Payability provides cash flow solutions to Amazon Sellers. Instant Access, their core product offering, provides sellers next day access to their Amazon sales, which are typically received on a 14 day delay from Amazon. Daily payouts from Payability give sellers the ability to buy more inventory, avoid stockouts, stay in the Buy Box and get deals and discounts from suppliers. In Amazon’s competitive marketplace, sellers with access to better cashflow can improve their inventory position and overall business health, ultimately not just benefitting the seller, but also the consumer and Amazon as a whole.
To understand Payability’s impact, we compared Payability customers against a cohort of similarly sized sellers over the course of 6 months across the following metrics:
Only Amazon knows sales figures for all sellers on the marketplace and estimating any individual seller’s sales is complex. However, each seller on the marketplace receives seller feedback reviews from customers after a purchase, and this can be used to approximate the relative growth or decline in sales of a given seller.
Providing feedback is optional for customers, and the percentage of customers who leave a seller review is anywhere in the range of 5–25%. The ratio varies widely between sellers, and is influenced by product pricing, category, and changes Amazon makes to their website interface.
A seller with 100 feedback reviews in a month doesn’t necessary sell more than a seller with 50 feedback reviews. So, feedback reviews is not necessarily a valid metric to estimate sales for each seller in an absolute sense. However as sellers increase their sales, their number of feedback reviews tends to rise too. And vice-versa, as their sales slow down feedback reviews slow down too. The key is not the total number of seller reviews, but the percent change over time.
The number of seller reviews is also affected by seasonality of sales. That’s why in September 2017 all sellers on Amazon received a total of 3.1 million feedback reviews, compared to 6.8 million in December 2016. Thus for any given seller we can measure their performance over time as it relates to other sellers by comparing their feedback reviews change. All sellers are ordered by the number of feedback reviews in the last 30 days to determine a seller rank. A seller rank of 15 means there are 14 sellers with more seller feedback reviews.
If a seller increases their rank from 10,000 to 1,000, a ten fold increase, they have undoubtedly increased their sales as it compares to the market. This accounts for seasonality, as it affects all sellers.
When we looked at the average change in Marketplace Pulse rank by month, it became clear that there was an increasing divergence, which can be seen in the chart above.
After Month 1 for example, the average non-Payability seller’s Marketplace Pulse rank dropped by 15.6%, while the average Payability customer increased by 5.8%. After 6 months, the average non-Payability seller’s Marketplace Pulse rank dropped by 22.1%, while the average Payability customer increased by 26.4%.
Furthermore, out of the sellers benchmarked in this study, 85% improved their rank since starting to use Payability (meaning their best rank since is better than that they started with) and 21% of sellers improved their rank by over 50%.
Sellers selling on Amazon have a choice to do their own fulfillment, or to utilize Amazon’s Fulfillment by Amazon (FBA) service. When using FBA, inventory is first shipped to one of the Amazon’s warehouses, where it stored until a customer purchases it on Amazon. By using FBA sellers offload most of the work of handling inventory.
49% of Payability customers are using Fulfillment by Amazon (FBA), while 51% handle their own fulfillment. Thus the customer base is split in half. For the sake of context, 64% of top 10,000 sellers on Amazon.com are using FBA, a share which has been slowly increasing over time. An average Payability customer had 1,942 products in stock when they joined, with an average of 721 products for an FBA seller and 3,217 products average for a merchant seller.
In each month after joining Payability, the cohort of Payability customers were more likely to increase the size of their catalog. For example, in the first month, 49.3% of sellers grew their product catalog where only 43.4% of non-Payability customers did.
When customers leave seller reviews they have an option to rate a seller positively, neutral, or negatively. Often negative reviews are a result of slow shipping, inaccurate product descriptions, or bad support.
The average Payability customer had a 90.3% positive feedback rating when they started. Over the course of their experience as a Payability customer, this rating increased to an average of 99.0%. Only 2 customers saw their customer satisfaction decrease after becoming a Payability customer
Payability customers are also consistently more likely than non-Payability customers to increase their positive feedback rating in each month after signing up, as seen in the chart below. After 6 months for example, 25.1% of customers increased their positive feedback rating, while only 4.7% of non-Payability customers did so.
In studying the performance of sellers with and without Payability, it is clear that daily access to cash flow can improve Amazon seller’s sales, grow the catalog of products being offered to the market and improve the end customer experience.
This study confirms what we believe to make intuitive sense: marketplace participants need readily available access to capital to effectively match supply and demand. We expect that marketplaces that provide similar cashflow solutions to their suppliers will see similar improvements for suppliers, consumers and the marketplace as a whole.