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In Amazon’s annual letter to shareholders, CEO Jeff Bezos noted that third-party sellers account for more sales on Amazon than Amazon’s first-party retail business, and that they have for several years.

share of physical gross merchandise sales on amazon Business Insider Intelligence

Bezos even said, “Third-party sellers are kicking our first party butt. Badly.” This shows how outside merchants are thriving on Amazon, but their success is positive for the firm as well, even if it appears to be behind.

Here’s what it means:Third-party sellers are the dominant driver of sales on Amazon’s marketplace, possibly due to some key initiatives from Amazon.

  • Third-party merchants racked up $160 billion in physical gross merchandise sales on Amazon in 2018, accounting for 58% of Amazon’s sales. This is a steep jump from 1999 when third-party sellers made up just 3% of Amazon’s physical gross merchandise sales — worth just $.1 billion — meaning that the segment saw a compound annual growth rate (CAGR) of 52% during that stretch. Third-party sellers first eclipsed Amazon’s first-party business…