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I ran a small FBA business for a year nowhere near any scale and it was an interesting lesson. People who weigh in on these tech topics should actually try the

I ran a small FBA business for a year nowhere near any scale and it was an interesting lesson. People who weigh in on these tech topics should actually try these things out to understand them better. It's nothing like listing on eBay where there's some haircut off the top and that's that. There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget. Depending on the fee it is - fixed, % of $, weight based, volume based, or some combination. The fees change constantly with not much notice. So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go? Like Uber drivers, I imagine some % of FBA sellers don't know they are losing money in real time. You need to do some decent accounting to track as all these different fees hit at different times. It's not like Amazon gives you the data & tools to track your all-in costs per sale.

shiftpgdn 3y ago
AWS works this way too but I’ll get dogpiled by Amazon sycophants and other people who have built their careers around getting witless companies sucked into the Amazon machine.
- smallnix 3y ago
  Steve gave examples for the different kind of fees and that it's hard to track them and why. I wanted to ask you for examples for AWS. Would be good to know concrete pitfalls and traps.
  - genewitch 3y ago
    egress fees, inter-DC transfer fees, IP fees, ebs storage fees, transactional fees on things that are transactional. If you don't carefully engineer everything you'll get left with a $15,000 AWS bill. This doesn't cost Amazon anywhere near $15k to provide, so they just "waive" the fees if you promise to be a good little user.
    - Karrot_Kream 3y ago
      Don't disagree with this, but this is the same in almost all cloud providers. Want to get started with Digital Ocean's app platform? You're paying for Container Engine to store your containers, then App Platform Business just to support scale-outs, then multiply this for the number of services you're deploying and make sure you don't have egress overages etc etc.
      - genewitch 3y ago
        I've never gotten a grand for deleting digital ocean block storage devices, though!
- fpgaminer 3y ago
  At least AWS gives me an invoice each month with a break down of fees. GCP just sends an invoice for the total amount. No detail, no breakdown. And I have never gotten any of GCP's many different pages under their billing system to spit out any numbers that make sense. Pick your poison?
  - bminor13 3y ago
    Check out https://cloud.google.com/billing/docs/how-to/export-data-bigquery https://cloud.google.com/billing/docs/how-to/export-data-big... - you can configure GCP to spit out pricing data to bigquery, to be queried however you like. (I don't think it produces a volume of data that escapes the free tier, but I'd have to check)
    - jiggawatts 3y ago
      If I remember correctly, they charge for the BigQuery table you use for the detailed export. In other words: there's a charge for seeing detailed charges! All other clouds provide a detailed cost breakdown report for free.
      - steveBK123 3y ago
        what a grift
WalterBright 3y ago
Ebay doesn't do fulfillment, which is why they take a smaller cut.
- steveBK123 3y ago
  Correct. My point is that people only casually familiar don't realize how vertically integrated the FBA model is. FBA is like eBay, PayPal, FedEx, Google Ads and a warehouse all wrapped into one. But they charge you varying types of fees based on different measures, at different times, for each of those parts of the stack. And you cannot cross shop, mixing and matching other vendors in to keep them honest on pricing. It's easy to use, but you are locked in to their stack.
  - ToucanLoucan 3y ago
    Why shouldn't they? You've arranged to have product you didn't create shipped to a warehouse you don't operate to be stored by a system you don't maintain to be sold on a storefront under a brand you made up and that you didn't create to be fulfilled by a shipping apparatus instead of you going to the UPS Store. What exactly are YOU doing here that merits a payday? Mediating a relationship between Amazon and a Chinese manufacturing firm? They already have tons of those. The entitlement these entrepreneur types exhibit is the economic equivalent of wind-drag. If buying stuff from random AliExpress sellers and charging 300% markup to sell it to people who don't know better on Amazon isn't working out for you, maybe you should find a way to contribute to the economy instead of just inserting yourself between existing profitable businesses and demanding money for sending some emails.
    - svpk 3y ago
      If it's legal they should do it because it's evidently profitable. If it's not legal then they shouldn't do it because it's illegal. Which is really the question at hand. You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor). But that's not really relevant to the question of did Amazon utilize anti-competitive behavior that violates the laws that govern how businesses are allowed to behave.
BeetleB 3y ago
Disclaimer: Former FBA seller here. > So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go? You've skirted around the obvious question: Why did you pick FBA to begin with? Amazon sellers existed long before FBA. They did their own shipping, so almost none of those fees apply. Many sellers continue to do well on the Amazon platform while not being part of FBA. If you can't succeed without participating in FBA, then all that's happened is Amazon created an environment for previously unviable businesses to succeed, and has merely tightened it. Edit: Amusing that this comment is being downvoted, whereas my other comment saying pretty much the same thing is being upvoted.
- agentgumshoe 3y ago
  I think a more obvious question is how are Amazon making this possible if it's not profitable otherwise?
  - BeetleB 3y ago
    Amazon gets to negotiate good shipping rates, and has larger economies of scale than a regular business can achieve. In general, cost per unit is cheaper if you have more volume.
- nortirn 3y ago
  [dead]
anjel 3y ago
Those fullfillment fees are nothing new. I worked for a publisher thirty years ago and they had a similar network of fees. The only difference was they were predictable in that the fee schedule changed only at time of contract renewal. Whats different is that the fulfillment centers then couldn't see our books and weren't looking over our shoulder seeing our accounting figures, so as to grab the profits the moment it crossed the threshold of feasiblility. Uber was easy and profitable in the beginning and clearly a superior value to car services and cabs. Many drivers took on debt to buy bigger better cars, never imagining the goalposts were adjustable by design so as to centralize all the profits.
- barrysteve 3y ago
  It is obscene, like Ducth East Indian trading corporation, or Rockerfeller. People will walk away, there's no choice and MegaCorps know this, so they will subtly lock down movement. Medium sized businesses are the buttery smooth, slippery slope to hell these days. Attention management and product discovery has to be done by permenantly white organizations, monasteries, regulated-to-inaction government arms, independent offshoots of a benevolent billionaire's philanthropy... The panopticon doesn't just effecy day-to-day life... it also strangles the power and wealth of businesses to death. I have been saying it for years, and people just dismiss it, why would a billion dollar company prey on a million dollar company, they have bigger opportunities... Well. There it is.
- gmd63 3y ago
  The nature of Uber being easy and profitable in the beginning was a heinous dishonest trap engineered by venture capitalist subsidizers. It should be illegal to convince people economically that a certain lifestyle is worth switching to when you are keeping secret your plan to slowly boil the ocean tweaking it so that you can get your exit.
root_axis 3y ago
> There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget. Have you ever run a business where you have to manage your own inventory? What you listed and likely the 5 things you omitted constitute real work. Perhaps amazon's fees are capricious but they're doing all the work for you. You can manage your own inventory and shipping logistics and still sell on Amazon

shiftpgdn 3y ago

AWS works this way too but I’ll get dogpiled by Amazon sycophants and other people who have built their careers around getting witless companies sucked into the Amazon machine.

smallnix 3y ago
Steve gave examples for the different kind of fees and that it's hard to track them and why. I wanted to ask you for examples for AWS. Would be good to know concrete pitfalls and traps.
- genewitch 3y ago
  egress fees, inter-DC transfer fees, IP fees, ebs storage fees, transactional fees on things that are transactional. If you don't carefully engineer everything you'll get left with a $15,000 AWS bill. This doesn't cost Amazon anywhere near $15k to provide, so they just "waive" the fees if you promise to be a good little user.
  - Karrot_Kream 3y ago
    Don't disagree with this, but this is the same in almost all cloud providers. Want to get started with Digital Ocean's app platform? You're paying for Container Engine to store your containers, then App Platform Business just to support scale-outs, then multiply this for the number of services you're deploying and make sure you don't have egress overages etc etc.
    - genewitch 3y ago
      I've never gotten a grand for deleting digital ocean block storage devices, though!
fpgaminer 3y ago
At least AWS gives me an invoice each month with a break down of fees. GCP just sends an invoice for the total amount. No detail, no breakdown. And I have never gotten any of GCP's many different pages under their billing system to spit out any numbers that make sense. Pick your poison?
- bminor13 3y ago
  Check out https://cloud.google.com/billing/docs/how-to/export-data-bigquery https://cloud.google.com/billing/docs/how-to/export-data-big... - you can configure GCP to spit out pricing data to bigquery, to be queried however you like. (I don't think it produces a volume of data that escapes the free tier, but I'd have to check)
  - jiggawatts 3y ago
    If I remember correctly, they charge for the BigQuery table you use for the detailed export. In other words: there's a charge for seeing detailed charges! All other clouds provide a detailed cost breakdown report for free.
    - steveBK123 3y ago
      what a grift

WalterBright 3y ago

Ebay doesn't do fulfillment, which is why they take a smaller cut.

steveBK123 3y ago
Correct. My point is that people only casually familiar don't realize how vertically integrated the FBA model is. FBA is like eBay, PayPal, FedEx, Google Ads and a warehouse all wrapped into one. But they charge you varying types of fees based on different measures, at different times, for each of those parts of the stack. And you cannot cross shop, mixing and matching other vendors in to keep them honest on pricing. It's easy to use, but you are locked in to their stack.
- ToucanLoucan 3y ago
  Why shouldn't they? You've arranged to have product you didn't create shipped to a warehouse you don't operate to be stored by a system you don't maintain to be sold on a storefront under a brand you made up and that you didn't create to be fulfilled by a shipping apparatus instead of you going to the UPS Store. What exactly are YOU doing here that merits a payday? Mediating a relationship between Amazon and a Chinese manufacturing firm? They already have tons of those. The entitlement these entrepreneur types exhibit is the economic equivalent of wind-drag. If buying stuff from random AliExpress sellers and charging 300% markup to sell it to people who don't know better on Amazon isn't working out for you, maybe you should find a way to contribute to the economy instead of just inserting yourself between existing profitable businesses and demanding money for sending some emails.
  - svpk 3y ago
    If it's legal they should do it because it's evidently profitable. If it's not legal then they shouldn't do it because it's illegal. Which is really the question at hand. You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor). But that's not really relevant to the question of did Amazon utilize anti-competitive behavior that violates the laws that govern how businesses are allowed to behave.

BeetleB 3y ago

Disclaimer: Former FBA seller here. > So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go? You've skirted around the obvious question: Why did you pick FBA to begin with? Amazon sellers existed long before FBA. They did their own shipping, so almost none of those fees apply. Many sellers continue to do well on the Amazon platform while not being part of FBA. If you can't succeed without participating in FBA, then all that's happened is Amazon created an environment for previously unviable businesses to succeed, and has merely tightened it. Edit: Amusing that this comment is being downvoted, whereas my other comment saying pretty much the same thing is being upvoted.

agentgumshoe 3y ago
I think a more obvious question is how are Amazon making this possible if it's not profitable otherwise?
- BeetleB 3y ago
  Amazon gets to negotiate good shipping rates, and has larger economies of scale than a regular business can achieve. In general, cost per unit is cheaper if you have more volume.
nortirn 3y ago
[dead]

anjel 3y ago

Those fullfillment fees are nothing new. I worked for a publisher thirty years ago and they had a similar network of fees. The only difference was they were predictable in that the fee schedule changed only at time of contract renewal. Whats different is that the fulfillment centers then couldn't see our books and weren't looking over our shoulder seeing our accounting figures, so as to grab the profits the moment it crossed the threshold of feasiblility. Uber was easy and profitable in the beginning and clearly a superior value to car services and cabs. Many drivers took on debt to buy bigger better cars, never imagining the goalposts were adjustable by design so as to centralize all the profits.

barrysteve 3y ago
It is obscene, like Ducth East Indian trading corporation, or Rockerfeller. People will walk away, there's no choice and MegaCorps know this, so they will subtly lock down movement. Medium sized businesses are the buttery smooth, slippery slope to hell these days. Attention management and product discovery has to be done by permenantly white organizations, monasteries, regulated-to-inaction government arms, independent offshoots of a benevolent billionaire's philanthropy... The panopticon doesn't just effecy day-to-day life... it also strangles the power and wealth of businesses to death. I have been saying it for years, and people just dismiss it, why would a billion dollar company prey on a million dollar company, they have bigger opportunities... Well. There it is.
gmd63 3y ago
The nature of Uber being easy and profitable in the beginning was a heinous dishonest trap engineered by venture capitalist subsidizers. It should be illegal to convince people economically that a certain lifestyle is worth switching to when you are keeping secret your plan to slowly boil the ocean tweaking it so that you can get your exit.

root_axis 3y ago

> There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget. Have you ever run a business where you have to manage your own inventory? What you listed and likely the 5 things you omitted constitute real work. Perhaps amazon's fees are capricious but they're doing all the work for you. You can manage your own inventory and shipping logistics and still sell on Amazon