Amazon hiking fees, sellers upset

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Amazon sells book. They do it exceedingly well. Buying on Amazon = a (usual) fun experience. But…

On the other side of the equation are the people who stock Amazon with its many products.

But a series of fee hikes over the past year and a half have alienated many merchants, and some are threatening to defect.

“If they increase fees too much, some sellers will decide to not sell there anymore,” said Niraj Shah, chief executive of furniture retailer Wayfair, which uses Amazon, eBay and Wal-Mart’s online marketplaces, as well as its own websites.

“That’s against Amazon’s plan, which is to get as much selection as possible on their site,” Shah added. “The vast majority of Amazon sellers are perfectly happy to go to any marketplace offering meaningful volume.”

Electronics were particularly hard hit.

Another, in August, complained about higher fees for selling electronic accessories that were due to kick in early this year: “Holy crap! 8% to 15%?! Goodbye good deals from 3rd party sellers on Amazon in the electronics section.”

A third ranted in August about higher costs for shipping products to multiple Amazon warehouses. “Amazon just pulled a fast one,” the seller wrote. “Now that Amazon has all the power, they’re imposing increased fee hikes to all those cozy sellers who have supported Amazon since Day 1.”

The complaints became so raucous last year that the company took the forums down and re-launched them. The new forums let sellers give each other ratings for their posts – a move that some sellers viewed as a way to reduce extreme complaints.

Storage fees are going up as well.

When Amazon introduced a new long-term storage fee for items that sit in its warehouses more than a year, some sellers elected to have the company destroy their unsold inventory as it was cheaper than getting the items shipped back to them.

Kat Simpson, a third-party merchant who also trains others how to sell on Amazon, said the company charges her 50 cents per item to return unsold inventory from its warehouses but just 15 cents per item to destroy it, she said.

“I would have said everybody needed to try FBA last year. Now I would say no,” she said. “If you are selling items under $25, you won’t do as well on Amazon as on eBay profit wise.”

Check out these numbers:

It costs $3.92 to sell a $10 item on Amazon and $2.72 on eBay, according to Bill Vogel of The Cumberland Companies, which sells on both. But eBay takes more time and most merchants store inventory themselves, adding other costs, he noted.

Other companies are stepping into the fray.

Wal-Mart’s marketplace now features just six merchants: Wayfair, Plumstruck, eBags, ProTeam, ToolKing and Shoebuy. Spokesman Dan Toporek said the world’s largest retailer is trying to expand available products and it “is a key component of that strategy to accelerate the growth.”

Google may be the bigger threat. It already owns most of the necessary pieces, such as product search, listings and a payment service — it just hasn’t combined them yet.

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  • Laura

    Thanks for a great article, Beth. This is helpful for those who are considering selling their products online, no matter what marketplace they choose to do it with.

    • Beth

      Thanks, Laura. It’s amazing how thin profit margins can get. I just read an amazing story about how much money an Amazon bestseller netted. I’ll have to post it.