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Third-party sellers drive big sales for e-commerce leader Amazon.com ( AMZN ), so much that if you take a look and add them up, Amazon is getting very close to catching up with longtime retail king Wal-Mart. At least, so says ChannelAdvisor ( ECOM ) Executive Chairman Scot Wingo, after looking at the numbers in a blog post this week that he called a deep dive into Amazon’s financials. Looking at third-party sales and what he says is the 10% commission that Amazon takes and includes as revenue in its quarterly financials, Amazon’s the total transactional value — the amount of goods the company moves — might surpass Wal-Mart ( WMT ) as soon as this year, Wingo says. ChannelAdvisor works with third-party sellers on Amazon and other platforms, and provides a range of related strategic services and technologies. One caveat is that Wingo excludes groceries, a small business for Amazon at this point but a big one for Wal-Mart. Excluding groceries, Wingo calculates that Amazon’s total transactional value — Amazon revenue plus third-party sellers — was close to $225 billion in 2015. Amazon reported 2015 revenue of $107 billion, but of course that does not include the great majority — 90%, says Wingo — of third-party revenue. Wingo estimates third-party sellers added $131.8 billion to Amazon’s total transactional volume last year, for the total of $225 billion. Wal-Mart hauled in $242 billion when you exclude groceries, which accounted for half of the company’s total revenue of $485 billion in fiscal 2015, Wingo said. He used data for Wal-Mart’s fiscal 2105 ended Jan. 31, 2015, but the company’s final fiscal 2016 revenue is expected to be roughly the same, with analysts expecting $483 billion. Amazon, on the other hand, has been boosting its annual revenue at a 20% clip. “Amazon has twice the economic impact people think,” Wingo told IBD via email, when we asked about his blog post. Since 2009, Wal-Mart has had a third-party sellers program open to “select” retailers. The company does not break out its revenue for its third-party sellers, and Wingo contends it is not significant. Add it up, and by these metrics, Amazon is heading to surpass Wal-Mart this calendar year. Said Wingo, “unless something slows down at Amazon, it will put considerable pressure on other offline and online retailers.” Amazon did not return several requests for comment. Amazon Pressure On E-Tail Only Getting Worse Yet, Wal-Mart has been “vocal” about its plans to aggressively build-out its e-commerce platforms. In December, Wal-Mart spokesman Dan Toporek told IBD that the firm has been building “dozens” of online fulfillment centers, and has made a big bet on its digital sales platform through its now 2,500-strong workforce in Silicon Valley. Half the company’s online sales are on mobile devices, he said. Nonetheless as Amazon expands, Wingo says other sellers will suffer. In his blog post, he said “we also expect that as Amazon ‘absorbs’ the next $100 (billion) in (market) share, a lot of retailers will lose share as a consequence — some will cease to exist entirely.” It’s going to take Amazon a lot less time to reach its next $100 billion in revenue than it will take Wal-Mart, Wingo wrote. Wingo says in the blog post that Amazon added $20 billion in gross merchandise volume (GMV) in Q4 above Q4 2014, and that those additions alone were near the total Q4 GMV for eBay ( EBAY ). An eBay spokeswoman has told IBD that third-party sellers are often in danger of being shoved out by Amazon as a result of Amazon deciding to start offering a seller’s product itself. Some observers have said Amazon can learn what is popular by data it gathers from its third-party sales. Wingo, though, says third-party sales are becoming more profitable for Amazon, thanks to the company’s infrastructure expansion and improvements, and that third-party sales are rising much more quickly on Amazon than are Amazon’s sales of its own goods. Amazon’s surging growth has propelled the company to a position in e-tail that in some ways makes it appear impenetrable — though the firm’s Q4 earnings did not meet lofty expectations . Image provided by Shutterstock . Scalper1 News
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