business news in context, analysis with attitude

Yesterday MNB took note of an Associated Press story about how "hundreds of inventors have flocked to Walmart’s headquarters in Bentonville" to "take part in Walmart’s fourth annual 'Open Call' Wednesday," competing for shelf space in the retailer's stores. Amazon, the story pointed out, was holding a similar event at the same time, but a Bloomberg story follows up and puts the Amazon event into great context.

"For years, Inc. was the go-to place for online merchants," the story says, but increasingly, "the e-commerce behemoth has competition for the hearts and minds of millions of mom and pops. Wal-Mart Stores Inc. is successfully courting many of the same merchants. Alibaba Group Holding Ltd.'s Jack Ma was in Detroit last week dangling millions of Chinese web shoppers before U.S. businesses. In July, EBay Inc. will host its annual seller celebration in Las Vegas."

The Bloomberg story goes on to point out that third-party merchants are "responsible for about half of all the merchandise sold on Amazon," but many may be finding the site to be almost too crowded and robust for comfort; Walmart, on the other hand, is early days when it comes to a third-party marketplace, and may appear to be a friendlier place to do business, especially with Marc Lore now running its online operations.

"Amazon can ill afford to alienate the more than 2 million merchants hawking goods on its site," Bloomberg writes. "A robust marketplace is key to Amazon's success: merchants competing to sell the same things keep prices low, and those constantly introducing new products keep inventory fresh. That's helped Amazon attract more than 300 million shoppers around the world." Which is why Amazon's event this week was "basically a warm-and-fuzzy sales pitch: stick with Amazon and we'll show you how to access billions of shoppers, including in hard-to-crack markets like China and Brazil."
KC's View:
Damned right Amazon can't afford to alienate the retailers that are part of its robust and very successful marketplace program. But I suspect they won't, mostly because at least for the moment, Amazon is far better engineered to offer real and actionable insights into how, why, where, and when customers behave. That won't be an advantage it'll have forever, though, which is why it must continue to develop its capabilities in this area.