The majority of sales volume on the Amazon marketplace comes from sellers that have been on it for years. That signals the controlled churn and high longevity of those businesses. At the same time, new sellers bring incremental growth.
Amazon seller cohort analysis is total volume, month by month, broken down by seller’s first year on the marketplace cohort, and represented as a share of the total. Seller feedback reviews are a proxy for sales volume, though an imperfect one. However, despite limitations, they are close enough to estimate the overall trends. In conjunction with other critical metrics like GMV, seller cohort analysis conveys the fundamentals of the marketplace.
Cohort analysis informs on four significant marketplace metrics: acquisition, churn, longevity, and saturation.
Amazon is adding thousands of new sellers daily, growing by more than a million every year. By acquiring new sellers - often passively, most sellers join the marketplace on their own or pushed by the partner ecosystem - Amazon is layering incremental volume on the existing base.
Churn is often the most feared metric because, in situations where churn is higher than acquisition, it points to unavoidable collapse. In the case of Amazon, churn is visible as older years’ cohorts shrinking over time. However, some churn is typical for marketplaces. Given Amazon’s millions of sellers, suspensions, or other churn causes, don’t impact the overall volume.
More than half of sales come from sellers that have been active for years. Roughly 2% of the volume is by sellers that joined the Amazon marketplace over ten years ago, and 30% of the top sellers on Amazon in the U.S. four years ago are still at the top. The number of sellers that have been able to build a business that lasted years, given how much has changed and the increasing competition, is crucial and is a signal of retention.
New sellers are not replacing past ones. In other words, the marketplace is not saturated because new sellers are finding opportunities to grow. Thus by reason, they are not the same as existing sellers and are selling in different niches. Besides, sales concentration is decreasing - top sellers represent a shrinking percentage of the overall marketplace volume. 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.
Crucially, total sales on Amazon are growing. 10% of the total volume in 2015 is a significantly smaller number than 10% in 2020. Because of that, while older cohorts represent a shrinking share of the total, that decrease is smaller when adjusted for overall volume growth.
On Amazon in the U.S., 5.5% of June’s volume came from sellers that joined in 2020. And 16% from 2019, 19% from 2018, 20% from 2017, 16% from 2016, and 20% from sellers that joined in 2015 or earlier.
Amazon’s international marketplaces exhibit a similar breakdown. In the four biggest markets - the U.S., the U.K., Germany, and Japan - more than half of the volume is by sellers that joined in 2017 or earlier.