Abstract
AbstractTo assess the performance of third‐party sellers relative to Amazon, this study estimates the effect of different sales strategies on Amazon's reported best sellers rank (BSR) of ground coffee in the USA and Canada and red wine in the United Kingdom using a fixed‐effects model. The products are either ‘sold and shipped by Amazon’ (Amazon), ‘sold by the third‐party seller and fulfilled by Amazon’ (FBA), or ‘sold and fulfilled by a third‐party merchant’ (FBM). For each of the grocery products and in all empirical specifications, FBM increases the BSR, reducing the relative sales performance of the product in its category. Specifically, FBM increases the BSR of grocery products by 60% relative to Amazon whereas the effect of FBA on BSR is mostly indistinguishable from the effect of Amazon on BSR. These results suggest that Amazon and FBA mostly perform equivalently, but both sales strategies outperform FBM. However, whether the relatively poor performance of the third‐party (FBM) shippers and sellers is due to unfair competition by Amazon remains an open question.
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