The Web Retailer News Digest for September 17th, 2021
The biggest marketplace seller on Amazon, based on seller feedback, is to become a public company listed in New York. This will take effect via a merger with a “blank check” company called Highland Transcend Partners I Corp., which already has a NYSE listing.
The seller is Pharmapacks, which ranks as the fifth largest worldwide as well as the number one in the US, according to our most recent update of the world’s top Amazon marketplace sellers.
Pharmapacks sells a range of health, beauty and personal care products. Its first online sales channel was Amazon.com, and it has expanded to other marketplaces and social media platforms in recent years.
It will become one of just a few public companies who have built their businesses up by selling through Amazon and other online marketplaces. But when you compare Pharmapacks with two of those other leading companies, you find some surprising differences.
The top seller on Amazon.com is going public
So who else is in this elite group of marketplace sellers? The two that come immediately to mind are China’s Anker and the UK’s musicMagpie.
Anker has developed an extensive range of its own-brand electronics including phone chargers, headphones, speakers, charging cables and more. Sales reached around $1.5 billion in 2020 with around a 10% profit margin. It’s ranked as the second largest seller on Amazon.com and its shares are traded on ChiNext – China’s equivalent to NASDAQ.
musicMagpie has taken a completely different approach. It buys used products such as mobile phones, games consoles, DVDs from consumers, then resells them online. musicMagpie is the largest Amazon seller in the UK, the third largest Amazon seller worldwide, and the largest eBay seller worldwide. Its annual sales are around $200 million and it has a profit margin of 5.5%
So what about Pharmapacks? Well, what it does is buy products from existing brands and sell them online. In other words, it is a conventional retailer. Sales this year are expected to reach $456 million but it is losing money. If things go to plan, Pharmapacks expects to generate a profit in 2024.
- Anker develops its own products and manufactures them to a high standard. The brand stands for innovation, quality and reliability.
- musicMagpie is about recycling and value for money. It buys from consumers and sells to consumers, and all sides benefit financially from that.
- Pharmapacks buys other company’s branded products and sells them online. Just like millions of other marketplace sellers, online stores and Amazon itself.
So, Pharmapacks’ business model is from an old playbook that says:
The art of good business is being a good middleman.
The problem is that this runs counter to the way retail and ecommerce has developed over the last 20 years. If all you do is sell other people’s products, then there are very low barriers to your competitors. All you can compete on is price, so margins get squeezed ever tighter and you struggle to make any profit at all. Just like Pharmapacks.
Read more at CNBC.
Shopify pushes into cross-border ecommerce
Web store platform Shopify has launched a new program to help its store owners sell internationally, called Shopify Markets.
Shopify Markets aims to provide automatic localization of storefronts so that:
- Prices are converted into the local currency
- Store content is translated into the local language
- Import duties are automatically calculated at checkout
- Payment methods are adapted to the local country
Store owners can define the international markets that they want to sell to, set specific prices for each market, set up global inventory locations, and access new analytics to see how their cross-border sales are performing.
Shopify merchants need to apply for early access to Shopify Markets to get started. The automatic localization features are available on the standard plan, while the other new features require the Advanced or Plus plan.
An additional fee of 0.85% applies for duty and import tax calculation, and there is a 1.5% fee for currency conversion.
Read more at eMarketer.
Walmart+ hits 32 million members
A new estimate of the number of households subscribed to Walmart’s membership program puts the subscriber count at 32 million.
Amazon Prime is estimated to have 150 million subscribers in the US, so it seems that Walmart+, which launched only a year ago, is catching up quickly. The new research comes from a survey by Deutsche Bank, which found that 25% of respondents had Walmart+ while 57% had Amazon Prime.
The demographics of subscribers to both programs are similar, with a bias to more affluent consumers. Walmart+ costs $99 a year with free unlimited grocery deliveries, fuel discounts, Scan-and-Go app for in-store shopping, and prescription discounts.
While these findings seem promising for online sellers looking to expand onto the Walmart marketplace, they need to be put into perspective. Walmart’s fulfillment capacity lags far behind Amazon’s and we don’t know if Walmart+ members are avid shoppers on the marketplace or if they are just joining for the free grocery delivery.
Another research company estimated the number of Walmart+ subscribers as only eight million in February, and said that the program mainly appealed to grocery shoppers.
Read more at CNBC.
Also in the news
- musicMagpie is the first eBay seller to reach 10 million feedback. Read more at Tamebay.
- Online prices are increasing after five years of decline. Read more at DC360.
- Amazon Outlet deal submission process has been improved. Read more at Amazon Seller Forums.
- Three new mandatory ASIN attributes for specific product types. Read more at Amazon Seller Forums.
- Kitchen organizer Prepdeck wins Amazon Launchpad award. Read more at Amazon Advertising.
- eBay Seller Protections for shipping delays due to Storm Nicholas. Read more at eBay Community.
Webinars in the week ahead
Various dates: Amazon advertising’s global webinar program rolls on with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips (Amazon).
For US sellers
Various dates: Amazon Small Business Academy Pathways series (Amazon).
For UK sellers
September 20: Learn how to source new products and create a Best Seller (Amazon).
September 21: Optimization Strategies for Q4 (SellerX and Tamebay).
September 22-23: Amazon European Brand Owners Community Summit (Amazon).
Amazon holiday returns window opens on October 1st
Amazon has provided an early Christmas “gift” for marketplace sellers, announcing that items purchased between October 1st and December 31st will be eligible for return until January 31st next year.
Sellers reacted angrily to the four-month returns window. JLTK_Enterprises, for example, said:
OH GOOD…I can’t wait to get all my Halloween, Thanksgiving and Christmas costumes and decorations back on January 31st 🤬😡
Another seller said that, when taken with other changes that have happened this year such as refund at first scan, the extended window would make returns a “living hell”. And yet another pointed out a recent post where a seller said Amazon authorized a return four years after purchase.
Christmas seems to come earlier every year. This year is no exception, but it’s not coming early in the way that sellers would prefer.
Read more at Amazon Seller Forums.
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