The major tech platforms, Amazon included, are often referred to as “walled gardens” because they offer an immense set of capabilities, services, data and insights — but only to users within the “walls” of their site. However, Amazon is slowly but surely changing that; in fact, very soon, Amazon and its services are going to be showing up in a lot more places that aren’t Amazon — Google, TikTok, DTC websites and even at ports and along freight lines (although the Amazon branding will likely be less prominent in those latter locations).
Last week, at the company’s fifth annual Accelerate conference for its third-party selling partners (which now account for 60% of its sales, by the way), Amazon continued down a path that it started on 24 years ago, when it first turned its website into a third-party marketplace. Amazon’s focus now is clearly less on its own ecommerce site and instead on the rest of the digital world, through an ever-growing roster of “externalized ecommerce services,” as they were described in one company press release.
In a further indication of the breaking down of tech barriers, the roster of partners included in these services features a host of companies that, while not exactly competitors, could certainly have once been considered “frenemies” of Amazon — Google, TikTok, PayPal and Shopify, the name just a few.
Amazon will now not only help sellers offer fast delivery and easy returns as it has for years with its Fulfilled by Amazon (FBA) service, but it also will help sellers manage the entire supply chain, from manufacturer through to the customer’s door. Not only that, but it will let sellers offer Amazon-level service on their own websites (including those built on Shopify) and help them sell more on other platforms such as Google and TikTok.
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Why Amazon is Investing in ‘Externalized Ecommerce’
In discussing this expansion beyond its own walls, 19-year company veteran Doug Herrington, who now serves as CEO of Worldwide Amazon Stores, pointed to previous decisions that, at the time, made many people — including Amazonians — scratch their heads. Namely, the initial decision to open its website to third-party sellers, and the 2006 decision to offer its fulfillment facilities and capabilities (and through that the Prime service promise) to sellers.
“Our customers’ experience with your products and your brands and your prices really defines for a lot of them what it is to shop at Amazon,” said Herrington, speaking to sellers at Accelerate. “Our relationship [with sellers] has evolved over the years, and it’s not been without controversy. Going all the way back to 2000 when we invited sellers into our store, it was highly controversial. Right now, I feel like we’re going through another evolution, though slightly different.
“Over the last two years, we’ve started to introduce more and more services and tools for our sellers to help their business off Amazon, in addition to on Amazon,” Herrington added. “And a lot of people have looked at it and said, ‘Aren’t you making shopping better on DTC sites? Aren’t you making shopping better off Amazon? And the answer is maybe we are. But if you’ve got a good brand and good products in 2024, you’re going to have a DTC website and you’re also going to have a multi-brand retailer distribution strategy.
“Given that, it makes a ton of sense to us, since sellers are also our customers, to take the amazing capabilities that we’ve developed over three decades and offer them to help you grow not just on Amazon but off Amazon. We are going to lose some sales, because we’re going to help you in a big box retailer, we’re going to help you on social media, we’re going to help you in DTC. But we do honestly believe that if it gets you excited about working with us as well, with Amazon, we’re going to grow the total sales pie and we’re both going to win.”
How Amazon Plans to Help Sellers Off-Amazon
Here are some of the new ways Amazon plans to accomplish this:
- A doubling down of its supply chain services, first announced at last year’s Accelerate, to include a fully managed solution that aims to make “make the supply chain more turnkey than ever before.” This includes a full suite of services that automate the process of coordinating receipt of products from domestic and international manufacturers, distributing those items to warehouses for storage, transporting them to fulfillment centers, determining inventory placement, replenishing inventory when needed and more. These supply chain services (which can be used on a piecemeal basis for those that don’t want the full managed option) can then be combined with Amazon’s Multi-Channel Fulfillment (MFC) solution, which will deliver inventory to any channel, physical or digital, where a seller needs it, including brick-and-mortar stores and other websites that aren’t Amazon;
- New capabilities in its Buy with Prime option, which allows sellers to offer Prime benefits on their own DTC websites. Updates include the ability for sellers to show an estimated delivery date for Buy with Prime orders in their ads on Google Shopping and TikTok. As was pointed out many times at the conference, faster delivery offers dramatically increased conversion rates, so sellers can now showcase Amazon-level service speeds on their own top-funnel ads on external platforms; and
- The introduction of “Amelia,” a new AI-powered assistant for sellers, similar to the shopper-facing AI assistant Rufus that was introduced earlier this year. Amelia (although that might not be her actual name, as this is apparently just a code name) was described by Mary Beth Westmoreland, VP of Worldwide Selling Partner Experience, as an “all in one selling expert” that will offer sellers personalized guidance and support, on everything from using Amazon’s seller tools and monitoring inventory and sales trends to offering marketing support. (Side note: The offering is very similar to what Alibaba has built for its buyers on the sourcing side of the ecommerce equation.)
Will Any Brand be Able to Avoid the Pull of Amazon?
It’s honestly enough to make one begin to wonder whether any brand will be able to avoid becoming part of the Amazon ecosystem in the near future. Should they even try to fight it? If Amazon is able to do what it says it can — that is, dramatically simplify the process of selling products online, and bring down the cost at the same time through economies of scale and technology developed based on its frankly unbeatable set of consumer insights — why would most brands even try doing this on their own? And could you in fact be missing out on some of the biggest technology and supply chain advancements by resisting?
Of course, Amazon is still a walled garden in one very important sense — you have to sell on Amazon to access any of these solutions, something that has been anathema to many brands in the past. Whether Amazon’s increasing willingness to accept other selling channels into its world will result in a similar open-mindedness on the part of larger brands remains to be seen.
For Amazon at least there’s no turning back, and the company is clearly bullish on the opportunity. “Sellers want to sell across many channels, that’s a very logical thing for them to want to do, which is why supply chain is a huge area where we’re making investments,” said Dharmesh Mehta, Amazon’s VP of Worldwide Partner Selling Services in an interview with Retail TouchPoints. “And you should expect that we’re going to continue to look for more, other ways to support sellers and selling everywhere.”
