Dealing with Amazon fees can be a nightmare, and I have an example to share to illustrate this.

[Rackpi]

For those interested in selling on Amazon, the fees can be a major obstacle to success. Currently, Amazon takes 15% of the sales, plus an additional 20-35% for storage and shipment, which can quickly add up. Advertising fees (up to 15% of total fees) are also a consideration.

These fees have been increasing steadily, and using Amazon's storage and shipping services is essentially mandatory for success on the platform. As a result, these extra costs are unavoidable.

Since Amazon's revenue is largely driven by advertising, it's essential to advertise your products to be seen. When all these fees are factored in, it becomes clear that careful spending on advertising is crucial for achieving a good return on investment.

For example, let's say you're selling dog toys on Amazon for $20 per toy. Here's how the fees would break down:

• Amazon takes a 15% referral fee on each sale, which amounts to $3 for each toy sold.
• Since you're using FBA, Amazon will also handle storage and shipping, with fees that vary based on the size and weight of the toy. Let's assume it costs $5 to store and ship each toy.
• Advertising is also important to get your products in front of potential customers. You decide to allocate 15% of your total fees to advertising, which is equivalent to $1.80 for each toy sold.

Let's assume that you sold 100 dog toys on Amazon using the example above. Here's how the fees would add up:

• Referral Fees: 100 toys x $3 per toy (15% referral fee) = $300
• FBA Fees: 100 toys x $5 per toy (estimated FBA fee) = $500
• Advertising Fees: 15% of total revenue = $2,000 x 15% = $300

The total fees would be $300 (Referral Fees) + $500 (FBA Fees) + $300 (Advertising Fees) = $1,100.

Without considering manufacturing costs, your total profit would be $2,000 (Revenue) - $1,100 (Total Fees) = $900.

It's worth noting that this example is hypothetical and the actual fees may vary depending on various factors.


To sum up, Amazon takes over 50% of the revenue that sellers make on its platform. This fact may leave some feeling like Munch's "The Scream" painting.

Given these recent changes, there are a few options for sellers:

• Raising prices (although this may not be well-received by customers)
• Finding alternative ways to store and ship products (which may not be practical for everyone)
• Exploring other marketplaces, such as Walmart (which can be a cheaper alternative, but with fewer customers)
• Investing more in your brand to encourage direct purchases

How do you suggest dealing with these issues, and what steps are you taking to address them?

 

[Vegantech]

The recent increase in fees by Amazon prompted me to leave the marketplace already. The exorbitant charges they're imposing are unreasonable. It seems like you either have to fool your customers or give up on making any sales.

 

[Hippoon]

I wonder if this trend will eventually result in Amazon's downfall or at least create a more balanced competition in the market. I'm noticing an increasing number of reports about people abandoning the platform in favor of other alternatives.

 

[Poplec]

I'm pleased that Temu is expressing concerns about Amazon due to their exorbitant fees. Understanding how Amazon generates its revenue, it is now crucial for sellers and affiliates to free themselves from their dependency on Amazon.

Researching about Temu and its model reveals a surprising aspect: it offers a seamless and efficient way to generate income.

I strongly believe that innovative online sales platforms like Temu have the potential to eventually overthrow Amazon. While this transformation might not occur immediately, the signs of change are undoubtedly becoming more evident.

 

[XglossyAnn]

Indeed, the increasing competitiveness each year results from the influx of new sellers joining the platform, coupled with Amazon's price hikes. As a consequence, one must consider relinquishing their current product and instead seek out offerings that can better support and maintain their business.

 

[Idekania]

You are absolutely correct. The fees imposed by Amazon are exorbitant, posing significant challenges for sellers, particularly those who are just starting out. It's exceptionally difficult for new sellers to achieve profitability unless they already have a well-established brand. A considerable portion of their profits is often consumed by advertising expenses alone. If they fail to generate sufficient sales, they can incur losses rapidly. Additionally, the presence of numerous Chinese sellers makes it nearly impossible to raise prices, further exacerbating the situation.

 

[Birdstoc]

eBay sets a maximum transaction fee at 15%, and participating in dropshipping completely eliminates any potential risks associated with the transactions.