2020 was the best year for e-commerce marketplaces in over a decade. E-commerce growth had a step change, and marketplaces captured most of it. In aggregate, it was the most successful year for sellers and brands that transact through them, too. The Year in Review looks at the state of marketplaces and describes the most important trends.
The press often focuses on the narratives that depict the Amazon marketplace as a hostile, unreliable, and unpredictable platform. Amazon should address all of them. But, while all true, those stores ignore the many businesses that manage to build and scale on it and many surrounding software and services firms that enable them. And more recently, investors who are funding and acquiring those businesses. Without dismissing the negatives, it is vital to notice the growth of sellers, the number of brands launched, and ultimately the growth of GMV.
Amazon marketplace added eBay’s worth of sales to its GMV this year. In 2020, sellers on the Amazon marketplace sold an estimated $295 billion worth of products, increasing their sales by $95 billion, up from $200 billion in 2019. Attracted by that, nearly $1 billion in fresh capital was committed to firms looking to acquire Amazon sellers and brands.
The Amazon seller is now in its third form. The Amazon seller 1.0 was a reseller. Advertising on Amazon and private label brands created the Amazon seller 2.0. The current seller - the Amazon seller 3.0 - is building Amazon-native brands, intentionally selling multi-channel, driving traffic from outside of Amazon, and investing in social commerce. The underlying Amazon marketplace building blocks remain the same, but the seller had to evolve to create more value and differentiate from the competition.
Marketplace winners and losers
As e-commerce boomed during the pandemic, some marketplaces have greatly benefited, a few prepared for the future, while others were caught unprepared to react. Etsy, Walmart, Amazon, and to some degree, Target were the four winners. They each grew sales for different reasons, added more sellers, and strengthened their market share. Etsy grew the supply as demand increased the most impressively. Target grew the fastest, but its small invite-only seller base makes it hard to compare against much larger marketplaces.
Amazon didn’t increase its market share this year - it grew slower than most retailers and marketplaces, in part because it is bigger than most and because its fulfillment struggles early in the year sent shoppers to its rivals. This year has highlighted the vulnerability that stems from Amazon’s fulfillment operations: Amazon warehouses and ships practically everything sold on Amazon.
Google Shopping, Wish, and eBay were the three losers. eBay had two consecutive quarters of growth but is unlikely to retain the momentum. Wish had slow shipping times because it relies on China-based sellers, and its sales growth in the third-quarter was lagging. Google Shopping didn’t make any notable moves in trying to become an e-commerce channel - it remained a bystander powering top-of-the-funnel ads.
This report focuses on those seven marketplaces. There are hundreds more, especially internationally, and thousands of topics that weren’t included. Thus, this is a selective collection of insights and data. Unless otherwise noted, all data discussed is Marketplace Pulse data, while the financial data comes from companies’ quarterly earnings. There are inherent limitations to estimating most of the behavior on marketplaces; thus, it is often the direction of changes that is more telling than the point-in-time value.