Small sellers reveal their real operating costs, netizens say: It's better to work in a factory

Recently, an American Amazon seller posted his operating costs and net profit for the past month on a forum. He wanted to discuss the issue of rising costs with other sellers, but unexpectedly, he was ridiculed by many people instead.

A small seller's helpless confession

The rising operating costs have long been an unspoken consensus among Amazon sellers. In order to let more people see the difficulties faced by small and medium-sized sellers on Amazon more intuitively, seller Tom did some calculations.

According to the data shared by Tom, his store ’s sales in the past month were approximately US$10,000, but the net profit was only around US$1,100.

After calculation, Tom's operating costs in the past month mainly include: various fees on the Amazon platform of US$6,000, product costs of US$2,500, and warehouse costs of US$400.

Because Tom runs the store by himself most of the time, he doesn’t include labor costs. But obviously, the profit of just over $1,000 a month is not enough to support Tom’s daily life.

After this post was published, it quickly attracted the attention of many sellers. One of the sellers left a message jokingly saying that after working for Amazon for so long, if he only earned this little every month, he might as well go work in an Amazon warehouse, where he would definitely earn more than he does now.

In response to this statement, Tom refuted that in fact the profits have been so low only this year. In the same period last year, Tom's store had a monthly sales of 26,000 US dollars and a net profit of 5,200 US dollars.

After comparison, Tom found that the increase in platform fees was the key reason for the decline in his profits. In addition, Amazon's change in platform algorithm was also a focus of Tom's complaints, which caused Tom's sales last month to drop by more than 60% compared with the same period last year.

Tom said that he has been working at Amazon for many years. During the busiest times, in addition to his wife's help, he had to hire two more employees to keep up with the work. But now he can handle it alone, and his wife has to work outside to cover the family's daily expenses.

When talking about his future plans, Tom said frankly that he might really have to say goodbye to Amazon, where he had worked for many years. Although it is still profitable now, considering the time and labor costs, this profit is actually nothing. After all, if he goes out to work, he will probably earn more.

Currently, Tom claims that he needs to work 60 hours a week, which is the minimum time to keep the store running normally. However, such investment has not received an ideal return. Tom said that his family is now at the point of receiving food stamps.

On the other hand, Tom is not particularly optimistic about the prospects of doing business on Amazon. "The current inflation problem in the United States is serious, and the prices of various products are soaring. In order to save money, American consumers are now more willing to shop from low-price platforms such as Temu, which has led to the continuous compression of the living space for small Amazon sellers like us."

Judging from the current industry environment, Tom's situation is not an isolated case, but more like a microcosm of a large number of small and medium-sized sellers.

The Dilemma of Small and Medium Amazon Sellers

According to data released by Adobe Analytics, the results of the Black Friday online promotion that just ended this year were quite gratifying.

On Cyber ​​Monday, U.S. consumers spent $13.3 billion online , up 7.3% year-on-year ; during the promotional period from November 1 to December 2, total online spending by U.S. consumers climbed to $131.5 billion, up 9% year-on-year.

However, this year's Black Friday online promotion seems to be just a carnival for some people.

According to feedback from many sellers, the effect of this year's peak season promotion is significantly worse than in previous years. Sellers in multiple categories even said that sales during the promotion period not only did not increase, but instead declined to varying degrees.

It is worth noting that a considerable number of sellers whose sales have declined are small and medium-sized sellers.

Industry insiders analyzed that the current escalating competition for existing products has forced cross-border sellers to spend money like crazy to lower prices, and the advantages of top sellers in the price war are simply unmatched by small sellers.

A seller of outdoor products said that this year's peak season was too bad. Big sellers of the same category started selling off their products without considering profits at all. However, we did not have enough financial strength and could not lower prices accordingly. The end result was a sharp drop in orders.

Another seller said that the high advertising costs are also a major reason for many sellers to quit. "In the past, basically you could invest a few thousand dollars to test the market response of a new product, but now you may not even see a splash with the same budget."

For big sellers, these are not a problem. After spending hundreds of thousands of dollars on advertising, it is difficult for small sellers’ ads to get exposure.

Under this siphon effect where the strong become stronger, small and medium-sized sellers have become cannon fodder in this price war due to their lack of product strength and financial advantages.

Many long-time sellers said they had never experienced such a difficult period before. A 7-year-old seller said: "The order volume of my store has been nearly halved in the past six months, and the average order value has also dropped sharply. The current profit margin is only in the single digits. The ranking of old products has continued to decline. I want to launch new products, but I am worried that the R&D cycle is too long and the results may not be good."

Some sellers even expressed despair that they no longer see any hope in doing business on Amazon. They dare not click into the backend every day because they can only see soaring advertising fees and shrinking order volumes.

However, not all small and medium-sized sellers are ready to give up. For sellers who still hope to continue Amazon as a business, the most important thing in the future is to find their own position and focus their main energy on maintaining existing links to ensure that they earn the profits they can earn now, and then look for opportunities to continuously strengthen their overall strength in terms of supply chain and marketing.

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