#Amazon fees

[anniewilliams098]

Understanding Amazon Fees and Their Impact on Profitability

Selling on Amazon offers immense opportunities, but it also comes with a complex structure of fees that can significantly impact your bottom line. Understanding these fees is crucial for maintaining profitability, especially for Fulfillment by Amazon (FBA) sellers. If you’re not factoring in the full cost of doing business on Amazon, you could be overestimating your profits or, worse, operating at a loss without even realizing it.

Types of Amazon Fees

There are several key categories of fees that every Amazon seller should be aware of. The first is the referral fee, which Amazon charges for every item sold. This fee varies by category but generally ranges from 8% to 15% of the item’s sale price. For example, electronics might have a lower referral fee, while categories like jewelry and clothing can be on the higher end.

Next, FBA sellers must account for fulfillment fees. These fees cover the cost of storing, picking, packing, and shipping products from Amazon’s warehouses. The amount charged depends on the product's size and weight. In addition, Amazon charges monthly storage fees based on the amount of inventory stored in their fulfillment centers, with higher rates during peak seasons such as Q4.

Other potential charges include long-term storage fees, returns processing fees, and unplanned service fees if your inventory doesn’t meet Amazon’s standards. While these fees may seem small individually, they can add up quickly, especially for sellers managing a high volume of products.

The Impact on Profit Margins

All these fees directly affect your profit margins. Sellers often price products based on competitive market rates without fully accounting for these deductions. As a result, an item that appears profitable on the surface may yield very slim margins after Amazon takes its share.

For example, a $30 product with a 15% referral fee ($4.50), a $4 FBA fee, and a $1.50 storage cost will leave the seller with $20 before deducting the cost of goods sold (COGS), advertising, and other business expenses. After accounting for all costs, your actual profit could be only a few dollars—or even negative if costs rise unexpectedly.

Why Fee Monitoring Matters

Consistently monitoring and reviewing your Amazon fees helps you identify profit drains and make smarter pricing or inventory decisions. For instance, if a product is incurring high storage fees due to slow turnover, it may be time to lower the price or run a promotion to move inventory. Understanding the real cost of returns, which includes not just refunds but also return processing fees and lost inventory value, can also help you revise your return policies or improve product listings.

Get Professional Help from an Amazon Seller Accountant

Navigating these fees and optimizing profitability can be overwhelming, especially as your business scales. An experienced Amazon seller accountant can provide essential support by breaking down fee structures, categorizing costs properly, and helping you analyze margins per SKU. They can also guide you in setting up accounting systems that track fees accurately and help you avoid common financial pitfalls.

Conclusion

Amazon’s fee structure plays a major role in your profitability. By understanding each type of fee and how it affects your margins, you can make more strategic decisions about pricing, inventory, and operations. With the support of a knowledgeable Amazon seller accountant, you’ll be better positioned to build a profitable, sustainable business in today’s competitive eCommerce landscape.

[mostlysignssomeportents]

Amazon’s financial shell game let it create an “impossible” monopoly

I'm on tour with my new, nationally bestselling novel The Bezzle! Catch me in TUCSON (Mar 9-10), then San Francisco (Mar 13), Anaheim, and more!

For the pro-monopoly crowd that absolutely dominated antitrust law from the Carter administration until 2020, Amazon presents a genuinely puzzling paradox: the company's monopoly power was never supposed to emerge, and if it did, it should have crumbled immediately.

Pro-monopoly economists embody Ely Devons's famous aphorism that "If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, ‘What would I do if I were a horse?’":

https://pluralistic.net/2022/10/27/economism/#what-would-i-do-if-i-were-a-horse

Rather than using the way the world actually works as their starting point for how to think about it, they build elaborate models out of abstract principles like "rational actors." The resulting mathematical models are so abstractly elegant that it's easy to forget that they're just imaginative exercises, disconnected from reality:

https://pluralistic.net/2023/04/03/all-models-are-wrong/#some-are-useful

These models predicted that it would be impossible for Amazon to attain monopoly power. Even if they became a monopoly – in the sense of dominating sales of various kinds of goods – the company still wouldn't get monopoly power.

For example, if Amazon tried to take over a category by selling goods below cost ("predatory pricing"), then rivals could just wait until the company got tired of losing money and put prices back up, and then those rivals could go back to competing. And if Amazon tried to keep the loss-leader going indefinitely by "cross-subsidizing" the losses with high-margin profits from some other part of its business, rivals could sell those high margin goods at a lower margin, which would lure away Amazon customers and cut the supply lines for the price war it was fighting with its discounted products.

That's what the model predicted, but it's not what happened in the real world. In the real world, Amazon was able use its access to the capital markets to embark on scorched-earth predatory pricing campaigns. When diapers.com refused to sell out to Amazon, the company casually committed $100m to selling diapers below cost. Diapers.com went bust, Amazon bought it for pennies on the dollar and shut it down:

https://www.theverge.com/2019/5/13/18563379/amazon-predatory-pricing-antitrust-law

Investors got the message: don't compete with Amazon. They can remain predatory longer than you can remain solvent.

Now, not everyone shared the antitrust establishment's confidence that Amazon couldn't create a durable monopoly with market power. In 2017, Lina Khan – then a third year law student – published "Amazon's Antitrust Paradox," a landmark paper arguing that Amazon had all the tools it needed to amass monopoly power:

https://www.yalelawjournal.org/note/amazons-antitrust-paradox

Today, Khan is chair of the FTC, and has brought a case against Amazon that builds on some of the theories from that paper. One outcome of that suit is an unprecedented look at Amazon's internal operations. But, as the Institute for Local Self-Reliance's Stacy Mitchell describes in a piece for The Atlantic, key pieces of information have been totally redacted in the court exhibits:

https://www.theatlantic.com/ideas/archive/2024/02/amazon-profits-antitrust-ftc/677580/

The most important missing datum: how much money Amazon makes from each of its lines of business. Amazon's own story is that it basically breaks even on its retail operation, and keeps the whole business afloat with profits from its AWS cloud computing division. This is an important narrative, because if it's true, then Amazon can't be forcing up retail prices, which is the crux of the FTC's case against the company.

Here's what we know for sure about Amazon's retail business. First: merchants can't live without Amazon. The majority of US households have Prime, and 90% of Prime households start their ecommerce searches on Amazon; if they find what they're looking for, they buy it and stop. Thus, merchants who don't sell on Amazon just don't sell. This is called "monopsony power" and it's a lot easier to maintain than monopoly power. For most manufacturers, a 10% overnight drop in sales is a catastrophe, so a retailer that commands even a 10% market-share can extract huge concessions from its suppliers. Amazon's share of most categories of goods is a lot higher than 10%!

What kind of monopsony power does Amazon wield? Well, for one thing, it is able to levy a huge tax on its sellers. Add up all the junk-fees Amazon charges its platform sellers and it comes out to 45-51%:

https://pluralistic.net/2023/04/25/greedflation/#commissar-bezos

Competitive businesses just don't have 45% margins! No one can afford to kick that much back to Amazon. What is a merchant to do? Sell on Amazon and you lose money on every sale. Don't sell on Amazon and you don't get any business.

The only answer: raise prices on Amazon. After all, Prime customers – the majority of Amazon's retail business – don't shop for competitive prices. If Amazon wants a 45% vig, you can raise your Amazon prices by a third and just about break even.

But Amazon is wise to that: they have a "most favored nation" rule that punishes suppliers who sell goods more cheaply in rival stores, or even on their own site. The punishments vary, from banishing your products to page ten million of search-results to simply kicking you off the platform. With publishers, Amazon reserves the right to lower the prices they set when listing their books, to match the lowest price on the web, and paying publishers less for each sale.

That means that suppliers who sell on Amazon (which is anyone who wants to stay in business) have to dramatically hike their prices on Amazon, and when they do, they also have to hike their prices everywhere else (no wonder Prime customers don't bother to search elsewhere for a better deal!).

Now, Amazon says this is all wrong. That 45-51% vig they claim from business customers is barely enough to break even. The company's profits – they insist – come from selling AWS cloud service. The retail operation is just a public service they provide to us with cross-subsidy from those fat AWS margins.

This is a hell of a claim. Last year, Amazon raked in $130 billion in seller fees. In other words: they booked more revenue from junk fees than Bank of America made through its whole operation. Amazon's junk fees add up to more than all of Meta's revenues:

https://s2.q4cdn.com/299287126/files/doc_financials/2023/q4/AMZN-Q4-2023-Earnings-Release.pdf

Amazon claims that none of this is profit – it's just covering their operating expenses. According to Amazon, its non-AWS units combined have a one percent profit margin.

Now, this is an eye-popping claim indeed. Amazon is a public company, which means that it has to make thorough quarterly and annual financial disclosures breaking down its profit and loss. You'd think that somewhere in those disclosures, we'd find some details.

You'd think so, but you'd be wrong. Amazon's disclosures do not break out profits and losses by segment. SEC rules actually require the company to make these per-segment disclosures:

https://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=3524&context=lawreview#:~:text=If%20a%20company%20has%20more,income%20taxes%20and%20extraordinary%20items.

That rule was enacted in 1966, out of concern that companies could use cross-subsidies to fund predatory pricing and other anticompetitive practices. But over the years, the SEC just…stopped enforcing the rule. Companies have "near total managerial discretion" to lump business units together and group their profits and losses in bloated, undifferentiated balance-sheet items:

https://www.ucl.ac.uk/bartlett/public-purpose/publications/2021/dec/crouching-tiger-hidden-dragons

As Mitchell points you, it's not just Amazon that flouts this rule. We don't know how much money Google makes on Youtube, or how much Apple makes from the App Store (Apple told a federal judge that this number doesn't exist). Warren Buffett – with significant interest in hundreds of companies across dozens of markets – only breaks out seven segments of profit-and-loss for Berkshire Hathaway.

Recall that there is one category of data from the FTC's antitrust case against Amazon that has been completely redacted. One guess which category that is! Yup, the profit-and-loss for its retail operation and other lines of business.

These redactions are the judge's fault, but the real fault lies with the SEC. Amazon is a public company. In exchange for access to the capital markets, it owes the public certain disclosures, which are set out in the SEC's rulebook. The SEC lets Amazon – and other gigantic companies – get away with a degree of secrecy that should disqualify it from offering stock to the public. As Mitchell says, SEC chairman Gary Gensler should adopt "new rules that more concretely define what qualifies as a segment and remove the discretion given to executives."

Amazon is the poster-child for monopoly run amok. As Yanis Varoufakis writes in Technofeudalism, Amazon has actually become a post-capitalist enterprise. Amazon doesn't make profits (money derived from selling goods); it makes rents (money charged to people who are seeking to make a profit):

https://pluralistic.net/2023/09/28/cloudalists/#cloud-capital

Profits are the defining characteristic of a capitalist economy; rents are the defining characteristic of feudalism. Amazon looks like a bazaar where thousands of merchants offer goods for sale to the public, but look harder and you discover that all those stallholders are totally controlled by Amazon. Amazon decides what goods they can sell, how much they cost, and whether a customer ever sees them. And then Amazon takes $0.45-51 out of every dollar. Amazon's "marketplace" isn't like a flea market, it's more like the interconnected shops on Disneyland's Main Street, USA: the sign over the door might say "20th Century Music Company" or "Emporium," but they're all just one store, run by one company.

And because Amazon has so much control over its sellers, it is able to exercise power over its buyers. Amazon's search results push down the best deals on the platform and promote results from more expensive, lower-quality items whose sellers have paid a fortune for an "ad" (not really an ad, but rather the top spot in search listings):

https://pluralistic.net/2023/11/29/aethelred-the-unready/#not-one-penny-for-tribute

This is "Amazon's pricing paradox." Amazon can claim that it offers low-priced, high-quality goods on the platform, but it makes $38b/year pushing those good deals way, way down in its search results. The top result for your Amazon search averages 29% more expensive than the best deal Amazon offers. Buy something from those first four spots and you'll pay a 25% premium. On average, you need to pick the seventeenth item on the search results page to get the best deal:

https://scholarship.law.bu.edu/faculty_scholarship/3645/

For 40 years, pro-monopoly economists claimed that it would be impossible for Amazon to attain monopoly power over buyers and sellers. Today, Amazon exercises that power so thoroughly that its junk-fee revenues alone exceed the total revenues of Bank of America. Amazon's story – that these fees barely stretch to covering its costs – assumes a nearly inconceivable level of credulity in its audience. Regrettably – for the human race – there is a cohort of senior, highly respected economists who possess this degree of credulity and more.

Of course, there's an easy way to settle the argument: Amazon could just comply with SEC regs and break out its P&L for its e-commerce operation. I assure you, they're not hiding this data because they think you'll be pleasantly surprised when they do and they don't want to spoil the moment.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/03/01/managerial-discretion/#junk-fees

Image: Doc Searls (modified) https://www.flickr.com/photos/docsearls/4863121221/

CC BY 2.0 https://creativecommons.org/licenses/by/2.0/

[whirling-ghost]

i don't want next day delivery. i want the things i need picked by someone working a living wage and delivered in the least environmentally destructive way by a driver who also gets paid fairly and who has time for bathroom breaks

[jordanrosenburg]

I just need to rant for a second because I'm so aggravated. Amazon Prime is $139 annually or $14.99 monthly. It used to only be like $100 annually, or $50 annually if you were a student. I do the $139 annual charge because it's actually cheaper overall than the monthly plan. (14.99 x 12 = 179.88) A lot of services are cheaper annually. But most people see the "lower" monthly fee and figure that's more manageable.

Amazon Prime Video is one of the "perks" of having an AP premium membership. The movies and tv shows on there don't have commercials, rightfully so. However, subscribers will soon start seeing ads unless they want to pay an extra $2.99 a month. So, for those monthly folks, that's now $17.98 a month. FOR WHAT?!

"We are writing to you today about an upcoming change to your Prime Video experience. Starting January 29, Prime Video movies and TV shows will include limited advertisements. This will allow us to continue investing in compelling content and keep increasing that investment over a long period of time. We aim to have meaningfully fewer ads than linear TV and other streaming TV providers. No action is required from you, and there is no change to the current price of your Prime membership. We will also offer a new ad-free option for an additional $2.99 per month*..."

That's funny because, they cancelled The Wilds after 2 seasons. (Netflix does the same thing! And Netflix just very sneakily got rid of their $7.99 a month low-res option. So now if you don't want to pay $11.99 a month which is the new "basic" plan, you have to pay for ads.)

"Access to exclusive and broad streaming video content (including Prime Video exclusives like The Lord of the Rings: The Rings of Power, The Boys, Tom Clancy's Jack Ryan, Citadel, The Wheel of Time, Reacher, and The Summer I Turned Pretty, as well as blockbuster movies such as Air, Creed III, Dungeons & Dragons, Candy Cane Lane with Eddie Murphy, and exclusive live sports including NFL Thursday Night Football). Access to Prime Video Channels, which provides an unmatched selection of subscription channels like Max, Paramount+ with SHOWTIME, BET+, MGM+, ViX+, Crunchyroll, PBS KIDS, NBA League Pass, MLB.TV, and STARZ—with no extra apps to download, and no cable required. Customers only pay for the ones they want, and can cancel anytime."

All of those "channels" are extra costs. And they're saying this as if you can't just download the apps to your TV as if everyone only has firesticks or Amazon TVs these days nowadays.

And also, what if I don't like any of the original programming? What if I didn't care about football? All of the original programming I was invested in, was cancelled! I'm hoping The Summer I Turned Pretty doesn't get cancelled after the third season, but who knows?!

And what's different with APV as opposed to other streaming services is that this is just included with AP. This isn't something you can opt out of to save money. So, you may as well use it, right? What aggravates me the most is the fact that when I go to search for something, it'll either say, "Video not available, watch with [insert extra channel I'd need to pay for here], rent for $x.xx, or buy for $x.xx". I SHOULDN'T HAVE TO PAY EXTRA TO WATCH SOMETHING ON A SERVICE I ALREADY PAY FOR! NOR SHOULD I HAVE TO DOWNLOAD ANOTHER APP OR CHANNEL THAT ALSO REQUIRES PAYMENT.

I am so sick of having to surf between Hulu, Netflix, APV, MAX, Paramount+, Peacock, Apple TV, or Disney+. My Hulu is included in my Spotify because I was grandfathered into that option, so I don't pay extra for Hulu. However, I can't watch everything on Hulu unless I want to pay for the Hulu Live option which is $76.99 a month WITH ADS! So, between paying that or $10.99 for my Spotify/Hulu plan, yeah, I'm gonna keep the $10.99 a month plan. With Hulu Live, you still have the issue of not being able to watch everything you want to watch! There are still movies and TV shows that are unavailable. And I'm not talking about original content. I'm talking about if I have the urge to watch an old movie or binge an old TV show, I should be able to do that without flipping between services or having to pay extra!

I'm aware that rights and ownership come into play here. I know these services have to pay the networks to be able to stream certain shows. However, Amazon is a multi-BILLION dollar company. I think they can afford to eat the cost. They wonder why piracy is still a thing. How could it not be? All of this costs so much money and you still can't watch the things you want to watch!

People turned to streaming services so they could go ad-free and to save money on cable. Now, it all costs the same, even more, as cable depending on how many services you're paying for.

I also think APV is pulling this bullshit as a punishment for the strikes. "We lost so much money because the writers and actors were gone for so long, so now we need to make up for that lost time and also we have to cancel certain shows because they take months to put together and cost so much to film. So now we have to raise our prices so we can try to salvage what we can afford to do." That's essentially the message they're sending.

Amazon has generated approximately $553.7 billion in revenue over the last year. So, this is clearly just the usual corporate greed. Breaking even isn't an option anymore. Every quarter, every year needs to make more money than the last. Meanwhile, Amazon treats their warehouse workers like garbage. (I hope the workers keep unionizing because they literally keep the world running. We're able to get just about anything delivered same day or overnight because of the warehouse workers and drivers.)

The writers went on strike because they were being run ragged and so were the actors. When you have a speedy three month production, that means those people need to find other jobs for the other months of the year. That's why the next season would take a year to make because people found other jobs, so they needed to work around those schedules. And that's not to say some writers and actors and behind the camera workers aren't working multiple jobs at the same time, because they are, but this creates more and more time conflicts. They weren't, and probably still aren't, paying these people enough. So, now that things have been renegotiated, the streaming services are upping their fees for bullshit reasons all because they legally have to pay their workers more and god forbid they don't turn a billion dollar profit.

It costs more money to market towards new subscribers than it does to maintain the ones you already have. But who am I to say anything?

[indiesellersguild]

Our Statement to the US Federal Trade Commission

Below the embedded link, you will find the preamble from the article in question and a small excerpt from the statement itself.

You are encouraged to go here and share your own comment with the FTC regarding restrictions on unfair and deceptive fees. The deadline to do so is January 8th.

To everyone who joined our discussion on the FTC’s proposed “Junk Fee” rule, thank you! We drafted a statement summarizing the experiences of our members, and submitted it to the FTC this morning. Continue scrolling to read it. We also encourage each and every one of our members to submit your own comment. The FTC would appreciate comments with specific examples on how unfair or deceptive fees affect specific types of creative businesses. Deadline for public comments is next Monday – January 8th, 2024.

[coffeeworldsasaki]

CLOTH FOR PUNCH NEEDLE ON THE WEBSITE I BUY YARN ON 🎉

[epicwolfofdarkness]

Me: *sees people posting about the Goosebumps 2023 novelisation already*

Also me: *cries because it's not available here until the 10th*

[inventorymanagementsystem]

In the competitive world of Amazon, securing the Buy Box is a vital step in increasing sales. The Buy Box is the section on a product detail page where customers can begin the purchasing process by adding items to their cart. Winning the Buy Box can significantly enhance your sales and visibility.

[mellow-sandwich]

I connect to WiFi with this thing once in a blue moon and what happens? My side-loaded books disappear from my library and then this ad shows up on my lock screen. I will not ‘discover’ whatever drivel “BookTok” decides they’re infatuated with at any point in time.

[zehecatl]

every time i see an 'use this instead of amazon' i just

okay is this available literally anywhere outside of america. is this easily available in europe. or are you once again just assuming everyone on the internet is in america

[dailyfinancial]

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[anniewilliams098]

How To Calculate And Optimize Amazon FBA Storage Fees?

Amazon FBA storage fees can significantly impact your bottom line if not closely monitored. Understanding how these fees are calculated and implementing strategies to reduce them is crucial for long-term success. Consulting with an Amazon FBA accountant can provide deeper insights into your financials and help you build a leaner, more profitable inventory strategy.

[fatpinkbitch]

I'm glad it's not just me that noticed! I'm not HOH/deaf but I rely on them when my auditory processing issues are really acting up. That being said, it's not Neil's fault, and it seems like they've been autogenerated- some of the bits I've noticed are wrong on my second watch are the kinds of mistakes autogenerated captions would make, rather than human error- for example characters names being wrong "Shacks" instead of Shax and "Fufu" instead of Furfur, which I'm assuming wouldn't have happened if someone who knew the characters names (as you would hope someone writing captions would) created them. I've noticed a lot of Youtube autogenerated captions and Instagram ones make similar mistakes. Here's hoping if we get a DVD/Blu-ray release they'll be done by an actual human being!

Do you know anything about why the subtitles for Good Omens 2 were so poorly done/inaccurate?

I don't know. Probably I won't know, at least as long as I'm on strike.

This probably happened because I'm on strike. On S1 I checked the closed captions that the BBC made and I checked the scripts that went out to foreign countries to be dubbed or subbed. For S2, Amazon did that stuff directly, and I was on strike and unable to do a final check and correct it.

Having said that, whoever does the captions is meant to refer to the scripts, so I don't understand why they were so off. I feel guilty, because it shouldn't have happened: it's not fair on the hard of hearing or anyone relying on the closed captions for aid. Nobody relying on the closed captions knows about Mrs Sandwich's hatpin, for example, or knows that Shax brought Crowley's mail to the bookshop, or that the first Doctor Who Annual was cover-dated 1966.

I very much hope it will be corrected soon.

[indiesellersguild]

Etsy needs to stop treating its sellers like Amazon distribution centers.

[akings]

The Modern World is Bonkers, and I’ve Had Enough

By a thoroughly fed-up citizen with a decent grasp of reality… Sort of. Our neighborhood is the kind of place where you’d half expect to see a watercolor painter on every corner. It’s peaceful, leafy, and delightfully boring in the best way—until, that is, some cretin in a beat up car comes barreling down the main road and flings a McFlurry cup out of the window like he’s trying to win an…

[grobyna]

Amazon is one of the most successful businesses in history because it is so widely used and convenient. And it gives a lot of opportunities to people via jobs as drivers and postmen.

But it is still a multi-billionaire company that survives on the labor of underpaid workers and the mass burning of fossil fuels and deforestation. So please please, if you have the option of getting something in person, or ordering it online via Amazon, go get it in person!

I just did it! And I plan on doing it again and again!