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Another Big Year at Amazon,,br>But Small Sellers Spin Their Wheels

Selling on Amazon

by Steve Weber

#111, 7 January 2007

2007 was another record-breaking year at Amazon, but rank-and-file sellers have little to cheer about. Amazon reported its "best ever" holiday sales, but many Marketplace sellers of used and collectible books reported decreased or flat sales this year. (A large minority of sellers, however, said their Amazon sales were up strongly this year.)

Amazon said its busiest ordering day was Dec. 10, with the number of items ordered up 35 percent compared to the previous year - 5.4 million items compared to about 4 million items during the busiest day in 2006.

Of course, many of those Amazon holiday sales are for toys and other new gift merchandise. But there's little doubt that growth in Amazon's third-party book sales, after years of double-digit increases, is slowing.

In 2006, growth in Amazon's Marketplace book sales stalled, as the percentage of sales resulting from Marketplace merchants failed to increase for the first time ever, according to a breakdown of the North American book market published by Foner Books, an independent publisher. According to the report, Marketplace accounted for 28 percent of Amazon's sales during 2006, the same as 2005. (To read the full report, see:

Because of Amazon's overall growth, Marketplace sales rose about 15 percent compared to 2005, the report said. But the share of Marketplace third-party sales relative to Amazon's sale of new items stalled, perhaps because of Amazon's heavy promotion of its Super Saver and Prime shipping programs.

Last year on Marketplace, Amazon began displaying listings for its own merchandise above better deals by third-party merchants -- unless sellers undercut Amazon by more than the price of standard shipping.

Perhaps the slowdown in Marketplace sales is simply due to the fact that double-digit growth was only sustainable for so long. This summer, The New York Times reported that online book sales would rise "only" 11 percent during 2007, compared with nearly 40 percent previous year.

But even if you accept the fact that online book sales have begun to plateau, why is it that sales for rank-and-file Amazon sellers seem so bad, according to anecdotal reports? Some sellers believe it's because regular sellers aren't as competitive anymore against Amazon's new merchandise or against sellers participating in Fulfillment by Amazon - in either case, buyers can qualify for free or cut-rate shipping, whether through Amazon's Super Saver Shipping program or through a subscription to Amazon Prime.

Amazon-fulfilled book listings now appear at the top of the list, above our Marketplace listings, unless we undercut Amazon by more than $3.99 - the amount the buyer pays for standard shipping. This is somewhat misleading to the buyer, implying that every purchase from Amazon qualifies for free shipping. Some sellers believe that this is not only forcing prices downward, but discouraging buyers from shopping with regular third-party merchants.

On sales of non-collectible books, we can assume that about one-third of customers don't consider our Marketplace listings, even when we've got the best deal. Some people just believe it's "safer" buying from Amazon. And there's surely another big chunk of buyers who just buy the first listing they see, regardless of the feedback or the price.

It's tough to compete with a landlord that gives themselves top billing and a sign that says "Fulfilled by Amazon." But most sellers of used books don't want to participate in FBA, either; they don't want to cede physical control of their merchandise. But there's no doubt that Amazon is committed to the program, and during 2007 construction began on one of its biggest-ever warehouse/fulfillment centers yet to help handle the FBA business.

At the same time that Amazon is hyping its free shipping, Prime shipping, and same-day service in some areas, Postal Service rate increases have pushed basic shipping fees to $3.99. And with recent increases in fuel prices, the pressure on shipping rates will probably continue. (Amazon Prime offers free two-day shipping and discounted overnight delivery for $80 a year. The new same-day delivery service, called Local Express Delivery, costs $5.99 for Prime customers.)

Book-Swapping Sites Stealing Buyers?

Some sellers suspect that the growing popularity of book-swapping sites such as, which has over 1 million books listed, are cutting into sales too. Certainly, many of the books popular on the swapping sites would be the same ones that are oversupplied on Amazon and selling for pennies. But still, if these readers are spending all their time borrowing and swapping free books, that's less time they have to spend money at Marketplace. is the most popular, but not the only book-swapping site. Other popular sites are BookMooch, Bookins, and TitleTrader. If you're patient, every once in a great long while you can find a book worth $20 to $40 on these sites.

And of course, there's Kindle, Amazon's wireless e-book reader it introduced at Thanksgiving time - and sold out shortly thereafter. It will be years, if ever, before e-books make a dent into paper-bound book sales. Nevertheless, it's one more thing keeping booksellers awake at night.

The Crummy Service Theory

One more popular explanation for the dip in sales to third-party merchants: New, irresponsible sellers have ruined the business for everyone. The theory goes that the typical amateur Marketplace seller delivers substandard merchandise and service, and that once a buyer has been burned, they never consider buying on Marketplace again.

Certainly, there's no barrier to entry at Amazon. There's no application or interview process, and so anyone who can read a bit of English can get started. The free-for-all will probably continue until the day comes (if it ever does) that a business license or tax ID is required for online selling. If the politicians ever get around to doing this, the ranks of part-time online sellers would be reduced drastically. Would this be good or bad for the market?

Providing superior service isn't getting any easier, even for conscientious sellers, thanks to the barriers Amazon continues to build separating sellers and buyers. In the spring, Amazon stopped providing buyer e-mails and shipping addresses in its "Sold, ship now" e-mails. Although sellers can still retrieve this information by jumping through some additional hoops (your Amazon Payments account or the software called Amazon Service Order Notifier).

Officially, Amazon explains that the changes aim to "protect the privacy of our customers and sellers."

Zero Tolerance on A to Z, Feedback Tweaks

Another sore spot that popped up with sellers during 2007 was a new get-tough policy on A to Z Guarantee claims. Previously, when sellers provided proof of shipment, Amazon usually paid the claim itself instead of deducting the amount from the seller's account. Now, Amazon debits sellers for claims, even when tracking shows the book was delivered. So, not only are many sellers struggling to get by on fewer sales, but they're losing the funds from some of their remaining sales through no fault of their own.

In the fall, Amazon debuted a new feedback page where Marketplace buyers are asked for more details about their buying experience. Nothing wrong with that, except that it continues a trend of emphasizing a short time window for Media Mail orders - and as we all know, the good old Postal Service is still taking its sweet time delivering most of these packages.

Yet Amazon is inviting buyers to zap up with negative feedback when USPS isn't prompt. When Amazon implies that something was substandard about the order, the implication is that it was the seller's fault, and all too often, the "remedy" is negative feedback.

The new page prompts buyers to criticize sellers for factors beyond the seller's control - even if the buyer was satisfied with the purchase. Some Amazon watchers believe the feedback changes were in response to eBay's new "Detailed Seller Ratings," which enables buyers to rate sellers anonymously on several criteria. In addition to eBay's longtime feedback system of simply positive, negative or neutral ratings, now buyers are also invited to give sellers ratings on a 1 to 5 scale on "Item as described," "Communication," "Shipping time," and "Shipping and handling charges." Amazon, in addition to asking buyers for an overall rating, now presents a series of "optional" questions, including: "Did your item arrive by X date?," "Did your item arrive in the condition as described by the seller?," and "If you contacted this seller, did they provide prompt and courteous service?"

Considering all that can go "wrong" with a transaction, it's hard for sellers to emerge from that series of question unscathed. On the other hand, I suppose Amazon's new design will reduce the amount of buyers who leave feedback or comment about a book's contents. This page design makes it more obvious than ever that the buyer is being asked to rate the transaction, not the product. But here's my take: Amazon redesigned the feedback form so that buyers can vent immediately using the feedback form, take out their frustrations on sellers, and consequently Amazon will receive fewer Marketplace order inquiries and complaints.

Since Marketplace has been such a crucial profit center for Amazon, let's hope that the company recognizes some of the problems small sellers are having these days. Perhaps there's hope that some of these woes can be corrected during 2008.

Questions or comments?
Contact the editor, Craig Stark

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