If you don’t lower your price, your listing will be deleted! Amazon sellers’ sales plummeted by 75%

On February 2, Eastern Time , Amazon released its 2022 full-year performance report, stating that its sales in the past year reached US$514 billion, an increase of 9% from 2021. Amazon also expects net sales in the first quarter of 2023 to be between US$121 billion and US$126 billion, an increase of 4% to 8% compared with the first quarter of 2022.

In terms of overall revenue, Amazon is still growing. However, many cross-border sellers said that this growth was achieved at the expense of their interests.

Amazon deletes listings after price reduction failed, sellers dissatisfied

Amazon's fair pricing rules have long been criticized by sellers. For third-party sellers with higher product costs, the existence of this rule has caused them huge losses.

Especially last year, multiple factors such as intensified inflation and rising costs of raw materials suppressed sellers' profit margins, but Amazon still tried to force sellers to sell on Amazon at the lowest price on the entire network , which caused dissatisfaction among most sellers about fair pricing rules .

Not only that, according to foreign media reports, many sellers have reported that Amazon has repeatedly deleted or even removed the purchase boxes of their product listings on the grounds that the product prices are too high . And through the Amazon seller forum, it can be seen that such complaints have continued to increase in recent times.

For Amazon, which adheres to the principle of customer first, fair prices for goods are to avoid losing customers to other platforms. Therefore, it requires all sellers to set the most competitive prices in a fair and just manner.

However , many sellers in the forum believe that Amazon’s approach has gone too far and does not care about the lives of sellers at all .

A seller of toy products said that due to Amazon's forced price cuts, the sales of its toy products have dropped by about 75% compared to three years ago . At the peak, the seller's sales on Amazon once reached 2 million US dollars.

The seller said that the retail price of several products sold in his store is usually around $18-20, but Amazon said that the price of these products should be set at $9.99. If they are sold at this price , the seller will lose money. The seller strongly refused to reduce the price, and Amazon subsequently deleted the listing .

Sellers speculate that Amazon's pricing recommendations are based on the suggested retail prices of similar large companies a few years ago, without taking into account the increase in various costs, and no similar products priced at $9.99 were found on Google or eBay .

Other sellers also said that Amazon’s enforcement of its fair pricing policy has become more stringent over the past six months .

In order to stimulate revenue growth, Amazon hopes that sellers will offer the lowest prices on the entire network to attract consumers to consume, and even held its first autumn promotion in 2022. However, the market environment is already like this, and it is difficult for it to escape the fate of being hurt.

Two days ago, Amazon announced its fourth-quarter 2022 results, with net sales reaching US$149.204 billion, an increase of 8.58% year-on-year; but net profit was only US$278 million, a year-on-year decrease of 98%; for the whole year, its net loss reached US$2.722 billion , the first annual loss since 2014.

From this perspective, Amazon's dream of maintaining profit growth by offering the lowest prices on the entire network has not been achieved.

Although many sellers complained about this rule , even in 2021, the US government sued Amazon for illegally maintaining a monopoly position based on its unfair terms for third-party sellers ( especially its fair pricing policy ) .

The US government stated that the standards set by this policy are entirely based on Amazon's interests, regardless of the seller's actual costs and other issues, forcing sellers to sell on Amazon at the lowest price on the entire network .

Since then, several sellers have filed appeals.

But Amazon was not affected at all, and was even more strict in pricing .

For many sellers, Amazon is their most important sales channel . Perhaps because of this, Amazon is more unscrupulous .

Loose return policy, high commission ... Seller: Profit is only 10%

Not only the pricing rules, sellers are also hurt by Amazon’s return rules and multiple fee increases.

Many sellers complained that extending the return time is Amazon’s first wave of gifts to consumers, and it is also the first knife that “cuts” sellers during the peak season.

As we all know, clothing is the product with the highest return rate on e-commerce platforms. On Amazon, this category is always on the best-selling list , so it has become the main category for many domestic sellers. However, the high return rate, strict pricing specifications, and high commissions have made it more difficult for clothing sellers to operate .

Last June, Eby, a women's underwear brand founded in 2018, entered Amazon. In just half a year, Eby generated millions of dollars in sales through Amazon. Amazon has now become one of Eby's fastest growing channels.

But at the same time, Eby co-founder Renata   Black said that although sales are high, the actual profit on Amazon is very low, and the profit on $1 million in sales may only be $100,000 .

The reason for this is that the already high return rate of the clothing category will be exacerbated on Amazon , followed by the high commission charges faced by the clothing category .

Eby data shows that the average return rate on its DTC website is 2%, and the highest is 3% during the holiday season. But on Amazon, its return rate has been hovering between 15% and 18% .

Not only Eby, other clothing brands and sellers also reported that Amazon's clothing category has the highest return rate compared to other categories.

Especially during the holiday peak season, Amazon also extended the return time. Data shows that the volume of returns during the 2022 year -end peak season increased by 63% year -on-year , and sellers in the clothing category suffered serious losses.

Meyer data shows that during last year's holiday peak season, the average return rate for furniture in the US e-commerce market was 6%, the return rate for beauty and personal care products was about 1.85%, and the average return rate for clothing reached 16.5%.

A high return rate not only results in loss of sales, but also loss of advertising costs, logistics costs, and time and energy costs invested by sellers.

Even if the seller resells the returned goods , these returned goods still need to be inspected by Amazon before they can be sold again. During the inspection process, mistakes made by Amazon employees can easily lead to the second buyer leaving a bad review, such as if a buyer finds that the product has been worn before or has an unusual smell.

In addition, Amazon apparel sellers have higher selling fees than sellers in other categories.

Apparel sellers using FBA pay higher fulfilment fees than sellers in other categories . For example , for non-apparel items weighing between 12 ounces (340 grams) and 16 ounces (454 grams), the fulfilment fee is $3.98 (£517) per item, but for apparel, the fulfilment fee is $4.36 (£567).

Amazon agency founder Laura Meyer said that Amazon 's sales commission for clothing categories is 17%, while other categories are usually 15% . In addition, if Amazon determines that the returned goods cannot be resold, the seller will be further charged storage fees and handling fees.

Although the increasingly stringent platform rules have made sellers miserable, cross-border sellers still rely on Amazon's huge traffic and exposure, so they can only endure these unfriendly rules and try their best to start from aspects such as product quality, thereby reducing return rates and reducing unnecessary cost losses.

Meiya

Seller

listing