Guntater
Regular Member
- Dec 1, 2021
- 395
- 418
Things are not looking so great for those interested in selling stuff on Amazon.
here's my loose recreation of Munch's Scream as a reaction to that).
The way I see it, with those recent changes on Amazon you can:
- As of today, Amazon takes 15% of what you make in sales + another 20-35% of the sale price for storage and shipment, which can really add up. Don't forget about advertising fees (up to 15% of the total fees).
- These fees have been steadily going up and let's not kid ourselves: using Amazon's storage and shipping service might as well be considered a requirement to do well on the platform. Those extra fees are not optional.
- Amazon stays afloat thanks to ads, so that's what you need to get eyes on your products. Otherwise you won't get seen.
- When you sum it all up, you'll understand how careful you need to be about how much you spend on ads so that you can get a good return on your investment.
Example
You're selling dog toys on Amazon, $20 per toy. Here's how the fees would break down:- Amazon takes a 15% referral fee on each sale, which would be $3 for each toy you sell.
- (FBA) Fulfillment by Amazon, so Amazon stores and ships your products. Those fees vary based on the size and weight, but let's say that it costs you $5 to store and ship each toy.
- Semi-mandatory advertisement to get your toys seen by customers. You opt to spend 15% of your total fees on it, which comes out to $1.80 for each toy you sell.
- 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
- Total Fees: $300 (Referral Fees) + $500 (FBA Fees) + $300 (Advertising Fees) = $1,100
Total Profit: $2,000 (Revenue) - $1,100 (Total Fees) = $900 - and that's without your manufacturing costs!
In conclusion,
Amazon gets over 50%
of what sellers make on the platform.
(Amazon gets over 50%
of what sellers make on the platform.
here's my loose recreation of Munch's Scream as a reaction to that).
The way I see it, with those recent changes on Amazon you can:
- Raise your prices (that's going to go well..)
- Find other ways to store and ship (not for everybody)
- Look elsewhere, e.g. Walmart (cheaper alternative, especially for new sellers, but there are fewer customers).
- Consider investing more in your brand to get some people to buy from you directly.
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