Are you an e-reader company that uses Amazon Warehouse to store and sell your products? If so, you’re in for a bit of bad news. Amazon has increased their commission from 40% five years ago to 50% today. This means that Amazon sellers are now paying more in fulfillment fees and advertising fees.
According to a study by Marketplace Pulse, this is the first time each sale has surpassed 50% in 2022. On average, Amazon sellers pay a 15% transaction fee, 20-35% in Fulfillment by Amazon fees (including storage and other fees), and up to 15% for advertising and promotions on Amazon. The total fees vary depending on the category, product price, size, weight, and the seller’s business model.
The 15% transaction fee has stayed the same for over a decade, but Fulfillment by Amazon (FBA) fees have steadily increased. Amazon has raised fulfillment fees every year and introduced increases in storage fees. This means that if you want to be successful on Amazon, you have to use FBA.
Amazon is dedicating more space on its site for advertising, which makes each spot less valuable according to Melissa Burdick, a former Amazon executive and president of Pacvue, an online marketing consulting firm. Conversion rates, which measure the number of shoppers who purchase a product after clicking an ad, declined each quarter last year.
“The advertising space on Amazon isn’t as successful as it used to be for sellers,” Burdick said. “A lot of sellers are choosing to offer discounts rather than advertise because shoppers are responding more to discounts.”
Juozas Kaziukenas, Marketplace Pulse’s founder and chief executive officer, said “For these small businesses, it’s getting harder and harder to be profitable because they are spending more and more money on Amazon fees. Amazon might be tempted to keep increasing fees because it’s in a tough spot, but you have to reach some kind of equilibrium.”
It’s clear that Amazon is making it increasingly difficult for e-reader companies to make a profit. With the commission rate now at 50%, it’s becoming harder and harder for these small businesses to compete with larger companies. What do you think about Amazon’s commission rate increase? Let us know in the comments!
