L2’s latest Intelligence Report on Amazon shows brands have little choice on whether and how widely they are sold on the retail platform. In fact, those not officially selling through Amazon were distributed more widely than brands that did. Non-distributors have 15,258 listings on Amazon, 92% of which are by third-party sellers. Meanwhile, distributors have 12,259 listings on Amazon, 70% of them by third-parties.
But there is no correlation between whether a brand is listed on Amazon and the total number of listings. For example, L’Oréal Paris does not directly distribute through Amazon, but has the most SKUs on the platform than any other beauty brand, 13,941. Thirty-six percent of those are listed by third parties, whereas only 6% of Almay (second largest SKU among Beauty distributors) products are sold by third parties on Amazon.
A few brands (Burberry, Kiehl’s) list products on Amazon in exchange for help in cleaning up the gray market around their products, but overall, Amazon has little incentive in removing third-party sellers. Third-party merchants contributed 39% of Amazon’s product sales in 2013 and more than $17 billion of Amazon’s $32 million in gross merchandise value. Furthermore, they create a large spectrum of products that allows Amazon to be the “everything store” while avoiding astronomical inventory costs.