller review is anywhere in the range of 1–5%, depending on the product’s pricing and the category. While using seller reviews has inherent limitations, it is the most stable way to benchmark all sellers.

Just 700 sellers are responsible for 10% of Amazon’s worldwide volume. But more than 33,000 sellers are responsible for 50%. That’s because of marketplaces power law, an observation that a small fraction of its sellers’ population generates a large portion of sales. Finally, more than 300,000 sellers are responsible for 90% of the volume. Thus it takes hundreds of thousands of sellers to generate the more than $200 billion in sales by the marketplace, but less than a thousand alone contribute $20 billion.

Number of Amazon Sellers Contributing % of Volume

The size of each percentage bucket has not remained consistent over the years. Instead, the number of sellers responsible for the top slice of the volume has grown faster than the number for the large slice. The number of sellers contributing 10% of volume on Amazon in the U.S. grew by 15% in 2018, 24% in 2019, and 45% in 2020. At the same time, the growth of those contributing 75% had decelerated from 26% in 2018 to 18% in 2019, and 8% in 2020.

As Amazon’s overall GMV continues to increase, more of it comes from a broader set of sellers, rather than the top sellers. The growth of the number of sellers contributing 10% is accelerating because they are growing slower than the overall volume. It takes more of the top sellers to result in 10% of volume. The growth of those contributing 75% is decelerating because they grow at pace with the overall growth.

The percent of the volume by the top 10,000 sellers is thus declining. In the U.S., they contributed 58% in 2017, 55% in 2018, 51% in 2019, and 48% in 2020.

Growth Rate of the Number of Amazon.com Sellers Contributing % of Volume

“A very, very big number (the products in the tail) multiplied by a relatively small number (the sales of each) is still equal to a very, very big number. And, again, that very, very big number is only getting bigger,” wrote Chris Anderson in the book “The Long Tail: Why the Future of Business is Selling Less of More.” The same applies to sellers on marketplaces. The large number of sellers multiplied by the relatively small number of sales is still equal to a very big GMV. On Amazon, that’s the long tail of millions of sellers.

Tools, consulting, and services available to all sellers have leveled the playing field, limiting the defensibility of large sellers. At the same time, there is no indication of the marketplace’s oversaturation, the inability of new sellers to find a niche. Due to the modeling limitations described before, these estimates are imperfect. However, the overall growth trends and distribution of sellers are correct, at least in terms of orders of magnitude.

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Juozas "Joe" Kaziukėnas

Founder of Marketplace Pulse, Joe wears multiple hats in the management of Marketplace Pulse, including writing most of the articles. Based in New York City. Advisor to other startups and entrepreneurs. Occasional speaker at conferences.

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