Amazon’s Third Party Platform is Really Just a Place for Market Testing

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This post describes how Amazon’s third party platform is really just a place for market testing. Learn how Amazon will affect the future of your small business. Discover how being a third party seller helps Amazon and how to use that to your advantage. First we’re going to review a scene from the movie Taken.

Taken Scene Review

Do you remember the movie Taken staring Liam Neesan? Neesan’s character, Mills, finally gets his daughter on the phone shortly after she arrives at her apartment in Paris. As Kim talks with her father she watches her friend, Amanda from an adjacent bathroom. Kim witnesses Amanda being pulled from the apartment by 3 men wearing all black.

The most shocking moment of the film for Mills beloved daughter (and the audience) happens next. As Mills sets himself up to gather as much information as possible about Amanda’s captures he advises Kim to take hiding under the bed in a nearby room. Kim gets comfortable as she awaits her fathers next instruction. It’s not as comforting as we all were expecting (that’s the shocking part). He says, “This next part is very important. They are going to take you.” While not as dramatic, consider the information in this post a little like that scene in Taken.

Amazon’s Third Party Platform

Amazon is a business that makes money off of third party sellers by charging commission, warehousing fee’s, pick and packing fee’s. Amazon wants as many third party sellers as possible partly because third party sellers have access to more products, they use Amazon services and they give Amazon commission. Amazon’s business depends on you as a third party seller.

Now here’s where this post starts getting a little bit like the scene from Taken mentioned above. Amazon lurks in the background observing analytics around each product listing. This is where they “take” you. When Amazon sees a product doing exceptionally well they’ll approach the manufacture to buy direct. You can learn more about that in this Amazon product lifecycle post. You can even read a Jet.com case study to dig a little deeper on the topic here. When Amazon buys directly from the manufacture the product listing reads, “Sold by and shipped by Amazon.”

The Scouts of the Amazon Ecosystem

Not only does Amazon use third party sellers to make money off commission but third party sellers become market testers. They’re guinea pigs, scouts and information gathers. Amazon uses the data to determine its own direction and next steps. This is just the nature of Amazon’s evolution.

You’re going to have a lot more than 10 seconds (the amount of time Kim had to yell out her captures features). It’s safe to say that you’ll have several years before Amazon gathers enough momentum and data to “take” over but don’t let that deter you from being proactive. Let’s focus on the positives because the friction is unnecessary. There’s no fighting Amazon.

Ultimately Amazon is good for the economy. Amazon’s third party platform caters to the consumer so folks can buy and receive products effortlessly. This means more sales and more money in your pocket (as a third party seller). You could put up a good fight and resist Amazon or you could go with the flow. There’s a lot of opportunity for your business with Amazon if you decide to go with the flow.

Positives and Opportunities

You can make millions of dollars

Amazon’s third party platform allows your small business to expand. The amount of money you can make on Amazon is significantly more than staying a small local business.

Free up time to do other things

Setting up a store and learning the ecosystem takes time and dedication but once it’s streamlined you’ll have a lot of extra time to do other things that are important to you.

Evolve and expand

Expand into different product categories and other areas geographically. Being on Amazon instantly give you access to millions of customers.

Create a specialty store

Joining Amazon’s third party platform isn’t the only option here. Over the past eight years I saw an influx in specialty stores and markets around LA. It seems like the general retail trend is moving away from large chain stores. People are wanting a more intimate, unique shopping experience. Consumers are adventuring to neighborhoods that have locally made products because they’re special. These special, unique pieces don’t do well on Amazon. I can’t imagine Amazon figuring out how to successfully sell these products any time soon.

There are multiple catalysts affecting retail trends, however, I can’t help but attribute the rise of Amazon as one of those catalysts. Amazon carries all the everyday, run of the mill products these days. People want to choose how they spend their time and shopping has become a leisure activity due to prime shipping and Amazon fresh. So, if you want to stay in retail, create a specialty curated store and be first movers toward locally made crafts and unique luxury items along with this Amazon launch.

Take a Moment to Think and Visualize

In conclusion, if you don’t know what direction you’re heading, it’s ok to take some time to think about it. Take a few days to think about what you see the nature of your business turning into. Do you see yourself managing an Amazon store and sourcing new products for it or do you see yourself converting to a specialty store and forming relationships with local craftsmen? Do you see your business turning into something else entirely? If so, what has it become? Dream about it, what sounds the most exiting for you? Idealize it and go for it. If you decide on doing the Amazon thing, consider us your Amazon spirit guides.

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