Amazon

For a while now, ecommerce has moved further and further towards marketplace sites, where it’s not just the website selling goods to users, but users selling goods to users through the website. The most well known example of an online marketplace is Ebay, where transactions are purely user to user. Sites such as Amazon and Play.com evolved from being purely business to consumer ecommerce sites, due to the growing popularity of user interaction boosted by the Web 2.0 revolution.

It opens up a whole new way to shop online for users because they’re able tobuy items that are not necessarily available in the main store, or there’s the possibility that used items for sale will be available at a lower price. Does this effect the sales of the website’s normal catalog? Possibly, but I think the advantages that user to user selling brings outweighs any potential sales reductions:

• Users need to sign up on the site in order to sell resulting in more user accounts and more opportunity to market new products to them with the data acquired.
• A small percentage of the sale goes to the store anyway. With no other major operating costs other than the space required on the server to advertise the products – it’s a virtually free source of revenue.
• Greater interactivity and more ways to buy will also attract more casual visitors to the site.

There are currently no commercial shopping carts that I am aware of that have this function available to users. It’s likely that startups will not find much success from this type of selling anyway. It seems only trusted and well known brands are able to generate enough users to make it work. In which case, it’s probably unlikely that we’ll see these types of shops making huge successes of themselves with small companies in the short-term, but certainly time will tell.

Ecommerce giants Amazon and Play have recently decided to challenge Apple’s dominance in the MP3 market by offering MP3 downloads as part of its service. Amazon launched Amazon MP3 with the intention of reducing Apple’s markets share by undercutting it’s prices whilst maintaining the convenience of the iTunes store. As far as first year’s go, a 5-10% market share isn’t that bad, but Amazon is little more than inconvenience to Apple who still dominate the market share with over 70%.

It appears that any market share gained from Amazon was from other small MP3 download services, meaning iTunes has remained pretty much intact.

So why is iTunes so immovable from it’s perch as king of the MP3 downloads? Sure, nothing beats the convenience of simply pressing ‘buy’ and seeing it in your iTunes library seconds later as if it’s always been there, but you’d think that the more competitive prices of Amazon and Play would have made more of a dent than a scratch. Those with the knowledge will know that it only takes a second to import and Amazon download into iTunes.

I’m sure Amazon will continue as normal however with it’s MP3 download service – there’ really nothing to loose. A market with virtually no operating costs, no delivery charges, unlimited stock and clearly booming in comparison to traditional CD high street sales. It’s a division that all online music sellers should incorporate – but just don’t expect to loosen Apple’s grip on the market!