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1/ Thread: $AMZN Marketplace in 2020
I read an interesting piece on marketplaces today which reviewed the best year for marketplaces in a decade.
I came across some very interesting data points for $AMZN marketplace which will be the focus on this thread.
I read an interesting piece on marketplaces today which reviewed the best year for marketplaces in a decade.
I came across some very interesting data points for $AMZN marketplace which will be the focus on this thread.
2/ Before we dive deep into $AMZN, broadly the marketplace winners in 2020 are: $TGT, $AMZN, $WMT, and $ETSY.
Losers are: $GOOG, $WISH, and $EBAY.
Losers are: $GOOG, $WISH, and $EBAY.
3/ $AMZN, in fact, added GMV this year that's equivalent of $EBAY's entire GMV.
It's funny because during 2000-2010, $EBAY was ahead of $AMZN in terms of market cap most of the time.
It's incredible how the fate changes in just a decade.
It's funny because during 2000-2010, $EBAY was ahead of $AMZN in terms of market cap most of the time.
It's incredible how the fate changes in just a decade.
4/ $AMZN global GMV in 2020 is $475 Bn. 3P GMV grew ~48% in 2020 after it grew 25% in 2019.
Was there anyone who imagined AMZN 3P would grow at 25% or higher in 2019/20 5-10 years ago?
Such staggering growth at this scale is just astounding.
Was there anyone who imagined AMZN 3P would grow at 25% or higher in 2019/20 5-10 years ago?
Such staggering growth at this scale is just astounding.
5/ "Nearly $1 billion in fresh capital was committed in 2020 to firms looking to acquire Amazon sellers and brands."
Access to capital for 3P sellers is probably just getting started. If they become better capitalized, the 3P machine might continue to post eye popping numbers.
Access to capital for 3P sellers is probably just getting started. If they become better capitalized, the 3P machine might continue to post eye popping numbers.
6/ Many of these 3P sellers are being bought at 2.5-4x EBITDA multiple.
Buyers are trying to do rollup strategy betting that these business can be eventually sold at much higher multiple.
Buyers are trying to do rollup strategy betting that these business can be eventually sold at much higher multiple.
7/ $AMZN marketplace is even more concentrated than what Pareto principle would suggest.
Top ~12% 3P sellers contribute 80% of GMV.
Just the top 852 3P sellers (.05% of sellers) contribute 10% of GMV.
Top ~12% 3P sellers contribute 80% of GMV.
Just the top 852 3P sellers (.05% of sellers) contribute 10% of GMV.
8/ ~18% of current year GMV in the US came from 2015 (or earlier) seller cohort, implying longevity of some sellers.
84% of top 10,000 sellers remained active in 2020. So the churn rate is pretty low compared to some other online marketplaces.
84% of top 10,000 sellers remained active in 2020. So the churn rate is pretty low compared to some other online marketplaces.
9/ The marketplace, however, is extremely Schumpeterian. Once something becomes popular, there is a rat race to copy that product.
~42% of top sellers are based in China.
~42% of top sellers are based in China.
10/ Anker, an $AMZN native brand and founded by ex-Google engineer Steven Yang, went public in Shenzen Stock Exchange in Aug, 2020.
It surpassed $1 Bn sales in 2020. Market cap? $11 Bn.
It surpassed $1 Bn sales in 2020. Market cap? $11 Bn.
11/ $AMZN made $20 Bn from advertising this year.
Avg CPC on AMZN ads $0.85
Avg. conversion rate 12.5%
Advertising cost of sale (ad spent/sales) 22%
62% sales are organic
Avg CPC on AMZN ads $0.85
Avg. conversion rate 12.5%
Advertising cost of sale (ad spent/sales) 22%
62% sales are organic
12/ $AMZN almost made the same amount from ad revenue in 2020 as it spent on its own marketing expenses.
This reminded me of this famous chart by @chamath
This reminded me of this famous chart by @chamath
13/ Success of AamazonBasics has seemed to flatlined in recent times, indicating 3P sellers remain very competitive.
End/ Here's the link to the original piece if you want to explore lots of interesting other tidbits of $AMZN and other marketplaces: https://www.marketplacepulse.com/marketplaces-year-in-review-2020?utm_source=Benedict%27s+Newsletter&utm_campaign=db0a8600c6-Benedict%27s+newsletter_COPY_01&utm_medium=email&utm_term=0_4999ca107f-db0a8600c6-71044385
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All my twitter threads are here: https://mbi-deepdives.com/twitter-threads/
