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Retailers are racking up big gains on online marketplaces over the holidays

December 1, 2016 10:40 AM
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In addition to prepping their own e-commerce sites for the holiday shopping rush, many retailers also readied for a sales bump on products they sell on online marketplaces. For many, that preparation is paying off.

In particular, marketplace sellers prepared—and hoped—for a jump in sales on the largest online shopping mall in the United States, Amazon.com Inc. And some sellers say Amazon sales during the five-day period between Thanksgiving Day and Cyber Monday met or exceeded their projections.

Internet Retailer estimates $4.74 billion worth of transactions took place on Amazon, including goods sold by Amazon directly and by merchants selling through Amazon’s marketplace from Nov. 24-28. In Q3, 50% of units sold on Amazon globally were from marketplace sellers, therefore Internet Retailer estimates that roughly $2.37 billion worth of goods sold on Amazon over the long weekend were products sold by its marketplace merchants.

What’s more, of the more than 7,690 Cyber Monday deals, nearly 80% of those promotions were offered on marketplace products, as opposed to Amazon’s own inventory, according to research from e-commerce pricing vendor One Click Retail. And, more than 52% of promotions offered on Cyber Monday were eligible for Amazon Prime’s free two-day delivery, One Click Retail says.

Getting products in front of Amazon’s loyal Prime customers is key for some marketplace sellers this holiday season. Online office supplies retailer Jam Paper & Envelope, for example, used Amazon’s fulfillment services for more of its products this holiday season than a year ago. With Fulfillment by Amazon, marketplace sellers pay Amazon to store inventory and pick, pack and ship orders. When marketplace merchants use Fulfillment by Amazon, their products become eligible for Prime two-day shipping. Amazon is No. 1 in the Internet Retailer 2016 Top 500 Guide.

About 25% of Jam Paper’s 12,000 SKUs available on the marketplace are fulfilled by Amazon, while the rest are fulfilled by Jam Paper. On Cyber Monday 2015, just 1% of the merchant’s items were Prime eligible. On Cyber Monday this year, Jam Paper’s order volume grew 40% year over year, and that’s in part because of the addition of more Amazon-fulfilled products, says senior digital marketing analyst Kelly Ennis.

“The real advantage for us is getting in front of Prime customers. We think a large percentage of Prime customers will only buy Prime products,” Ennis says. Almost two times as many orders were shipped through Fulfillment by Amazon than by the retailer itself on Cyber Monday, Ennis says.

Roughly 45% of U.S. consumers, as of October, live in a household that belongs to Amazon Prime, the $99 annual membership that gives consumers access to fast shipping options, streaming video and music, and other benefits, according to Cowen & Co. investment bankers.

Marketplace sellers are catching on to evolving consumer expectations for fast and free shipping. According to data from e-commerce vendor ChannelAdvisor Corp., 80% of orders placed on online marketplaces between Thanksgiving and Cyber Monday will receive free shipping, up from 70%last year. Amazon Prime sellers aren’t the only ones offering free shipping, however, in fact, a higher percentage of orders on Wal-Mart Stores Inc. (No. 4 in the Top 500) and eBay Inc.’s marketplaces were shipped for free compared with Amazon orders over the five-day period between Thanksgiving and Cyber Monday, based on sales data from ChannelAdvisor’s clients.

High-end kitchenware e-retailer Willow & Everett quadrupled its sales on Amazon’s marketplace on Black Friday and nearly doubled sales on Cyber Monday year over year. The two-year old company learned from its first Christmas selling online in 2015, co-founder and vice president of marketing Camille Szramiak says. “We didn’t quite realize how insane the Christmas season was,” she says.

For instance, the company stocked twice the amount of inventory during November and December in preparation for an uptick in sales in 2015, but that wasn’t quite enough. Toward the end of the holiday shopping season last year the retailer ran low on inventory of some items, so it increased prices on Amazon in an effort to slow sales volume and keep items in stock. “It didn’t work. People were still buying those items, and we were watching our stock levels drop and drop,” she says.

This year, the e-retailer ordered four to five times more inventory for November, December and January than a typical month during the year. After the Thanksgiving weekend, Szramiak says they’re on pace to sell through the inventory.

One way Willow & Everett prepared for the holiday season was by updating its Amazon product listing pages with relevant holiday content. For instance, Willow & Everett added a couple of paragraphs under the product description section of its Amazon listing pages that describes the company’s charitable work. The retailer says giving back has always been a part of its company philosophy, but now that its position is front and center on product listings, it hopes the content will resonate with shoppers during the holidays, when they may be in a more charitable mood.

The e-retailer, which sells on Amazon and its own website, generated $1 million in revenue in 2015 and projects sales to more than double this year.

Aside from Amazon, retailers say they fared well on other marketplaces, especially Wal-Mart’s marketplace. Sports e-retailer Dazadi Inc., for instance, grew sales on Walmart.com by 70% in November compared with a year ago, CEO and co-founder Jason Boyce says. Jam Paper’s sales on Wal-Mart on Cyber Monday grew 55% year over year, Ennis says.

Wal-Mart executives say they increased the number of items available on Walmart.com this holiday season, largely by recruiting additional merchants to sell their products on the retailer’s site. There are 23 million items available on Walmart.com, three times the 8 million available last holiday season, according to a Wal-Mart spokesman. As of September, Wal-Mart hosts products from more than 1,000 sellers. 

 

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