ChannelAdvisor

Chart: Amazon vs. Ecommerce vs. Retail...

I saw this chart today in the Silicon Alley Insider and thought it was an interesting visual and as you know they say a picture is worth a bunch of words.  If you look the inflection point when Amazon started to really accelerate, it co-incides with the launch of Prime and the ramping up of the seller business (aka 3P).

Amazon ProductAds - Conference call tomorrow and details...

Gene Munster over at Piper Jaffray has a report out today detailing Amazon's ProductAds program and he offers up some interesting views on the size of the program. You can download the entire file here: Download AMZN Product Ads May 19.

In the report, Gene covers two different ways to size the ProductAds opportunity for Amazon.  In the first model (Amazon ProductAds for just items that Amazon doesn't offer), Gene shows that the 2 year revenue opportunity for Amazon is north of $200m.

In the second model, where Amazon has ProductAds for both items it offers and doesn't shows the revenue coming in at about $150m.

For retailers, we're finding that this program is a really big win because it allows you to get your products on Amazon for an economical rate and you get to own the customer.  The program 'works' for Amazon because it essentially extends their selection.

Call Tomorrow - May 20 @ 2pm ET

Gene is hosting a call tomorrow at 2pm where we'll be discussing this program as well as his findings on Prime and other Amazon.  Gene has been kind enough to allow us to invite some retailers/blog readers to attend.  The details are:

• Dial In # 800-745-8951
• Int'l Dial In # +1 212-231-2908
• RES # 21425463
• Replay will end 5/27/09

I hope everyone is able to make it!

How big is Amazon Prime?

One of the most frequently asked questions we get at ChannelAdvisor from both retailers and Wall St. analysts is: "How many buyers do you think are in Amazon Prime?"  Well as a card carying member of Prime, I can't imagine why anyone that buys at least one thing a month online wouldn't have it.  But it is a unique program that I've found many consumers don't really understand.  Given that I typically guess that about 2-5% of Amazon's 91b active buyers.  Thus I guesstimate that there are 1.6-4m buyers in the program.  Of course, you'd expect these to be the power-buyers and Prime super-charges that so they probably represent a larger share of Amazon's GMV (Gross Merchandise Value - The sum of Amazon's retail and seller business' sales).

Amazon doesn't disclose any data related to prime which tends to fuel the speculation out there as well.

Well Gene Munster, a Wall St. analyst with Piper Jaffray (PJC), has a great report out.  Here are some highlights:

• Gene's team did an analysis and a survey and discovered:
• By PJC's estimates there are 2m Prime members and they are growing at a 24% y/y rate
• The survey of prime members reveals that new prime members' gmv goes from $400/yr to $900/yr in their first year of prime (WOW!)
• Thus every 1m prime members adds 1.5% to Amazon's revenues by PJC's calculations
• Prime members spend 130% more than the non-prime Amazon buyer 
• 92% of Prime members surveyed plan to renew 

Gene included this chart that illustrates the incremental lift that Amazon receives with each chunk of adoption:

Aside from confirming that Amazon Prime is a great promotion for Amazon because it increases wallet-share dramatically, Gene also has helped sellers understand the 'pull' you can expect by having your items in FBA.  There's two ways to look at it:

• At 2m users out of 91m that's 2%
• But if they spend 130% they are essentially the same 'size' as 5m buyers or 4%.  

It's important to note that FBA not only gives you Prime member benefits, but also SuperSaver and the 'fulfilled by Amazon' tag that increases buyer trust.

We'll be digging into some more case studies on FBA - what works, what doesn't and how you can leverage this Prime audience that is on Amazon spending 130% more than the average Amazon consumer.

 

Welcome to the Amazon Strategies Blog!

On this blog we'll be covering news, analysis and most importantly - selling strategies - all around Amazon's seller business and related services.

We'll be spending the bulk of our time talking about Amazon's ProMerchant service (also known as Merchants@ or Amazon's 3P) business and all of the strategies that have developed for that platform.  We'll talk about how to own the buy-box, advanced pricing strategies, merchandising on Amazon and of course how the Amazon search engine works and how retailers can optimize for increased exposure.

But also, retailers are increasingly interested in Amazon services such as:

• Fulfillment By Amazon (FBA) - While you may have heard of FBA from the outsourced fulfilment angle, at ChannelAdvisor, we're finding the killer app that is driving FBA adoption in reality is access to the Amazon Prime customers as well as SuperSaver free/discounted shipping promotions.
• Product Ads -  With the ProductAds platform you can essentially treat Amazon like a comparison shopping engine.  This PPC program allows you to send a feed of products to Amazon where they are seen by buyers and then traffic is sent to your website.  This program is really getting traction and we have some case studies and best practices to share here.
• Checkout By Amazon (CBA)-  While still a relatively new addition, retailers are watching this service and wondering where it fits in with options out there like PayPal, Google Checkout and of course credit-card merchant services.
•  Webstore and ecommerce - Amazon's webstore offering is an interesting way to leverage what you may already be doing on Amazon into an ecommerce platform.  The primary use-case is for those smaller merchants without an existing ecommerce site.  
•  Vitamin C -  Forrester's Brian Walker has tweeting and tellilng the press about an Amazon effort he's been briefedon called Vitamin C evidently internally at Amazon.  Brian suggests this is a mid-market ecommerce offering that is more independent of amazon than Webstore.

Phew, that's a lot to cover, but if I missed anything - please let me know in comments and I'll make sure it is on our radar.

Scot Wingo

CEO

ChannelAdvisor