Amify started 7 years ago as one man’s quest to sell sports equipment to retirees. Now they’re in the top 1% of Amazon’s third-party sellers, expected to generate $33m in revenue for 2018.
Ethan McAfee, Amify’s founder and sole-proprietor, is just one of many eager entrepreneurs cashing in as a third-party reseller (a business that sells other brands’ products on Amazon).
But, as more and more small businesses and retailers flock to Amazon, the question is whether companies like Amify will keep reaping the rewards, or if an unforeseen “cardboard ceiling” looms in their future.
Niché is riché
McAfee started Amify as Pickleball Direct in 2011, selling pickleball paddles (a court game popular with baby boomers, best described as tennis with less running), and quickly expanded into other sports equipment like tennis shoes, hockey skates, and roller skates.
After doing $300k in revenue in 2013, McAfee began hiring people and turning his project into a real business.
Last year, Amify did $25m in revenue with 30 full-time employees, and according to McAfee, they’re not stopping there: “We are trying to grow this baby, hitting the accelerator and taking a long-term vision,” he told The Washington Post.
You heard it here folks, they’re putting the pedal to the metal
Amify says their “secret sauce” is knowing which products to push (ones that have a higher margin) — but, the margins are still slim.
Online retailers typically profit ~3% of gross sales, which means at $33m in revenue, Amify is profiting ~$1m a year (and that’s not taking into consideration the cut Amazon takes).
And, it’s a dangerous game
Companies like them make up more of Amazon’s total offerings than ever: About 50% of the items sold on Amazon come from third parties.
That means more and more companies depend on staying in Amazon’s good graces to survive (90% of Amify’s revenue comes from third-party sales on the platform).
And, if Bezos decides to “Zuck over” sellers the way Facebook did with publishers, companies like Amify could be in a world of hurt.
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