Why You Can Trust CNET Amazon third-party vendors sold more than 2 billion items in 2014
That's a plus, given the retail giant's profit margins are higher when products are sold through third parties, say analysts cited in The Wall Street Journal.
Amazon's third-party sellers accounted for 40 percent of all products sold through the retail giant last year.
On Monday, Amazon announced that its 2 million third-party vendors sold a record 2 billion items worldwide in 2014, twice the number sold in 2013. The number of items sold doubled from the year prior even though the number of Amazon sellers remained the same.
Amazon provides a marketplace for third-party vendors to sell new and used items directly to consumers alongside the retailer's products. The third-party sellers benefit by having Amazon handle the transaction process, while Amazon benefits from the ability to offer more products to the public than it could directly. Amazon earns money by collecting a commission on each product sold.
The retail giant touted its Fulfillment by Amazon (FBA) service as a key value to third parties. Through FBA, sellers can have Amazon store and ship their products directly, take advantage of Amazon Prime shipping and tap into Amazon's customer support. In 2014, the number of sellers using the FBA service jumped 65 percent from 2013.
Amazon also introduced and expanded other services last year to help third-party vendors. The Amazon Seller app for iOS and Android allows sellers to list items for sale, handle orders and manage inventory. In November, the company added a Growth Guarantee to its Amazon Payments feature that promises sellers who use the feature a refund in service fees if they don't see an increase in sales.
"It's been a record-setting year for selling on Amazon," Peter Faricy, vice president for Amazon Marketplace, said in a press release. "We're seeing strong growth from sellers listing their items across our global marketplaces. In fact, there are now more than a billion offers for customers to browse from sellers who are listing items for sale outside their home country. The growth of mobile and the introduction of the Amazon Seller App have also been a big win for sellers this year. Sellers are constantly telling us they value the flexibility of managing their businesses on the go from their tablets and mobile devices."
Though Amazon still sells most products directly, some analysts say they believe the company earns a higher profit margin on items sold through third parties, The Wall Street Journal reported.
An Amazon spokesperson would not comment on profit margins but said that third-party sellers are charged a certain fee based on the category of the item sold.
Third-party sellers did especially well during the holiday shopping season, according to Amazon. Sellers who offered special holiday deals saw a 400 percent increase in unit sales during the holiday season. On Cyber Monday, sellers sold more than 16 million units around the world, while orders via Amazon Payments rose by more than 60 percent from the prior year.