Here's How Much Amazon Takes From Every Third-Party Sale

https://www.msn.com/en-us/money/companies/heres-how-much-amazon-takes-from-every-third-party-sale/ar-AA17umSa

Here’s How Much Amazon Takes From Every Third-Party Sale

The Street by Tony Owusu - Feb 14th, 2023

Third-Party sellers are generating more revenue than ever on Amazon, but fees have been rising for the past five years at the same time, also.

Amazon (AMZN) is getting 50% of the revenue from every third-party sale on its platform, according to a new survey from Marketplace Pulse.


For those who don't want to leave the forums to read the full article

Sellers often end up paying the 15% referral fee (MP refers to this fee as a transaction fee), the 20-35% in Fulfillment by Amazon fees (which includes storage and other fees), and up to 15% for advertising and promotions on Amazon.

These totals represent an overall increase of 10% over the past five years.

While the cost of selling on Amazon has risen as a whole for sellers over the past five years, the 15% referral fee has been the same for over a decade, according to Market Pulse.

The estimates comes from profit and loss statements provided to the e-commerce market watcher by sellers.

The numbers presented in the study aren’t an “accurate depiction of the cost to sell on Amazon,” according to a company spokesperson.

“It is true that Amazon is investing more than ever in supporting the growth of our selling partners and helping them achieve a record [holiday] sales.”

Amazon reported third-party seller service revenue of $117.7 billion in fiscal 2022, according to FactSet. Seller service revenue represented 23% of Amazon’s total revenue – coming in second only to online store revenue that totaled 43% at $220 billion.

Products from third-party sellers represent nearly 60% of the units sold in Amazon’s store, according to the company.

“Sellers who choose to purchase optional logistics or advertising services from Amazon do so because they see incremental value to their business,” Amazon said.

The company says that Fulfillment by Amazon is on average 30% less expensive than standard shipping methods offered by other major third -party shipping partners, and 70% less expensive that “comparable two-day shipping alternatives.”

This is a point that MP concedes.

“Fulfillment services by 3PLs (third-party logistics companies) are not always cheaper than FBA. Amazon fees pay for a lot of value,” Market Pulse said.

But while the company claims that “many of our selling partners have built and run their business without advertising,” Marketplace Pulse says the Amazon ecosystem makes it nearly impossible to succeed without advertising.

“Advertising on Amazon is not optional. Most of the best-converting screen space is allocated to advertising; thus, sellers inevitably have to advertise to have a chance to be discovered,” according to MP.

“Every year, Amazon sellers pay more fees as a percentage of their sales. The increase is not a result of sellers using more services. The same services have gotten more expensive (FBA) or unavoidable (advertising).”

Amazon says that third part sellers are selling more than ever on its platform, so everyone must be winning in this equation.

But is this a case of a rising tide lifting all boats? Market Pulse doesn’t seem to think so, but it does see Amazon as a better alternative than the company’s rivals in some ways.

“Walmart, for example, is cheaper than Amazon, especially for new sellers for which it offers transaction fee discounts. But it’s also an order of magnitude smaller than Amazon,” the company says.


The bottom-line is sellers are selling more on Amazon, but the percentage of money they are taking home seems to be shrinking at the same time.

“Sometimes it’s only at the end of the tax year that they realize how little net profit they have left. A few sellers showed paying 60% and even 70% of their revenue to Amazon in fees. They still had to pay for inventory, freight, employees, and other expenses,” MP said.

Seems a tad excessive, to this Seller. What is your opinion on Amazon’s Seller fees?

Are Amazon fees excessive?
  • Absolutely outrageous!
  • A little bit high… But Sellers deserve it.
  • Amazon Seller fees seem reasonable to me.
  • No, not at all. In fact just like Federal taxes, I should be paying more!
  • I am not really in a position to make an informed decision.
0 voters
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Sorry for the “unlisting” of topic on post, I am experimenting with spam filtering!

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No worries! Didn’t really feel like a true Amazon Seller forum without getting flagged and repressed. Now it feels like just like the OSFE.

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I had the setting looking for anything (dot)com, and it’s only allowed to raise an alert, but I guess when it’s the first post it hides the post!

ANYWAY, I saw this article the other day but it was only posted by the street, and it was paywalled, so I didn’t post here.

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I think it’s a vague question

Compared to what?
The fees per se are not excessive, is the added costs (FBA, long storage, PPC, free exchange program) So I’ll go with option two, “sellers deserve it”, but not all sellers

Amazon fees remain competitive when compared with, for instance, the cost of bringing new customers to your own site. The cost of bringing a new buyer to your own e-store is astronomical (I’d estimate it to be several 100s bucks each). We are renting the buyers from Amazon, and Amazon brings plenty of buyers.

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They’re “only” getting 15% from me. I haven’t advertised in along time and don’t do FBA. They might get a tiny bit “extra” from not providing the full shipping discount they get, but since it is less than I would pay directly to UPS no big deal.

Sometimes it’s only at the end of the tax year that they realize how little net profit they have left

I have no pity on anyone who doesn’t figure out what their income/expenses are as they go. I can understand it is difficult in the beginning to know exactly what fees there are for those doing more than just FBM. They should be able to calculate the ballpark however.

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I don’t think it is too much because when we calculate the cost of additional employees in the regions we sell in to handle the distribution FBA does for us, and the cost of shipping for FBM, it all adds up to more than FBM.

Each time the conversation comes up, there are usually two camps, people who value their labor cost as $0 because they consider the time spent to be excess labor for a current employee, or their own time as a business owner. Then you have the other camp who calculates the cost of an employee who would not be hired if FBA were used.
We have done the math for years and to operate in any major metro area, it would be more expensive to have employees for FBM to replace FBA.

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It’s such a tricky question–even with 5 great options!–because “excessive” is relative to benefits, which vary across Sellers.

And many fees are voluntary, as in not required to sell on Amazon–though perhaps needed to be successful on Amazon, in a particular category or product.

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A bit pedantic don’t you think?

I :heart: it!

So many great insights from everyone!

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That’d be my middle name :wink:

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Indeed my first thought.

Closely followed by the thought that many sellers get little bang for the buck because they have no clue what they are doing, what they should be doing, and how they are doing.

How dare anyone lay claim to pedantic, my specialty

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Here is a genius on the NSFE who I expect will be complaining about fees

Need photos for listing

by Seller_Lw74cm5Kfx7XP4 minutes ago

I found a supplier abroad, now I just need the photos for the listing. He is unable to take any, but to ship out a sample would be almost $400 considering how big the product is. Would you recommend finding a photographer where the supplier is or order the samples and finding a photographer in the US.

Any help would be appreciated, thanks!

He is going to buy some crap from the far east without seeing it, or even a picture of it.

Here is another

https://sellercentral.amazon.com/seller-forums/discussions/t/ef41247b-abbf-4ecb-b7d1-b622ef1541d9

No one answered their questions yet, how sad. I would have answered, and guaranteed that I would have been pedantic

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Leaves me with a single pressing question…

are you stupid

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I don’t have an issue with the fees at all. I think it’s more than fair and a lot less than if we did it all ourselves.

The only thing I have an issue with is inventory limits and black hats.

Interesting to see how the new capacity limits affect everybody. On the surface it looks good but will it remain looking good in Sept - Jan. That’s the million dollar question. The bid for space thing will be a cash cow for FBA just like PPC is. Great idea by whomever came up with it.

We all know the desperados will bid just about anything for space in Q4. Thankfully our stuff is tiny so if we have to participate we will because SAS specifically told me that exceptions under this new program will no longer be possible so we may exit that program.

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The fees per se are not excessive, is the added costs (FBA, long storage, PPC, free exchange program)

This :arrow_up: :arrow_up:

I’m small potatoes - I don’t use FBA, and I don’t advertise, so my fees haven’t increased in any dramatic fashion. The biggest impact for me is with returns (too many, and always on my dime).

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Fees aren’t the real issue. The issue is debilitating red tape on expediting unnecessary hurdles on a platform that has made a genocidal amount of the backs of 3rd party sellers. In any competitive market, the house - any institution and organization - becomes a biological entity and struggles for primacy and hegemony in its domain - that is the natural course of things and everything that is within that ecosystem will be utilized by this organism - I honestly feel amazon is symbiotic in many ways - but often times, it operatives purely as a parasitic organism and that is the issue.

I doubt the way it is and keeping the above in mind - that its possible and I guess there are things like SAS to escalate issues but good god man.

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Expensive things like SAS that we are already questioning the value of. LOL

We’ll see…

I must say that I sleep a lot better knowing we have it if we need it but it’s an expensive insurance policy.

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console spend

I’d like to think I’m contributing :joy:

I guess I’m just sore.

Or at least a part of me is still sore and hasn’t healed yet. Gleam (not ream) from that what you will.

:smirk:

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Spent a few bucks ourselves (both accounts).

image

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