Amazon sellers cry as platform takes over 50% commission

According to data released by the statistics agency Marketplace Pulse, the proportion of fees charged by Amazon to sellers' sales has increased year by year, and in 2022 it exceeded the 50% mark for the first time.

Generally speaking, Amazon sellers need to pay a 15% transaction fee (Amazon calls it a referral fee), Amazon fulfillment transaction fees (including storage and other fees), and advertising and promotion fees on Amazon. The specific fees vary according to product category, product price, size, weight, and the seller's business model.

The 15% transaction fee has remained unchanged for more than a decade , and the ratio varies depending on the category and can be as low as 8%.

However, Amazon's FBA fees have been rising steadily. Amazon raises delivery fees and storage fees every year. Because it is inconvenient to sell goods on Amazon without FBA, most sellers choose to use FBA, which is the reason why Amazon raises prices.

Although Amazon does not set specific advertising prices, as more and more sellers begin to advertise, competition becomes more intense and advertising costs rise.

Moreover, Amazon’s advertising is very important because most of the areas with the best conversion rates are allocated to advertising. Therefore, sellers must advertise to have a chance to be discovered by consumers.

While many small sellers spend less than 5% of sales on advertising , some private label sellers place great emphasis on branding and often spend more than 10% on advertising.

However, Amazon cannot be directly compared with Walmart and shopping platforms such as eBay or Shopify based solely on these fees. Because although Walmart's fees are cheaper than Amazon's, its number of users is also an order of magnitude smaller than Amazon's, so sellers can only partially replace Amazon with Walmart.

Going direct to consumers through a platform like Shopify is a fundamentally different business model, so expense isn’t the only consideration.

Due to the continuous rise in costs, many sellers only discovered that the bulk of their profits were taken by Amazon when they calculated their profits at the end of the year. In addition, sellers also need to pay for inventory, shipping, employee salaries and various other expenses. In the end, they may just barely break even.

To change this situation, sellers must either raise prices or diversify and reduce their dependence on Amazon. Otherwise, there will be many limitations if they rely solely on the platform.

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