With profits exceeding $100 billion, sellers have become Amazon's main source of income

This year, many Amazon sellers are facing the problem of rising costs. The cost of various types of advertising has increased, and the cost of FBA has increased one after another, which undoubtedly adds a lot of pressure to operations. Compared with Amazon's revenue, it has made a lot of money from third-party sellers. As a seller, take a look at how much you have contributed to the platform?

According to the latest research , Amazon has made more money from its Marketplace than AWS, which has long been known as its cash cow . The effective participation fees on the Amazon platform continue to grow, and platform sellers provide about 34% of its revenue , which has become Amazon's main source of income .

Research firm ILSR said that in 2021, Amazon will earn $121 billion from sellers in terms of platform fees and advertising revenue, accounting for about 34% of sellers' total revenue , which is twice the revenue in this area in 2019 , when the revenue was $60 billion, accounting for 31% of sellers' total revenue .

Amazon founder Jeff Bezos objected to this statement, saying that it is an illusion that more and more money is flowing from sellers to Amazon because more people choose to pay for the platform's additional services, such as displaying results based on keyword searches and using Amazon 's logistics and warehousing .

Amazon officials also claimed that the ILSR report was inaccurate, saying that it conflated the platform 's sales fees with its optional additional service fees , and that the sales fees on the Amazon platform were highly competitive compared with other online retailers .

However , researchers pointed out that these additional services of Amazon have now gone from optional to mandatory , because the platform continues to provide benefits to sellers who choose its services . Reports in the past few years have also shown that Amazon provides convenience for FBA sellers , and FBA sellers have great advantages in the display position of their products in search results and other aspects .

However, Amazon did not respond to the claim that sellers spend 4-5 times more on advertising and placement than in 2016. It said that advertising and other additional services are indeed a good way to help sellers increase product visibility , and denied that the platform favors FBA users in search results .

Additionally, the report mentioned that Amazon is using creative accounting methods to hide the huge revenue it earns from seller fees and to combine the huge profits of its marketplace division with the huge losses it incurred from building its shipping infrastructure.

According to ILSR analysts' estimates of Amazon's profits from seller advertising and other fees , Amazon's Marketplace platform generated $24 billion in operating profit in 2020, far exceeding the $13.5 billion in profit from Amazon's AWS cloud service .

News reports have long described AWS cloud services as Amazon 's main source of revenue, but this report from ILSR shows the public that the tech giant does have a second cash cow out of sight . As a seller on the Amazon platform, how much do you contribute to the platform?

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