eBay's future, at least in public, has been about structured data, new user experience development and efforts around AI and machine learning. eBay has been talking about the structured data initiative since at least the start of 2015, so it's been two years, and there isn't yet much to show for it. We think the biggest issue with the structured data initiative is it is taking too long.
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Amazon has unique and unrivaled visibility into the performance of hundreds of thousands of products and brands. Just like Netflix is investing into TV shows based on data they collect, Amazon is starting to build brands based on data. But Amazon could also avoid doing most of the work, and instead invest into the brands already performing well.
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Given the recent change in the US government, and policies yet to come, the question of how big of a role China plays in Amazon business is very interesting. The takeaway from this research is not the exact percentage of Chinese sellers. It's the fact that there are more Chinese sellers than one might assume, they are very competitive because of FBA, and the ratio is no doubt growing.
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Amazon marketplace has advanced from a website where people list some random products on, to a platform where true retailers build their business. This meant that gaining access to a seller's Amazon account is potentially very lucrative. Not only can a hacker use it to gain insight about the seller's business, best products, ads performance, etc., but also cause big cashflow issues. We think the attacks on Amazon seller's accounts are only going to get more aggressive and sophisticated. Crime is moving online, and Amazon seller accounts are one of the targets.
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This time we looked at how many of the top Amazon sellers have joined in the past 365 days. It is an interesting number to look at because as we found, it shows that it takes a while to become a top seller. We found that just 5.6% of top 10,000 sellers joined during the past 365 days.
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We think Amazon should introduce a Verified Seller status. A verified seller is checked by Amazon to have a valid business, no history of counterfeit, good rating, etc., but also willing to publish their business information. It's a seller who doesn't need to hide behind the anonymous name.
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Amazon is positioning themselves as a e-commerce infrastructure company, not a retailer. Their message to big brands is that they are not selling products to Amazon for resale, but instead using Amazon as a platform to reach a massive audience, and using their infrastructure to facilitate all e-commerce tasks. In this view, Amazon is not a middleman, but instead an enabler.
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Since Walmart marketplace has been receiving a lot of attention from marketplace sellers, we decided to investigate how big the opportunity of selling on Walmart really is. We found one way to look at it - by comparing seller feedback. By comparing all feedback received by all Amazon sellers, to all feedback received by all Walmart sellers, we could get a relative number.
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Last year Amazon collected $8.9 billion in shipping revenue, but spent $16.2 billion on shipping costs. Thus the net shipping cost is $7.2 billion. Because of the growth in Amazon Prime membership and the current $25 minimum to get free shipping, fewer people are paying for shipping. This has resulted in shipping costs growing faster than shipping revenue. As shown in the chart below, during the busy Christmas periods the difference is very large.
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Today Walmart passed a big milestone - 10,000 sellers on the marketplace. Even though Walmart marketplace was launched in 2009, it took a while before it started to gain traction. The first time we covered Walmart was in May 2016, when the Walmart marketplace just passed 500 sellers.
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