Since 2017, Amazon Australia has been making a typical Amazon ‘long play’ progression on its plans to dominate the online marketplace space in Australia.

Each year, they file their results with the ASIC. This year, there’s 3 key numbers no one is talking about that consumer brands need to be paying attention to, or they could find themselves playing catchup.

The obvious number people will talk about is Amazon’s Online Store revenue growth. This is the revenue that Amazon receives from consumers shopping on the platform. This is not one of the top three, but for the record:

Online Store Sales

2021 – $886,102,000

2022 – $1,293,710,000

2023 – $1,567,822,000

This is a 21.2% increase from 2022, but a 77% increase in the 2 years since 2021.

This alone would make Amazon the fastest growing major retailer in Australia and it shows Amazon is increasingly a meaningful channel for consumer brands in Australia.

But there are still many consumer brands not taking it seriously, and it will catch them by surprise.

#1 Who is Driving the Sales Growth? The most surprising number.

Third Party Seller Revenue received – This is money Amazon charges to non vendor sellers for being able to sell on Amazon. This includes commissions on sales (from 7 to 15%), monthly subscription fees for sellers, and FBA fees for Amazon managing the pick, pack, and shipping for sellers, warehouse storage, and other miscellaneous product preparation fees.

Third Party Seller Services

2022 – $316,924,000

2023 – $568,620,000

This number has increased by 79.4%.

What this means is, a combination of Amazon bumping up fees for sellers and the split of Vendor Sellers (1P) to Marketplace Third- Party Sellers (3P) has shifted in favour of 3P Sellers.

When Amazon started in 2017, it was mostly on the back of 1P sellers. Amazon needed to fill their catalogue as fast as possible, so they went to big brands or distributors of brands and listed and even purchased small quantities of their full catalogue.

In the beginning, the 3P seller side was much smaller and made up maybe only 10-20% of sales.

But as the low hanging fruit 1P seller opportunities have dried up for Amazon, the 3P side is seeing growth from Australian companies starting to sell and also from more international sellers. This is still an untapped opportunity for Amazon.

And now there are more 3P sellers than 1P sellers. This transition has happened faster than we had predicted.

While domestic sellers are growing, international sellers pose a competitive risk for brands selling as a (1P) seller.

Amazon is an ideal platform for challenger brands, who, with the right strategies for Amazon, can outrank big consumer brands. International sellers often fit this category. They also turn up on Amazon AU, after years of experience selling on Amazon in the USA, and Europe. They are Amazon-hardened, and many of their products come with thousands of shopper reviews.

This means even household brands cannot rest on their brand equity alone. They have to utilise all the Amazon marketing benefits available.

Amazon’s ranking algorithm is ultimately based on sales velocity. The more units sold, the higher your rank. Product listing page conversion rates are a key component of this ranking, because they indicate relevancy and Amazon likes this metric.

3P brands have traditionally had to work harder on their product listing pages, because they don’t use price as their main marketing lever, unlike the 1P side, which always uses price as their way to drive sales.

When you look at the best 3P product listings and storefronts, they do a better job than many of the known brands, who can often rest on their brand equity. But that will change as hungry 3P sellers pull out all the stops to win over new customers.

Many 1P sellers are leaving this work to Amazon, which is rarely a good idea. They also miss the point that Amazon is not like any other retailer.

It’s a hybrid retailer and D2C.

Brands have to take ownership of their brand’s success on Amazon and not leave it up to the Amazon Retail team.

This includes getting their brand presence on point, optimising product listings that convert, advertising, and tracking key analytics.

#2 – Amazon Prime Subscriber Numbers

Amazon Prime is arguably the world’s biggest membership programme for consumers. Amazon Prime subscriber growth has been impressive in 2023.

Prime Membership Revenue

2022 – $246,213,000

2023 – $346,189,000

This is a 40% increase.

Based on the membership being $79 a year or $9.99 a month, that would mean between 2.884 million and 4.382 million members. Take a midpoint of 3.6 million, but it may be higher as monthly subscriber growth by December 2023 would have been strong.

To keep the number easy, let’s say there are 4 million Prime members.

A quick recap of the benefits Amazon Prime members get.

• Free one day (or less) delivery on Prime eligible products to main centres and 2-3 days to more remote areas.

• Free international delivery from other Amazon stores when purchased through Amazon AU.

• Prime TV with movies, hit shows, Amazon Original, and more.

• Free games and a Twitch subscription.

• Music and ad free podcasts.

• Thousands of eBooks, short works, children’s books and more.

• Voice enabled shopping with Alexa.

• Early access to selected deals.

For around $100 a year, that is an incredible deal.

The main benefit Prime members enjoy is free one-day shipping.

Amazon has changed the e-commerce delivery landscape. With their infrastructure now in place, from warehouses through to last mile delivery with Amazon Flex drivers, shoppers now trust the delivery speed.

It’s hard enough for other big retailers to compete, but for the typical consumer brand D2C store, it’s not even close from a shipping cost and speed point of view.

Having their products on Amazon has to be a serious consideration to give their customers the option of where to buy their brand.

#3 Amazon Ad Revenue Growth

2021 – $63.57 million

2022 – $101.6 million

2023 – $153.6 million

51% growth from 2022

142% since 2021

Many brands haven’t been paying attention to the Amazon Ads opportunity in their marketing mix. Globally, Amazon’s ad revenue is now $50 billion, eating into Google and Meta’s marketshare.

With 58 million visits per month on the site, Amazon.com.au is the #10 ranked website in Australia (Similarweb – May 2024).

With multiple advertising opportunities, many brands use Amazon not only for on-platform conversion, but also for top-of-the funnel audience building. The advertising innovations coming out of Amazon Ads is only going to ramp up as Amazon USA rolls out innovations to Australia.

The cost effectiveness of brand building on Amazon is underrated and smart brands are allocating more budget to Amazon as the attribution is accurate and relative value is high.

It’s Happening, Whether Brands Like it or Not

4 million Australians are now thinking about ‘what else can I buy on the Amazon marketplace so I can get free shipping?’

As Amazon builds momentum, brands need to get control of the channel to maintain and grow their brand and market share.

Amazon plays a long game and their patience is paying off. The future is predictable, as we have seen what has happened in other countries where Amazon has been present for a decade or more.

Amazon is not going away, and brands need to work out how to make it work for them, or they’ll be playing a catch up game.

Amazon AU is approximately 6 years old, and the next 4 years reveal their impact on the Australian retail space.

It’s happening, whether brands like it or not.