Amazon is online retail’s 800 pound gorilla, but even so, it has tried to play nicely with others. One of the ways it has done that is with the Amazon Marketplace, which allows third parties to sell through its site.
The Marketplace accounted for over 30% of Amazon.com’s unit sales in Q4 2010, and has helped fuel at least some of Amazon.com’s continued impressive growth.
But not all retailers are happy with the relationship. As reported by Internet Retailer, at least three major retailers have quit the Amazon Marketplace in recent months: Buy.com, Gap and Macy’s.
One big reason: data. “We didn’t want to give them information on products and sales that Amazon could potentially use against us,” Buy.com CEO Neel Grover told Internet Retailer. As for Macy’s, the company will only say that it believes “Amazon no longer represents a productive source of customer business for Macys.com.” Ouch.
While it remains to be seen whether these three major losses for the Marketplace are harbingers of things to come or will prove to be isolated, they do highlight the challenges Amazon will face in trying to maintain relationships with third party retailers now that Amazon.com’s bona fides as a retail giant are indisputable.
The big question for retailers: is access to its customer base worth the data given to Amazon when it sells for us?
This is a question that retailers have to ask beyond Amazon.com. That’s because it isn’t the only third party with which retailers have established such relationships, or may consider establishing such relationships. Walmart, for instance, operates a similar, albeit smaller, program called the Walmart Marketplace.
It’s important to note that retailers like Buy.com, Gap and Macy’s aren’t the only ones who need to look at this issue.
Small and mid-sized businesses use programs like the Amazon Marketplace too, and while they may have different considerations when it comes to whether participation in them makes sense, they should remember that as Amazon.com’s position in the world of retail grows and evolves, competitive issues such as data access and the quality of sales affect them just as much as they do larger retailers.