Amazon will now receive a 50% commission per sale from e-reader manufacturers
Companies that sell e-readers and use an Amazon Warehouse to store and sell their products on Amazon will now have to pay more. It has increased from 40% five years ago to 50% today thanks to Amazon. Due to Amazon’s increased advertising and fulfillment fees, Amazon sellers are paying more. A Marketplace Pulse study that sampled seller transactions from 2016 to 2022 found that this is the first time that each sale exceeded 50% in 2022.
A typical Amazon seller pays a transaction fee of 15%, 20-35% in fees for Fulfillment by Amazon (including storage and other fees), and up to 15% in fees for Amazon advertising and promotions. The category, price, size, and weight of the product, as well as the seller’s business model, all affect the total fees.
Over the past ten years, the 15% transaction fee has not changed. It can be as low as 8% and varies by category. Fees for using Fulfillment by Amazon (FBA) have risen steadily. Amazon has introduced annual fee increases for storage and fulfillment. Since FBA is required to sell on Amazon, it is uncommon for sellers to succeed without it.
According to Melissa Burdick, a former Amazon executive who is now president of Pacvue, an online marketing consulting firm, Amazon is dedicating more space on its website to advertising, which not only gives the company more space to sell products but also lowers the value of each advertising spot. She said that conversion rates, which measure the number of people who buy a product after clicking on an advertisement, decreased 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, the founder and chief executive officer of Marketplace Pulse, stated, “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.”