The steady – at times stunning – growth of eCommerce continues to demonstrate the strength of online business. But any growing avenue of sales
inevitably gives rise to new ways of doing business.
Enter the marketplace facilitator.
Up and up
This time of year (for the past several years), recent memory says much that we need to know about the growth of ecommerce: Black Friday 2024 saw a record $10.8 billion in U.S. online sales, up 10.2% over 2023. Cyber Monday wasn’t far behind, as consumers looked to spend $13.2 billion, up more than 6% over 2023.
Overall online shopping has grown steadily, too. Since 2021, global online retail sales have grown from almost $5 trillion to an estimated $7 trillion by this year, according to Statista, with sales via mobile devices quickly catching to those via desk- and laptops. Almost 3 billion people are expected to shop online this year worldwide.
In the U.S., the Census Bureau estimated e-commerce sales for the third quarter of last year at $300.1 billion, an increase of 2.6% over just the previous quarter.
Other forecasts suggest that online sales will account for nearly one in every four global retail sales by 2027.
Quite a pie.
The facilitators’ slice
How many of these sales are through marketplace facilitators? Is this slice increasing as well?
A marketplace facilitator is a platform where third-party sellers of any size and location can facilitate retail sales by listing their products. These days, marketplace facilitators process payments, collect receipts, sometimes assist in shipment and assume collecting and remitting sales tax. The household names in facilitators include Amazon, eBay, Etsy, among well-known others.
Again starting with recent history, two months back Amazon posted a record late-November shopping season. According to cited estimates, among online retailers in the U.S. in all of 2023 Amazon took the biggest slice (almost 38%) of the market, distantly followed by Walmart’s 6.4%.
(Walmart Inc. did notch about 6% of total U.S. retail sales in 2023, though, and finished ahead of Amazon’s 4%. The U.S. also remained Amazon’s most robust market in the world as of 2022.)
The rest of the online retailers in recent stats trailed Amazon even more in 2023: Apple took 3.6% of the market, eBay 3% and Target and The Home Depot 1.9% each. These figures are about equal with other statistics for 2022 and 2021 – which does indicate that marketplace facilitators have maintained their market shares even as U.S. eCommerce overall continues to explode.
As for what online retailers, one other key stat stands out regarding marketplace facilitators: In that November 2024 boom mentioned earlier, more than 60% of Amazon’s sales come from independent sellers.
(Click here to learn more about working with marketplace facilitators and about the sales tax laws governing them.)
If you think your business may be impacted by sales tax developments and trends, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.
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