Global eCommerce giant Amazon bought Selz, - A Sydney-based eCommerce platform for the growing businesses. The move was silent, with no public announcement or hype whatsoever. The news eventually got leaked and got confirmation from Amazon officials. Selz, just like Shopify, gives small-size and mid-size businesses easy to use and implement eCommerce solutions.
Why Was Amazon Interested in Acquiring Selz?
Amazon launched its own version of easy-to-use independent e-commerce solutions under the name 'Amazon Webstore' in 2010 to assist the retailers in operating their own e-commerce store. This happened just after four years of Shopify's launch in 2006. The business model was different than the core Amazon services, which brought all the retailers to one place.
Since 2010, Amazon is trying to catch-up with what was then the underdog in the eCommerce industry. With each year passing on, Amazon expanded its service areas and covered other business domains under its shed, whether it's Amazon Web Services, Amazon Pay merchant, Amazon Prime Video, Amazon Prime Music and so on. But Shopify established its market in its own genre; easy e-commerce solutions for business. It went on offering new features and solutions to its customers without hovering around other businesses. Amazon lost its focus on Amazon Webstore, which was in the similar niche of Shopify, and soon announced its discontinuation. Amazon gave a year's time to its current users to opt for other eCommerce solutions as they were shutting down the Amazon Webstore.
With Shopify still having a good run is running smoothly and expanding with each year. The company always performed well in its domain. This made Amazon restless and made it look for another shot at the niche. It couldn't resist its Webstore's failure, and it has made a deal with Selz to compete with Shopify and BigCommerce. Now, Amazon is looking for the pile's bigger chunks by offering small and mid-size eCommerce business solutions through Selz.
Why is Amazon Changing its Business Lane?
The model on which Amazon runs, it wouldn't want brands to have their own store and sell from there. So why is Amazon making such a move? Well, for Amazon, it's not a 'want to' thing anymore, but more of a 'have to' thing. In November 2019, Global sports brand Nike made an exit from Amazon. Nike entered Amazon in 2017 with the hope of stopping the counterfeiting of its products. But it failed to do so because new third-party sellers would appear time and again and sell counterfeit products. Nike's official products became less popular with time, and the counterfeits gained popularity for their low price, of course. Nike realized that coming to Amazon hasn't been successful move because Amazon and Nike failed to put a stop on counterfeit products; hence they opted out. Nike is not the only brand doing so. In the past years, the leading brands such as Ikea, Vans, Rolex, and Luis Vuitton have also left Amazon and opting to go for their brand-specific independent eCommerce store.
The leading brands looking for an independent eCommerce store definitely go for the solutions and services offered by Shopify and BigCommerce. And Amazon is having a hard time digesting this fact, so it decided to acquire Selz in the niche where their old customers are headed. Major brands may have left Amazon, but their products are still available from the third-party sellers who have their multi-brand stores on Amazon.
It’s like 2010 again, when we saw Amazon Webstore vs. Shopify. Now it is Amazon + Selz vs. Shopify vs. BigCommerce. Shopify is still holding its position strong in the market.
Major Brands Exiting Amazon; Where Does it Leave Amazon?
One after the other, global brands are opting out from Amazon and trying their hands on their independent stores. This has definitely put a dent in the e-commerce giant's business, but is the dent big enough to take Amazon's feet off the ground? Let's see
- Amazon buying Selz is the move to repair the damages that are already done by Nike, Ikea, Rolex, LV, and other brands. By offering independent eCommerce solutions through Selz, it may cover the losses in the future.
- Amazon has hundreds and thousands of independent retailers that don't have the resources or investment to start and withhold an independent store. Their profit margins are still good when they sell through Amazon. They are not leaving anytime soon and, the brands that have left Amazon, their products are still available on Amazon. So, the dent is not that big as it seems.
- The home-made product owners, the small indie manufacturers, the startups that want to sell locally don't go for Amazon. From manufacturing to selling, everything is managed by them or their family members, and it is easier for them to maintain a small-size independent store with everything limited and within their reach of expertise. Such merchants either use Shopify or Bigcommerce. Amazon wants to target that audience with Selz.
- Amazon is sitting on a huge pile of customer data and advertisement that cannot be matched in the recent future. The customer base is bigger than any other platform. The traffic it generates, the service areas it has covered, the number of warehouses it has, the costs covering up the return or exchange of the products, it is a well-knitted system that is still tough to bring down.
How Does Amazon Acquiring Selz Affect Shopify and BigCommerce?
Shopify has been introducing new features and solutions every now and then. In 2013, it got a $100 million Series C investment from Insight Venture Partners and OMERS Ventures with participation from FirstMark Capital, Bessemer Venture, Felicis Ventures, and Georgian Partners. On 3rd March, PostScript raised $35 Million in Series B round for Shopify. Postscript also raised $4.5 Million in 2019 as well. All this helped Shopify reach over 1,000,000 businesses worldwide. With all the investment and strategy partners, it is making easy to use, feature-rich, and safe eCommerce solutions for businesses. Today, you can have a complete store on Shopify or just have Shopify Buy Button and safe payment method on your HubSpot website.
BigCommerce raked the investment of $64 million in 2018 to support its eCommerce business. BigCommerce is the home of the websites of companies like Toyota and Sony showcasing the true potential of the platform when it comes to international brands and unlimited industry niches. In totality, BigCommerce has raised $200 million since its inception year 2009.
Amazon tried to leave a mark in BigCommerce and Shopify's niche with Amazon Webstore, but it didn't work out. Now it's trying to corner them both once again, hoping to cover up its recent brand losses and fulfill a long-awaited urge.
What do you think of this deal? How will this re-shape the eCommerce business? Share your thoughts in the comment section.