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Selling on Amazon
Amazon Marketplace
2006 in Review

Amazon Grows Larger, but a Bigger Giant Looms

by Steve Weber

#86, 15 January 2007

For booksellers trading on, 2006 was a year of upheaval. The company rolled out a series of policy changes making life more difficult and less profitable for its Pro-Merchants.

Despite those unpopular changes, Amazon's Marketplace grew more crowded than ever. Amazon increased its market share in the online used book market, becoming a critical venue for most online booksellers. Individual booksellers continued to migrate to Amazon after aggregated listings from Alibris and Abebooks were booted from Marketplace in late 2005. Meanwhile, volume at seemed unusually light, and eBay made a series of missteps that seemed to drive even more booksellers to Amazon. Although auctions of rare and collectible books remains brisk, eBay lost some rank-and-file booksellers after it jacked up its Store fees and reduced visibility of Store items in search results.

But just as Amazon's grip on the online used-book market tightened, an even bigger giant loomed over its shoulder: Google.

Putting Sellers at a Disadvantage

Throughout the year, Amazon introduced policy changes making selling more difficult and third-party listings less competitive against Amazon's own listings:

  1. Amazon added shipping fees to Marketplace offer pages in November, attributing the change to "customer requests." However, products shipped by Amazon don't have a shipping cost displayed, regardless of whether the purchase qualifies for Amazon's free shipping deals. This gives casual buyers the impression that buying items fulfilled by Amazon is a much better deal, unless the used listings are priced several dollars below Amazon's price.

  2. Amazon began phasing out zShops in October, replacing them with a much weaker Marketplace storefronts. Sellers had been able to customize their zShop stores, but the new Marketplace stores have very few features, and sellers have no options for customizing them. Moreover, the new storefronts have no categories or searching function, although Amazon says it will add category lists at some point.

  3. Amazon significantly enlarged the window of time it allows Marketplace buyers to return items to sellers for a refund. Previously, items had to be postmarked for return within seven days of receipt. The new policy allows buyers 30 days after shipment to postmark an item for return.

  4. Amazon also made it tougher for buyers and sellers to communicate - before and after purchases. Seller e-mail addresses are no longer displayed on their Amazon storefronts. Instead, buyers must use a Web-based contact form to send a message. Meanwhile, sellers have less access to buyer e-mail addresses and are forced to use a contact form when contacting customers; previously customer e-mail addresses were visible within the seller's payment account.

Although Amazon still provides buyer e-mail addresses within its "Sold, ship now" e-mails and order fulfillment reports, in June it announced plans to eliminate all buyer information from the order e-mails - even names and addresses. Starting in February 2007, Amazon plans to provide Windows desktop software for sellers to download order details. No word yet on how Mac users are expected to deal with the change.

Fulfillment by Amazon

Perhaps Amazon's biggest news of the year was its testing and rollout of "Fulfillment by Amazon," a program enabling booksellers to outsource customer service and shipping. The beta test began in April, with booksellers sending their books to an Amazon warehouse.

In addition to relieving sellers of their fulfillment chores, FBA makes the seller's listings more attractive to buyers, compared with regular Marketplace listings. The FBA listings have special badge indicating "Fulfilled by Amazon," and the items qualify for the Super Saver Shipping, Prime shipping, and gift wrapping options normally reserved for Amazon's new items.

However, FBA has two big downsides: One, sellers aren't able to list their books on other selling venues, and two, they have less control over the quality of customer service. Buyer feedback rates for some of the FBA sellers nosedived after Amazon responded slowly to FBA orders during the beta test. Amazon charges added fees for handling FBA orders, as well as monthly storage fees for inventories.

On the bright side, Amazon made a series of improvements to its bulk-listing tools that makes it easier for sellers to list pre-ISBN books in bulk. Also, Amazon cracked down on questionable collectible listings, requiring that listings be priced above the retail price and have some unusual quality, such as being a first edition.

The Google Monster

As Amazon and eBay continued to make storefronts less attractive for sellers, Google offered the potential for more exposure. In late 2006, Google began distributing free software enabling sellers to upload their Amazon, eBay or Yahoo store listings to Google Base, a giant collection of product listings. The tool, called Google Base Store Connector, could result in lower customer acquisition costs for booksellers, when compared to commissions and fees at the marketplace venues. For the time being, it provides enhanced exposure (and improved sales) for eBay Stores and Marketplace sellers.

Is Google planning to build a full-fledged online marketplace? It's unclear today, but the company is certainly collecting book product listings on its Google Base site. And, considering the control Google exerts over Internet traffic, this situation bears watching no matter what you're selling. Currently, Google sends most people searching for books to Amazon, eBay, ABE and the other marketplaces. Whenever Google decides Base is ready for prime time, there's nothing to stop them from flipping a switch and sending all that search traffic to Base. And who knows, maybe Google will integrate Base listings with Google Checkout, the search giant's answer to PayPal.

Don't Forget about the Ankle Biters

As if the threat from Google wasn't big enough, Amazon is also looking over its shoulder at Barnes & Noble, which is beginning to crank up its long-dormant used marketplace, BookQuest. Previously, only sellers from Alibris and Abebooks were allowed on BookQuest, but in late 2006, B&N began signing up new sellers directly.

In another setback for Amazon, Borders Group, another big U.S. brick-and-mortar bookstore chain, announced it would develop its own online bookstore. For the past five years, visitors to have actually been shopping on a Borders-branded version of Amazon, with revenue split between the two companies. It's unclear whether Borders will simply begin selling its own new books on its site or develop a full third-party selling system.

Meanwhile, ABE launched an initiative to lure back some of its booksellers who had closed accounts during 2006 and defected to Amazon. In an apparent attempt to boost its competitiveness against Amazon, ABE contacted former vendors and emphasized these recent improvements:

  1. Booksellers can build personalized storefronts with more available features than ABE's old seller home pages.

  2. has a new shopping cart enabling faster and easier purchasing.

  3. Item quantity is available in ABE's online listings manager and will soon be available in its HomeBase 3.0 software.

  4. Listings are now searchable on five international marketplaces, including

Questions or comments?
Contact the editor, Craig Stark

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