Last week the two eCommerce Marketplace giants, eBay and Amazon, announced 3rd quarter earnings and started to look forward to the Christmas season.
The announcements were very positive for Marketplace sellers like us, so let’s take a closer look together.
No MBA (Masters of Business Administration) needed ;)
eBay the Comeback Kid?
eBay had a real surprise showing in its first quarter without Paypal as it beat Wall Street analyst estimates on profit, and mostly maintained its revenue for the same period over last year.
This news generated the biggest jump in the stock price in nearly 10 years and shows investors think the company is on the right track.
With all the doom and gloom predictions earlier in the year and anecdotal stories about Marketplace sellers like us shifting inventory to Amazon, it seems immediate changes announced already have a positive impact.
In an ideal world, it would be nice if all announced changes could be implemented for the Christmas season, but the continuing focus of changing the Marketplace and eliminating side projects will already help our eBay listings profit during this year’s Christmas season.
A little time spent over the next few days on improving pictures, revising copy, and updating item specifics can only improve your visibility on this resurging Marketplace
eBay is also making its site more search engine friendly, so the loss of traffic and sales we all experienced earlier in the year is being addressed and fixed. Some changes already kicked in which may account for this surprisingly good quarter.
Don’t Allow Your eBay Listings to Languish
Undoubtedly some of us have neglected our current eBay listings and while time is short, if you fall into this group, you may want to take your top-selling products and refresh them now.
Amazon’s earnings call also included a big surprise with most analysts predicting a loss of around 13 cents per share, but instead the company announced a profit of about 17 cents per share.
The exceedingly strong showing by its Amazon Web Services (AWS) unit accounted for this profit surprise.
While AWS is not particularly relevant to most of us Marketplace sellers, it does mean the company will have the cash to continue the rapid expansion of its global warehouse and delivery network.
Something it will need to continue to increase its total active customer base, which in the 3rd quarter grew over 230% year-over-year.
The Amazon Christmas Rush
This Christmas season, Amazon expects to create over 100,000 seasonal jobs in North America, and over 40,000 seasonal jobs across its European Fulfillment Network (EFN).
No wonder Amazon’s written press release starts out with these two statements:
In numbers , Amazon predicts a booming Christmas season with net sales expected between $33.50 billion and $36.75 billion, or to grow between 14% and 25% compared with fourth quarter 2014.
When you digest this positive forward-looking statement with earlier in the year information by Amazon that about 40% off all units sold on Amazon are by Marketplace sellers, this can only mean a very nice Christmas season for us Amazon Marketplace sellers.
- If you are not on Amazon now, you have very little time left to claim your piece of the Amazon sales pie and we have the tutorials to get you started today.
Amazon FBA/EFN Key to Marketplace Success
As a group, we Marketplace sellers are also continuing to increase the inventory available on Amazon by having Amazon store and ship our products with Amazon FBA / EFN.
Amazon FBA: (North America Fulfillment by Amazon)
Amazon EFN: (Amazon’s European Fulfillment Network)
Amazon is even pushing for more cross boarder fulfillment with its Multi-Country Inventory (Amazon MCI) program.
(Yes more acronyms, we may need an index soon to keep up…)
And if the idea of an ever increasing network of warehouses near your customers is not enough inducement for you to send your inventory to Amazon, consider this statement from the company:
- The July Prime Day event attracted a 7% growth in Prime memberships
Let’s place this number into proper context.
A recent report from Chicago based market research firm Consumer Intelligence Research Partners suggests that Prime members buy 2.5 times more than non-Prime members!
It’s a “No Brainer” that you need to have your products available for this premium customer base.
The Bottom Line
Earning calls are for financial nerds and unless you are an investor in these stocks, the barrage of numbers and acronyms is mind numbing.
In UnderstandingE style we simplified this for you and here is a quick recap:
- eBay and Amazon had strong 3rd Quarter results
- eBay is resurging by fixing its problems, especially search engine visibility
- eBay is back on focusing on the core business
- Amazon added fulfillment capacity
- Amazon Prime members are crazy loyal buyers vs non-Prime members
- Amazon FBA/EFN is your ticket to Marketplace success
Both companies are looking forward to a healthy Christmas season and if your items are not listed on at least one, preferably both Marketplaces, you are losing sales and profits to your competition.
About the Author:
Richard Meldner’s first encounter with Marketplaces began in 2001 enforcing his then employer’s intellectual property rights on eBay and Yahoo. Ironically a short stint as an employee instead of an entrepreneur. In 2004 he and a friend started a regional automotive distribution business in Miami, Florida. They used eBay to sell non-moving inventory, but over time turned it into a full scale eCommerce business. We believe his experience and American insights, actually he is a German living in Amerika (not everyone can be perfect), will be interesting to other eCommerce sellers.