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Between 2016 and the end of 2020, the proportion of the top 10,000 sellers on Amazon based in China went from one in five to nearly one in two, according to data from research firm Marketplace Pulse. (Sellers were ranked by seller feedback, a proxy for their revenue on Amazon.)

That was actually a subset of the total. Amazon bans sellers all the time, for infractions including poor-quality items and using disallowed “black hat” tactics to boost the rankings of items, says Juozas Kaziukėnas, founder of Marketplace Pulse. This could explain why the Shenzhen Cross-border E-commerce Association has said that the total number of accounts banned by Amazon in the spring and summer of 2021 exceeded 50,000, he adds.

“This whole system has created a massive issue for Amazon because the consumer can’t pick the best product for any search anymore, because they’re all essentially the same,” says Mr. Kaziukėnas.

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“For a while Shopify could do no wrong,” said ecommerce analyst Juozas Kaziukenas from Marketplace Pulse. “The broader industry was hoping Shopify would compete directly with Amazon. But obviously that hasn’t happened yet, and it’s unclear if that will ever happen.”

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“Amazon’s ambitions for advertising span significantly beyond turning more of Amazon into advertising space. That’s where I think efforts like local ads will play a part, “ said Founder and CEO of Marketplace Pulse Juozas Kaziukėnas.

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But Juozas Kaziukėnas, the founder of e-commerce research firm Marketplace Pulse, said it can be hard to independently know what actually caused those declines — whether it’s Amazon’s policies or other factors.

According to Marketplace Pulse, the share of top China-based merchants has steadily been declining on Amazon’s third-party marketplace since late 2020, a trend some experts believe may be caused by pandemic-induced supply chain snafus and the company’s recent efforts to crack down on prohibited activity, including fake reviews. Last year, the company suspended several prominent China-based sellers and reportedly kicked off 50,000 merchants for violating its rules.

Marketplace Pulse’s data shows 55% of the top sellers on Amazon’s U.S. marketplace are domestic businesses, a jump from 48% in November 2020.

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Over the past few years, Chinese merchants sold a growing percentage of what Americans bought on Amazon until there was a roughly 50-50 split between sellers based in the U.S. and China. The percentage sold by Chinese merchants, however, has declined to about 42 percent in May from about 48 percent in late 2020, according to the e-commerce research firm Marketplace Pulse.

I asked Juozas Kaziukėnas, the founder of Marketplace Pulse, whether this shift away from Chinese merchants was caused by temporary closures of factories in China related to the pandemic and the increased costs and complexity of shipping products from Asia. He said probably not. Most merchants based in the U.S. buy and ship from manufacturers in China or elsewhere in Asia, too.

Kaziukėnas said that it’s difficult to know exactly what caused the change, but some merchants have been frustrated with the increasing costs and Byzantine rules on Amazon. There have been news reports from China of product sellers hoping to find websites other than Amazon to sell their goods to the world. Those gripes about the downsides of selling on Amazon are definitely not new, however, and are commonly expressed by merchants outside China, too.

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Shipping and fulfillment costs have increased significantly in the inflationary environment, causing sellers to raise prices or accept lower margins, said Juozas Kaziukėnas, the CEO of the research firm Marketplace Pulse. Consumer prices for online shopping have jumped by over 10% since June 2020, data from Profitero shows.

"It ultimately means shoppers are paying more for the same goods," Kaziukėnas said.

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Juozas Kaziukenas, founder and CEO of Marketplace Pulse, agreed with Sebastian that subsequent quarters should take care of the over-capacity issue. He added that with ecommerce demand being pulled forward and then back again by the pandemic cycle, “it’s back on the trendline it was before COVID, and so is Amazon.”

“So, Amazon failing to grow in Q1 only looks bad when ignoring the two-year context,” he said. “Quarters to come are much more important as they will be compared against 2021 which was no longer boosted by COVID. If Amazon is still showing weak growth in Q3 and beyond this year, then that’s a concern.”

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Meanwhile, the total value of goods sold on Amazon’s site in 2021 grew at half the rate it did in 2020, according to an analysis by research firm Marketplace Pulse.

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At Amazon, the total value of goods sold grew in 2021 at half the rate it did in 2020, according to an analysis by research firm Marketplace Pulse.

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Investors poured more than $14 billion in equity and debt combined into the space over the past two years, according to an analytics

firm Marketplace Pulse. As many as 100 rollup startups were founded over that period.

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Juozas Kaziukėnas, the founder of the e-commerce research firm Marketplace Pulse, posed a question to me a couple of months ago that I haven’t been able to forget: Did the coronavirus really compel us to shop online more — or just shop more, period?

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Listing new sellers on its marketplace is especially important to the company as it competes for sellers and buyers with Amazon. Marketplace Pulse puts Walmart sellers at 136,000 compared to the over six million on Amazon.

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But those efforts have so far only succeeded in capturing a tiny sliver of the overall e-commerce market, said Juozas Kaziukėnas, founder and CEO of the e-commerce research firm Marketplace Pulse. “We’ve been talking about live commerce and social commerce for years and have little progress to show for it.” he said.

“If anyone can figure out live commerce, it won’t be Amazon, Walmart or any other incumbent, but instead platforms like TikTok that already have the attention of users,” Kaziukėnas said. “It is more likely that TikTok will learn how to add shopping than Amazon will learn how to become social.”

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Amazon has more than 400 different private brands, according to estimates.

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Research firm Marketplace Pulse estimates Walmart added about 8,000 sellers from China from March 2021 to mid-January 2022, accounting for almost all of its new international sellers and 14% of total new merchants. “WFS makes the seller’s business location practically invisible to shoppers since Walmart ships orders from domestic warehouses on the seller’s behalf,” wrote Juozas Kaziukenas, chief executive officer of the researcher, in a December report. “FBA played a crucial role in unlocking Amazon for international sellers, and the same [is] playing out on Walmart.”

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“Getting N95 masks for kids seems to be surging in waves -- first in August 2021, and now in January,” said Juozas Kaziukenas, founder of Marketplace Pulse, which monitors consumer demand on Amazon and other online stores.

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Marketplace Pulse said Amazon sellers were getting bought out at valuations of between four and eight times underlying earnings, against two to three times a couple of years ago.

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If debt funding is included, the figure is as high as $13 billion across a pool of 89 global active Amazon aggregators, according to industry tracker Marketplace Pulse.

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The timing makes sense, too, as the pandemic has given online sales a shot in the arm. Walmart, which started its marketplace in 2009, saw gross merchandise volume—total sales through its platform—double in 2020, according to estimates from Marketplace Pulse. Pre-pandemic, growth was a more muted 35%.

The newer crop of marketplaces seem to be trying to avoid both risks by being more selective with sellers. A lousy integration with in-store experiences can also hurt, notes Juozas Kaziukėnas, founder of Marketplace Pulse. Shoppers could get frustrated if they can’t pick up and return marketplace items at the store, for example.

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“In some ways Amazon doesn’t really want to be a retailer,” said Juozas Kaziukenas of Marketplace Pulse, an e-commerce consultant. “It doesn’t want to do curation or offer human interaction,” two of the essential qualities of retail for centuries.

“Amazon knows what I buy, how often I buy, what I search for,” Mr. Kaziukenas said. “But decades after it launched, it can’t answer a simple question — what would Juozas like to buy? Instead it shows me thousands of deals, with some basic filters like category and price, and hopes I will find what I like. Amazon is so much work.”

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