A recent study from Marketplace Pulse
reveals that the cost of selling on Amazon is higher than ever, surpassing 50% in combined fees. The study finds that the soaring costs can be attributed to Amazon’s “increased fulfillment fees” and “spending on advertising [becoming] unavoidable.”
This is a significant surge from five years ago, when Amazon’s take was roughly 40%. “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,” Juozas Kaziukėnas, founder of Marketplace Pulse, explains.
While Amazon transaction fees have remained unchanged for over a decade, its fulfillment fees have been growing steadily over the years, most notably rising by 30% in the past two years
. Since Amazon favors sellers using its proprietary fulfillment service, it’s extremely challenging for businesses to build success on the platform without it.
Amazon fees can be broken down into several categories:
- Amazon referral or transaction fee (8% – 15% depending on product category)
- Fulfillment by Amazon (FBA) fees (20% – 35%)
- Advertising fees (up to 15%)
Small business owners must increase their prices to stay profitable, which ultimately translates to customers partially covering Amazon’s expensive fees. Amazon penalizes sellers that offer lower prices on other channels, often forcing them to increase prices across all platforms.
The e-commerce giant also dedicates its most attractive screen space to ads, meaning that advertising is more of a necessity than an option for businesses selling on Amazon. With more businesses paying to get featured on its highest-converting spots, advertising prices have increased.
While it’s easy to blame the company for its pricing structure, the study points out that Amazon fees “pay for services that wouldn’t be free elsewhere either,” adding that competitor fulfillment services “are not always cheaper than FBA.” Still, nearly two million businesses are getting squeezed by Amazon’s ever-rising fees, making it hard to maintain healthy profit margins.
With Amazon’s final cut rising from 35% in 2016 to over 50% in 2022, more and more small businesses are turning to leading e-commerce website builders
. Selling on their own websites allows them to tailor the language, design, and CTA elements to their target audiences.