Conan's Newsletter No. 18

Review of e-commerce Marketplaces for 2020

Happy new year and I hope you all have had a wonderful Christmas! This week, the reading material I recommend is Marketplaces Year in Review 2020, which is an excellent review of e-commerce marketplaces in 2020 by Joe Kaziukenas. The report itself takes about one hour to read, and you could refer to the high-level digest below.

The pandemic-incurred e-commerce boom had vastly different impacts on the existing market places: 

  1. Amazon holds its place in the last year, 

  2. Walmart/Etsy are big winners, and

  3. Google Shopping/Target/Wish/eBay was caught unprepared to react.


There are several interesting trends about Amazon.

  1. Trend 1: Third-party merchants grow faster. Now third-party merchants contribute to 62% of Amazon's worldwide GMV, up from 60% in 2019 and 58% in 2018.

  2. Trend 2: Fulfillment operations become a bottleneck. Amazon's fulfillment struggles caused a surge of negative reviews during May due to the COVID order influx. Merchants reacted by taking more fulfillments on their own from late February to early August.

  3. Trend 3: Top sellers represent a shrinking percent, and new sellers are bringing incremental growth. More of the sales come from a broader set of sellers than the top sellers outpacing the rest. In addition, new sellers could find incremental opportunities to grow, which means the Amazon marketplace is not saturated yet.

  4. Trend 4: More native brands. There are three generations of Amazon sellers: 1) resellers who buy products and sell them on Amazon, 2) private label brands, 3) sellers who build Amazon-native brands. This year there are more and more success stories of Amazon-native brands. For example, Anker went public this year with an 11 billion market cap.

  5. Trend 5: More sellers from China.  The share of China-based top sellers has increased from 11% to 42% since May 2015.

  6. Trend 6: Big bands like Nike are leaving Amazon and focusing on their own channel. Nike has longspun issues with Amazon, and it realized that it could instead build a channel on its own thanks to the COVID boost to e-commerce. The direct e-commerce jumped to 30% of Nike's sales in the last year, a mark it had previously expected to hit only in 2023. Nike is not the only big brand that chose to double down its own channel. It is also the reason I am super excited about using AI to optimize websites, which become critical for those brands (BTW, I am working at a great startup called Intellimize in this space, and we are hiring).


Both Walmart and Etsy are big winners in the e-commerce boost in the last year. 

  1. Walmart's marketplace GMV more than doubled in 2020. In the third quarter, marketplace sales grew "triple-digits" (over 100%) while overall e-commerce sales were up 79%. It also announced a partnership with Shopify to add Shopify stores to the Walmart marketplace. 

  2. Etsy has used surging demand for face masks to accelerate growth for all handmade and vintage goods.


  1. Target is still very hesitant in embracing the online marketplace. Target's marketplace (Target+) is invite-only, meaning merchants and brands on it are selected by the company instead of more open marketplaces of other retailers. Target continued to put Target stores as the center of both online and offline user experience.  

  2. Although eBay was benefited from the surge in online shopping in 2020, it is unlikely to retain the momentum because its operations have been slim down under activist investors' push in the past years.

  3. Wish heavily relied on China sellers and suffered from the COVID outbreak in China early in the year and a global logistic freeze later. The average "time-to-door" was 62 days in the second quarter of 2020 for US customers. This slow delivery time is a significant roadblock for the growth of Wish.

  4. Google shopping should focus on making itself more attractive to shoppers instead of focusing on the seller side. To attract more sellers, Google Shopping reduced commission fees to zero in July. However, the report thinks the most valuable asset is shoppers, not the supply of products. According to Ben Thompson of Stratechery, In a world of abundance, being able to aggregate demand is more valuable than being able to create supply. It is shoppers who determine the demand for e-commerce.

Leave a comment