More than two-thirds of retailers that sell on Amazon.com Inc.’s online marketplace worry that the web giant will use their sales data to compete with them, according to a new survey from SLI Systems, an e-commerce technology and site search provider.
The survey, “The SLI Systems Q2 2017 EPIC Report,” which SLI released Monday, surveyed 213 online retailers from May to June 2017. 60% of the respondents were U.S. retailers.
Of the 44% of survey respondents that sell on Amazon, the most popular reason to sell on the marketplace is to increase sales. Here are the top reasons retailers added the marketplace to their e-commerce strategy. Respondents could select more than one choice.
- 68% to increase sales
- 47% to acquire new customers
- 47% visibility from a high traffic channel
- 33% fulfillment by Amazon
- 31% ease of use for my customers
- 25% Amazon’s infrastructure
Despite these benefits, 21% of these retailers said they are “very worried” and 47% said they are “somewhat worried” about Amazon using their sales data to compete with them.
“Businesses feel compelled to sell on Amazon for fear of missing a large pool of potential customers, but few believe Amazon has their best interest at heart,” says Chris Brubaker, chief marketing officer of SLI Systems.
For example, Amazon could notice a trend with shoppers or with a particular marketplace seller and decide to compete directly against the seller, Brubaker says. For example, Rain Design has been selling an aluminum laptop stand on Amazon for more than a decade, and it was a best-seller in its category. The $43 product has a 5-star rating and 2,460 customer reviews. Last year, AmazonBasics started selling a similar product at half the price, and sales of the Rain Design original have slipped.
“Amazon is the best e-commerce business at leveraging big data to optimize sales. Amazon marketplace retailers are providing Amazon with more data,” he says. “This might work in a retailer’s favor or against them. It all depends on what drives a better outcome for Amazon and their customers. Amazon’s algorithm could send more shoppers to a particular retailer, notice a trend that favors another marketplace competitor or even compete directly.”
The report also found:
- 86% of the surveyed retailers expect an increase in e-commerce revenue in the second quarter of 2017.
- 81% of retailers expect revenue from mobile sites and apps to increase in Q2 2017, and 15% said they expect mobile revenue to increase more than 30%.
- 37% of total respondents, and 40% of U.S. retailers, said they plan to expand to sell on at least one new marketplace in Q2 2017.
Amazon is No. 1 in the Internet Retailer 2017 Top 1000.