Amazon and its sellers sold $700 billion worth of goods in 2023. Gross merchandise volume (GMV) more than doubled in four years; most of the growth came from third-party marketplaces.
Based on data disclosed by Amazon, Marketplace Pulse estimates that in 2023, Amazon's sales (also known as first-party sales) will reach $220 billion, a year-over-year increase of 6%, and third-party marketplace sales will reach $480 billion, a year-over-year increase of 13%. Global merchandise volume (GMV) is estimated at $700 billion, a year-over-year increase of 11%. The GMV estimate is a rough calculation and can only be used to estimate the size of Amazon. It discloses first-party sales, but reports marketplace sales as transaction revenue and fulfillment fees charged. The ratio of fees to sales is based on Marketplace Pulse estimates of historical sales adjusted for increasing fees over time.
Amazon is huge and continues to grow, and even in a market like the U.S., it no longer holds more market share. But it's the market that plays a key role. Since 2019, Amazon's sales have more than doubled to an estimated $365 billion. However, third-party marketplaces alone have contributed roughly 75% of incremental GMV.For years, Amazon has been slowly but surely making a controlled shift from one-to-one sales to 3P sales. Over the past 8 years - since 2016 when e-commerce overtook retail sales - sellers have increased their market share by 150 basis points per year. This shift has not accelerated or slowed except in 2020, when the company struggled to keep its warehouses operational and restricted many sellers from sending inventory.
The undercurrent behind all of this is Amazon's delivery capabilities. in 2023, the company said it delivered "the fastest ever, with more than 7 billion items arriving the same or next day." But more importantly, "For the first time since 2018, we've reduced unit service costs globally. In the U.S. alone, service costs per product are down more than $0.45 from last year," said Amazon CEO Andrew Jesse. It delivers faster and more efficiently, which also serves the market as most sellers use Amazon to fulfill their orders.
Andrew Jassy added: "It's not hard to reduce prices; it's hard to afford to do so when we're discussing Q4 results." The statement celebrated the lower cost per unit of service and took a swipe at Shein, Temu and TikTok for trying to disrupt e-commerce. Low prices remain one of Amazon's pillars, but at Amazon, transportation is as much a part of the product as the product itself and its price. It doesn't just compete with Shein, Temu and TikTok on price. So the 7 billion items that arrive the same day or the next day are the source of the estimated $700 billion.
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