Amazon Merging Marketplace and Retail Operations

Dive Brief:

  • Amazon has largely merged its marketplace and retail teams, according to a company statement circulated to multiple media outlets last week. Amazon didn’t immediately return Retail Dive’s request for more details.
  • “We’ve been working for some time on standardizing the products, tools and services we offer to the brands and resellers that sell on Amazon, and have made some organizational changes as a result,” the company said in a statement. Bloomberg, citing former and current Amazon employees, first reported earlier this month that the marketplace and retail teams were merging.
  • Three months after Amazon Marketplace chief Sebastian Gunningham left for WeWork, the next highest ranking executive on that team, Peter Faricy, has been stripped of many of his responsibilities, according to internal documents viewed by CNBC. Most of those duties have been reassigned to Amazon executives in the retail group, which is led by Doug Herrington, according to the documents.

Dive Insight:

Amazon began as a bookseller but soon morphed into a mass merchant with a huge assortment, increasingly bolstered through the years by the third-party sellers on its marketplace. For more than a year, over half of the goods sold through Amazon have come from third-party sellers.

Those sellers have been a boon when it comes to sales and fulfillment. The marketplace model allows Amazon to reap the benefits of sales without much if any cost of fulfillment and shipping. But as those sales have taken over a greater portion of Amazon’s sales, its reputation for top-notch customer service has suffered, as some sellers fail to provide its customers with solutions to problems, adequate packaging or shipping speeds and, perhaps worst of all, authentic goods or goods-as-advertised.

Amazon’s move to merge its marketplace and retail groups is a signal that third-party sellers are core to its long-term business plan, Adrien Nussenbaum, co-founder and U.S. CEO of marketplace platform company Mirakl, told Retail Dive in an email.

“For years I’ve seen resistance to collaborate between these two teams, and not just at Amazon,” he said. “In fact, we had an entire session at our recent customer summit dedicated to alignment because it can make or break the success of the business as a whole. I think Amazon continues to showcase a model worth replicating, where the core of its business is constantly minding the balance between owned and third-party inventory, with customer-centricity as the constant driving force.”

As Amazon continues to invest in its marketplace, pressure is mounting for it to fix the burgeoning sales of counterfeits from third-party sellers. “Seller fraud is an easy issue to overcome with the right solutions that ensure compliance with quality standard,” Nussenbaum said. “As such, there’s no excuse for a company of Amazon’s size with almost unlimited resources to have not solved this problem.”

Originally post on Retail Dive on June 26th, 2018.