Marketplace Strategy · Amazon, eBay & Marketplace Economics

Marketplaces solve the hardest problem in e-commerce — getting traffic — by providing access to hundreds of millions of existing, purchase-ready shoppers. Amazon alone has documented over 200 million Prime subscribers globally. A new brand that would spend months or years building organic search traffic and paid acquisition efficiency can list on Amazon and access commercial-intent traffic on day one.

The cost of this access is substantial. Amazon's combined selling fees (referral fee + FBA fee + advertising), when correctly accounted for, typically amount to 30–50% of revenue for most categories. After COGS, marketplace fees, and advertising, many products that appear profitable at retail price are margin-negative on Amazon without careful fee management and pricing strategy.

Amazon Seller Central is the portal through which third-party sellers manage their Amazon presence. Two account types: Individual (no monthly fee, £0.75 per sale, limited features, not appropriate for volume sellers); and Professional (£25/month + VAT, access to advertising, analytics, and API, appropriate for any serious marketplace seller).

The product listing on Amazon is the foundation of marketplace success. Every listing has: ASIN (Amazon Standard Identification Number — Amazon's unique product identifier); product title; bullet points (five key features); product description; backend keywords (not visible to customers, used for search matching); product images; A+ Content (enhanced brand content for Brand Registry members); and price and availability data.

Amazon's A9/A10 search algorithm ranks products based on: relevance (how well the listing matches the search query, determined by title, bullet points, and backend keywords); conversion rate (a product that converts well when shown for a query is ranked higher — Amazon prioritises products that will generate sales); and seller performance metrics (reviews, order defect rate, fulfillment performance). Understanding this algorithm is the foundation of Amazon SEO.

Fulfilment by Amazon (FBA): the seller ships inventory to Amazon's fulfilment centres; Amazon stores, picks, packs, and ships orders on the seller's behalf; Amazon handles customer service and returns for FBA orders. FBA fees include storage fees (per cubic foot per month, higher in Q4) and per-unit fulfilment fees (based on product size and weight).

Fulfilment by Merchant (FBM): the seller stores inventory and ships orders directly to customers. The seller handles customer service and returns. No FBA fees, but the seller needs fulfilment infrastructure and must maintain Seller Fulfilled Prime metrics to qualify for Prime badge if offering Prime shipping.

Amazon listing optimisation follows the same logic as any SEO — matching the listing's content to the queries buyers use to find products like yours — but with Amazon-specific format requirements and the additional goal of conversion rate optimisation (because conversion rate directly affects ranking).

Product title: Amazon's documentation recommends: Brand + Product Name + Key Feature + Size/Quantity/Colour. 80–200 characters (category-dependent). Include primary keywords in natural language — Amazon's algorithm matches keyword terms in titles to search queries. Example: "Optimum Nutrition Gold Standard 100% Whey Protein Powder — Vanilla Ice Cream, 2.27kg (74 Servings)"

Bullet points: Five feature/benefit bullets, each starting with a capitalised key feature. Lead with the most important benefit, not the feature itself. "FAST RECOVERY: Contains 5.5g of BCAAs per serving to support muscle repair after training" not "CONTAINS BCAAs." Bullet points are the highest-read copy on the product page — treat them as conversion copy, not specification lists.

Backend keywords: A field only visible to Amazon's algorithm — used to include search terms that could not fit naturally in the visible listing. Include: alternative spellings, Spanish equivalents (for US marketplace), competitor brand terms (Amazon's guidelines restrict this; approach cautiously), and long-tail variants of primary keywords. No need to repeat terms already in the title — Amazon's algorithm counts them once regardless of field.

Product images: Amazon requires a main image on a pure white background showing only the product. Additional images (up to 9) can show: in-use lifestyle shots; close-up detail images; comparison charts; infographic-style images with key features highlighted; and video (auto-played in the main image carousel on compatible devices). Amazon's documented guidance on image quality has a minimum resolution of 1000×1000px to enable zoom functionality — a documented conversion rate improvement.

The Buy Box is the "Add to Cart" button on an Amazon product listing. For products sold by multiple sellers, Amazon's algorithm determines which seller's offer appears in the Buy Box — the seller who "wins" the Buy Box gets the vast majority of sales from that listing (Buy Box winner receives approximately 80–90% of all sales for the ASIN).

Buy Box eligibility factors (documented in Amazon's seller documentation): seller performance metrics (order defect rate below 1%, pre-fulfillment cancel rate below 2.5%, late shipment rate below 4%); fulfillment method (FBA has advantage over FBM at equivalent price); price (competitive pricing relative to other sellers and Amazon itself); and inventory availability (in-stock sellers only).

For brand-registered sellers who are the only seller of their own branded products, Buy Box ownership is less competitive — though Amazon can still suppress the Buy Box if pricing is significantly above Amazon's reference price or if the product is available substantially cheaper on other marketplaces (Amazon's price parity policies).

Amazon's advertising platform (Amazon Ads) offers three primary ad types relevant to third-party sellers: Sponsored Products (appear in search results and product pages — the most widely used format); Sponsored Brands (brand logo + custom headline + product carousel, appearing at the top of search results — requires Brand Registry); and Sponsored Display (retargeting ads shown to users who viewed specific products, on and off Amazon).

Sponsored Products operate on a keyword auction model similar to Google Ads — the seller bids on keywords and pays per click. Match types (broad, phrase, exact) work as in Google Ads. Auto campaigns (where Amazon automatically targets relevant keywords based on the listing) are useful for discovering converting search terms; manual campaigns (where the seller specifies target keywords) provide more control for scaling.

Amazon advertising economics: ROAS benchmarks vary significantly by category — electronics typically 3–5× ROAS, consumables 6–10× ROAS. The key metric for managing Amazon advertising profitability is ACoS (Advertising Cost of Sale): ad spend / ad revenue × 100. A 20% ACoS means 20% of revenue is going to advertising. Target ACoS should be set based on gross margin — at 40% gross margin, maximum sustainable ACoS is 40% (break-even); target for profitability is 15–25% ACoS for most categories.

Amazon Brand Registry (ABR) is available to brands with a registered trademark and provides: access to Sponsored Brands advertising; A+ Content (enhanced product description with images and comparison charts); Brand Analytics (search term data and competitor benchmarking); and IP infringement reporting tools (to report counterfeit listings and unauthorized resellers).

Unauthorized resellers — third-party sellers who source a brand's products and sell them on Amazon without the brand's consent — are one of the most common issues for established brands on Amazon. They can undercut the brand's own pricing, use poor-quality images, and damage brand perception. Brand Registry's IP infringement reporting and Transparency Programme (QR code authentication on individual product units) are documented tools for controlling unauthorized reselling, though enforcement requires active monitoring and reporting.

eBay's marketplace is fundamentally different from Amazon in its search and discovery mechanics, audience, and pricing model. eBay's Cassini search algorithm weighs: listing title keyword relevance; seller performance metrics (feedback score, defect rate, shipping time); price and free shipping; and listing freshness. Unlike Amazon, eBay supports auction-style listings alongside fixed-price Buy It Now listings — making it particularly suited for unique, collectible, or secondhand items where value is uncertain.

For new commercial stock, fixed-price eBay listings with competitive pricing, high-quality images, and complete item specifications (eBay's item specifics fields) are the standard approach. eBay's Promoted Listings (cost-per-sale advertising model where a percentage of the sale price is paid when a promoted listing drives a sale) offers a lower-risk advertising model than CPC — no spend unless a sale occurs.

The strategic relationship between marketplace and direct-to-consumer (DTC) should be deliberate, not accidental. The typical framework: use marketplaces for discovery (reaching customers who do not yet know the brand exists) and DTC for relationship (building the customer relationship, owning the data, delivering higher LTV through email and retention programmes).

Converting marketplace buyers to DTC: inserting a package insert with a compelling reason to buy direct (exclusive products available only on the brand's own site, a loyalty programme benefit, a registration mechanism for warranty or personalisation) is the primary documented method. Amazon's terms restrict direct communication with marketplace buyers through the platform, so the physical package is often the only channel for direct-to-consumer migration from Amazon.

Brands that generate 70%+ of their revenue through Amazon are substantially exposed to a single platform's policy changes, algorithm updates, and fee increases. Documented Amazon policy changes that have significantly affected seller revenues: category fee increases; changes to FBA storage fee structures; algorithm updates that reduced organic visibility for previously high-ranking products; and suspension of seller accounts for policy violations (sometimes based on competitor-filed complaints).

The risk management approach: treat marketplace revenue as a distribution channel, not a business model. Build direct-to-consumer revenue in parallel — not as an alternative to marketplace, but as insurance against marketplace dependency. Brands with 40% DTC revenue and 60% marketplace revenue are in a much more resilient position than brands with 95% marketplace revenue, because they have a direct customer relationship and data asset that has independent value.

Sources & Further Reading