That Amazon.com is more and more becoming a platform goes
unchallenged. Yet this strategy remains largely emerging and quite
difficult to measure given the few metrics the company disclose. A very
convincing analysis of its 2011 Q4 results by ChannelAdvisor CEO Scot Wingo makes some very good points and clearly demonstrates the depth of this transition.
Even though Amazon.com's results missed analysts' revenues
expectation by $1 bn, it beat their profit estimates by $100 m. Scot
Wingo argues that sales from third party sellers cannibalized
Amazon.com's own sales, but contributed to the increase in profit
because costs are far lower on those sales. To sum up, the company is moving away from a retailer model (where its revenues are equals to the transaction values) to a marketplace model (where its revenues are commission on transaction values).
- The company also disclosed it had two million such sellers,
representing 36% of units sold (an increase of 65%). This shows the
level of momentum Amazon.com is able to sustain.
- Services like FBA, AWS, MechanicalTurk are slowly maturing. The
company announced a new metric called "Service Sales" encompassing all
those services, and disclosed it had been growing by 74% year over year.
- Purely digital offers (Amazon App Store for Android, Kindle Direct Publishing) are basically a platform model on steroids.
In a recent article,
Chris Dixon explained why he thinks two models are currently competing:
Amazon.com is heralding the centralized e-commerce approach, while
eBay's strategy clearly supports a decentralized paradigm.
- Contrary to eBay, Amazon.com always maintain its control over the
customer accounts, and often competes directly with its third-party
- The leading e-retailer provides an end-to-end solution which ensures
a great customer experience for the buyer. Through its multiple
acquisition, eBay built a basket of services that are well segmented but
less integrated. Most of those products kept their own brands (cf.
PayPal, Magento, Hunch, GSI Commerce).
- eBay does not keep any inventory. Amazon.com's numerous fulfillment
centers and facilities can be considered one of the company's most
impressive assets. Being able to provide such a strong link between the
physical and the digital world is definitely a key offer to help other
companies transition to the web.
Centralize vs. decentralized e-commerce