July 2024
Amazon.com and its myriad of associated entities is making a mockery of U.S. Anti Trust laws and the U.S. government appears to be unwilling or incapable of dealing with the monster.
Dana Mattioli has been a long-standing investigative journalist at The Wall Street Journal focussing on all things Amazon. She published a book “The Everything War” (ISBN 9781911709565 hb) in April this year which describes Amazon’s ongoing dubious corporate antics in fine detail.
The book should be of particular interest to anyone selling their products via Amazon.com or contemplating doing so. The following is a very brief extract based on passages from the book.
When it comes to the millions of small and medium sized sellers which Amazon touts, a large percentage report being unhappy with their relationship with Amazon, feeling stuck on a hamster wheel. Their gripes run the gamut. For one, the amount of fees Amazon charges sellers to use its platform has exploded in recent years, shrinking seller’s profits and forcing them to raise their prices in order to cover their costs to sell on amazon.com. In 2023, Amazon took 45% of every third-party sale on Amazon according to research from the anti-monopoly group, the Institute for Local Reliance which also noted that Amazon’s 45% take was up from 19% in 2014. The fees Amazon sellers pay, range from a commission (often 15%), a shipping fee for inclusion in Amazon’s Fulfilment by Amazon program (FBA) and advertising costs. Sellers say that they feel they have no choice but to enrol in the FBA program so that they can be eligible for Amazon Prime shipping and that advertising is necessary in order to succeed on the platform.
According to a Marketplace Pulse report, using Amazon’s FBA (logistics) program to fulfill and ship orders is all but absolutely required in order for sellers to be successful. Fulfilment by Amazon (FBA) fees have be increased every year along with increases in storage fees. In 2022 Amazon reported that independent sellers on Amazon’s US online store sold an average of 7,800 items per minute.
Jeff Bezos - CEO of Amazon.com
Amazon’s Prime program has two hundred million members worldwide who pay a fee to get unlimited fast shipping etc and because it is so popular with Amazon customers, many third party sellers feel they can’t afford not to enrol in Amazon’s logistics program. Having a Prime badge can triple a seller’s sales on Amazon. One seller commented “there is a ramification for not using FBA, it impacts your searchability and impacts your Buy Box opportunities because FBA trumps everything when it comes to Buy Box.” Sellers say that success on Amazon is also predicated on buying advertising from the company. Because of the explosion in fees, sellers complain that their margins have become so small that they’ve been forced to raise prices of items they sell on Amazon in order to offset them. Another seller reported that despite generating US$10 million revenue a year in sales on Amazon, he pays Amazon US$1.5 million per year in commissions and another US$1.5 million for advertising on Amazon’s site.
A report by the American Booksellers Association in 2018 included an estimate that Amazon’s activity had resulted in a net loss of 700,000 retail jobs in the U.S.