From The Motley Fool…
Amazon’s Third Party Marketplace Is Worth Twice as Much as Its Own Retail Operations
“Over the last few years, the growth of Amazon’s (NASDAQ:AMZN) third-party merchant services has overshadowed its own retail business. Sales from those merchants first surpassed Amazon’s own sales at the start of 2017, and their share is steadily climbing. Third-party services grew two to three times faster than Amazon’s own online sales throughout 2018.
While third-party seller services bring in just one-third of Amazon’s own online sales, its profit margin on those services is significantly higher. Amazon historically operates its e-commerce unit with razor-thin margins. But when it comes to third parties, it takes a percentage of each sale, plus additional charges to store and ship the inventory of the merchants that use the Fulfilled by Amazon service.
Based on all of that, analysts at Evercore ISI recently valued Amazon’s third-party services at more than $250 billion, while giving its in-house retail operations a value of just $120 billion.”
This is great for Amazon investors. Bad for the rest of us. Those sellers can hide behind PO Boxes and fake names and Amazon doesn’t yet have to back these goods.
Read all about it here.
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