Amazon seller fees rise to 50%

Amazon’s average cut of a sale has climbed beyond 50% as logistics costs to retailers climb and the competition for sales increases the cost of advertising.

This is according to a new study by Marketplace Pulse, based on P&Ls provided to the research company over the course of five years. In response, many retailers are raising prices to maintain margin on the site. 

Why it matters

The cost of doing business is increasing: advertising has grown more expensive as have logistics. What’s interesting about this study is that Amazon’s marketplace continues to offer great scale, but one that comes at a cost.

This chimes not only with Amazon’s reported 23% currency adjusted ad revenue growth, reported in its latest earnings, but also data from the ANA in the US. It found that for many retail media buyers – Amazon being a key spend destination – it is more of a “have to buy” than a “want to buy” medium.

What it says

Amazon hasn’t changed its basic 15% transaction fee in over 10 years. Instead, it appears that fulfilment fees have risen steadily over the course of five years. It is nominally an optional cost, but it’s very difficult to be successful without it.

Advertising, meanwhile, is also optional, but the ad marketplace has become more expensive because of increased competition for space on the platform – though this varies quite a lot depending on category and brand maturity (it costs more for smaller brands to grow).

Compared to Walmart, this is expensive, but Walmart is far smaller internationally even if new sellers enjoy discounts on transaction fees.

Sourced from Marketplace Pulse, WARC 

[Image: Marketplace Pulse]