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> The 15% transaction fee has stayed the same for over a decade. It varies by category and can be as low as 8%. Fulfillment by Amazon (FBA) fees have steadily i

• moltar 4y ago
  This is exactly it. And the increase in total fees is a transfer of marketing budgets from other platforms like Google Ads and Facebook ads to Amazon Ads. If anyone thinks 50% cut is a big margin they probably haven’t operated an e-commerce store the traditional way.
  • belval 4y ago
    Apple, Steam, Google et al. charge 30% on *digital* goods. With Amazon you get <50% for physical goods. If anything that's impressive.
    • shanebellone 4y ago
      "If anything that's impressive." I'm conflicted about this statement. On one hand, it's almost passive revenue for the seller. On the other hand, Amazon offloads the risk of carrying inventory and takes half the revenue. I'd argue that it's impressive with one caveat: the "partnership" heavily favors the house.
      • deleted 4y ago
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      • Closi 4y ago
        Important to note that plenty of other companies will carry the inventory and ship goods out for you (Amazon did not invent the concept of third party logistics) - however if you go to a third party warehouse it is difficult to get certified as 'Prime'. (Seller Fulfilled Prime is a thing, but in reality is currently closed for sign-up and is really only for the large sellers)
    • votepaunchy 4y ago
      Apple, Google, maybe others charge 15% on up to $1 million or the first $1 million in digital sales. Or less when negotiated. Does Amazon offer reduced rates to small businesses or low volume sellers?
    • nobu-mori 4y ago
      Digital goods have very low marginal unit costs compared to physical goods.
      • shanebellone 4y ago
        Edit: I was wrong :)
        • deleted 4y ago
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        • Closi 4y ago
          You are misunderstanding the concept of marginal unit costs if you disagree on that basis. AAA software is wildly expensive, but each incremental copy sold is not wildly expensive. With a tea kettle, each incremental copy still costs you metal, heating elements and plugs, so the unit margins are smaller.
          • shanebellone 4y ago
            Oh! That I failed to recall. You are absolutely correct.
    • JohnFen 4y ago
      It tells me that the fee on digital goods is insanely high.
  • StreamBright 4y ago
    It is not that I think 50% is a lot but it is the same 50% when amazon is selling fakes. If amazon would be able to sell items that are original and the money would go to the right person maybe 50% is ok. This is not the case by a long shot.
    • omgomgomgomg 4y ago
      As a former Amazonian who has worked on vat, compliance, taxes, product compliance etc, I can tell you, really from an unbiased perspective that Amazon is doing everything they can to terminate the bad actors. This includes the fake reviews etc. Lets say you have a charger for iphones, you cant have text for the ASIN saying for iphone, it will get delisted immediatelly, you have to say "compatible with iphone" and such. The main weakness is how products are created, the catalogue principle, this allows some to fly under the radar for a bit sometimes. And Amazon will not immediatelly shut down a whole sellers account, but rather target ASINs one by one. The best way for a buyer to deal with this is to leave a sellers(not product) review and ask for a refund, you will always get the refund, Amazon always pushes liability to the sellers in order to protect the brand image and to not be exploitable. Once theres enough of reviews and refunds, the sellers will get shut down and the funds will be held on hold, just like a banl does for credit card processors. The cost to do business on amazon with fakes repeatedly(need new companies every time etc) is quite high, if not prohibitivelly high. Do not suck it up, do the 2 things mentioned to keep the place tidy.
      • runnerup 4y ago
        Amazon is doing nothing about the total product switches where hard drives have reviews about laundry detergent. They’re clearly not doing basic easy prevention. Customers try really hard to report stuff like this and Amazon actively thwarts them. It’s insane to say that Amazon is trying really hard to prevent fraud. Maybe some types of fraud, sure. But so much of the customers-facing fraud is actively supported by Amazon, like Amazon puts actual active effort into preventing customers from reporting it!
        • omgomgomgomg 4y ago
• wewtyflakes 4y ago
  If the seller has to ship the product to Amazon anyway, why not just ship it to the customer instead and not pay the extra fees? What need is Amazon fulfilling that Fedex or DHL do not?
  • ianburrell 4y ago
    Storing the product and packing it up. If you have small volume, then garage might work and can pack yourself. But Amazon and customers have expectations on speedy shipping. For larger volumes, you need warehouse and people to package orders. Doing yourself makes sense if already have own store but otherwise probably easier and cheaper to pay Amazon. Also, my impressions is that Amazon shipping is cheaper since they have volume discounts, use their planes for long-haul, and use their trucks for cities.
    • wewtyflakes 4y ago
      That makes sense I think. So as a seller, I could buy bulk from some producer, get it bulk shipped to Amazon, and they will take care of meting it out to individual purchasers. Did I get that right?
      • smallerfish 4y ago
        Yes but competition between sellers in most niches is so tight that as a new seller you'll struggle to make profit, even if you've innovated on the product, because you'll be paying Amazon for search engine ads and also dropping your price as far as you can to win sales. You essentially end up as an unpaid employee of Amazon, managing and optimizing a listing.
  • hammock 4y ago
    Ever ask that of your grocery store? Do you order cereal from Kelloggs.com?
  • brianwawok 4y ago
    Mostly 1 and at worst 2 day delivery for the entire continental US. You would need between 3-6 warehouses around the US to meet this. Which isn’t a small starting place for most sellers.
• darth_avocado 4y ago
  The FBA fees are interesting. I briefly talked to someone who runs a store on Amazon. Yes you’re paying Amazon a fee for storage and other logistics, but as a seller get the added benefit of your product just being delivered to the customer with strong delivery guarantees (even fedex and ups give Amazon packages a higher priority over your regular packages). All you have to worry about is get your product to them and they will distribute it over a chain of warehouses by doing their own forecasting of demand to get the optimal delivery experience. Sellers actually don’t mind paying this part because you’d have to do this out of pocket anyway and letting Amazon do it has its perks, including Amazon guaranteeing a certain sell volume. The downside of this though is that sometimes Amazon demands a certain volume from you for your product, and you have to do it even if you don’t think it makes sense because they think the demand would go in a certain direction. When it doesn’t happen, Amazon asks you to get it off their hands and figure out how you want to offload it. You eat the FBA costs and the costs to get it back, on top of any other costs you may incur while getting rid of this inventory. This system works for some sellers, but not for others who can eat up these losses.
  • sashenka 4y ago
    [dead]
  • lots2learn 4y ago
    This only describes one model of selling on Amazon i.e. as a vendor. The vast majority of sellers are not vendors and manage their own inventory quantities. The way the system qorks changed several times over the years, and was notably very constrained during COVID, but these days Amazon just provides a recommended qty per sku and an overall hard limit on total square footage each seller can use. The limit is determined by sales volume, so higher volume sellers get more space. If product doesn't move, the seller pays storage fees and eventually (more expensive) long term storage fees.
  • omgomgomgomg 4y ago
    Former Amazonian here, great company and all that, I enjoyed it. I felt I can provide data here, FBA is not the end of the road, there are more levels so to say, FBA and prime etc. Now, FBA has some potential pitfalls. - VAT, Amazon will often store in a country where its most economical for them, ie, for German sellers, there will be a warehouse just after the Polish border etc. They will do this unless you explicitly disable this. This leads to very complicated VAT fillings and correction - Lost, stolen, damaged cargo. If your merchandise gets damaged or stolen etc, its not so easy to get new storage space allocated/assigned. - Recalls, if your ASIN is subject to a recall, god help you, if you use amazon, you will have penalty points on the account health page, affecting many other things. All and and FBA ASINs affected , whether youre selling it or someone else need to be removed. The recall is only finished after that. And youre paying for the storage or recovery or disposal. - Shipping confirmation. You are supposed to inform about any package and order status very soon after the order is placed. Same for tracking status. Now, sometimes the Amazon api for that is buggy and you get heavy markdowns on account health even though you provide the data, just the feed dont work. Still, when its all said and done, Amazon offers the best product and logistics if you just want to sell your product. There is no way any competitor can offer the same quality at a better price. Keep in mind, whatever the percentage is, the ecommerce business has a margin in the single digits, all of Amazon is subsidised by the money making machine AWS.
• Closi 4y ago
  I think the complexity is around the 'Prime' flag, which has a huge impact on sales and can force you down the FBA route if you actually want to sell in volume. ('Seller Fulfilled Prime' is possible - however currently closed for new applicants, is more targeted towards very large shippers, and there is pressure from account management on utilising Amazon Shipping as part of this at least in the UK)
  • omgomgomgomg 4y ago
    Yes, you need to "earn the dues" before they enable that, I think its for good reasons, they protect the product and I would not advise a newcomer to even try prime FBS if they habe a certain volume and a very professional infrastructure is needed. They have very protective rules for sellers who sell jewlery and such, too.
• erikpukinskis 4y ago
  This is also a pretty normal rate for retail. If you want to sell your alpaca mittens at the tchotchke shop on Main Street they’re also going to want a wholesale price that’s 50% of retail.