Small Businesses Winning on Amazon; Amazon Handmade Deals Another Blow to Etsy

RetailTechNews’ weekly Amazon Watch brings you some of the company’s biggest moves from the past seven days, analysing how the giant is revolutionising the retail space. In this week’s edition: Small businesses winning on Amazon; Amazon Handmade deals another blow to Etsy; and Amazon users buy more items.

Small businesses winning on Amazon

We all knew that Amazon would have a great Black Friday, but the online retail giant ended up taking a massive 55% of spend on this day, as well as accounting for 45% of online checkouts completed on Thanksgiving Day.

However, it was Cyber Monday that turned out to be the winner for the holiday season, recording USD$6bn (£4.5bn) in sales, up 16.8% year-on-year. Small businesses were the real winners when selling on Amazon, with shoppers buying nearly 140 million units from small businesses.

While this may seem like good news for small retailers, who clearly stand to gain from selling their goods via the marketplace, some are concerned about the levels of control Amazon has over the selling process.

Many merchants depend on Amazon for more than 80% of sales, and, for that reason, Amazon’s dominance has many of them worried. More than half (52%) are concerned Amazon will take away their privileges, half are worried about high fees, and 45% are scared that Amazon will compete directly with them, according to recent research from marketplace commerce platform Feedvisor.

Amazon Handmade deals another blow to Etsy

Amazon Handmade is making an aggressive move into the craft goods marketplace, rolling out its goods via Prime Now, which gives customers the option to receive their goods within one or two hours. Handmade, which was rolled out for the holiday season, is Amazon’s answer to Etsy.

The news comes as a big blow to Etsy, who were starting to turn their business around, with third quarter gross merchandise sales rising 13.2% year-on-year to USD$766.4m (£572m). However, they have been plagued for the last few years with stories that produce sold on their marketplace is counterfeit and mass produced. On the other hand, Amazon’s Handmade has been stringent on only selling handmade goods.

Though Handmade has been around since 2015, Amazon have put an increased emphasis on the platform for the holiday season. The more authentic nature of the goods, combined with better delivery options, mean that if the marketplace continues to run after the festive season, Etsy, and sites like it, could soon be history.

Amazon users buy more items

Amazon Echo owners are typically buying more consumer goods, than non-users of the device. Echo owners increased their purchases of consumer products, like diapers, by 13.5% in the third quarter of 2017. This is up from the 7.5% jump seen in the second quarter of this year. Those companies also saw an unusually high 60% upsell rate, meaning the consumers bought more products from the same brand after their Echo purchase.

Alexa’s voice technology is clearly turning into a major marketing platform for consumer brands. As well as being good news for brands selling through Amazon, this is also positive for retailers who are already place their items on Amazon. It means brands will be more likely to want to sell their goods via Amazon’s marketplace, prompting them to work with retailers that already have a presence there.

It does, however, create a reliance among brands and retailers on Amazon, solidifying the giant’s grip on the retail market. If rival retailers are stocking more brands, and seeing more sales, because they are selling their goods via Amazon, this will mean a missed revenue source for retailers not using Amazon. Sooner or later, every major retailer will need to sell through Amazon, if they are to continue to compete.