Saijo George

Curated by Saijo George

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friday31 Jul 2020

Amazon Collects 30%, on Average, of Each Sale Made by Independent Sellers on Its Site Up from 19% Five Years Ago

https://ilsr.org

Amazon’s dominance of online retail means that hundreds of thousands of small businesses must rely on its site to reach customers. In this report, they find that Amazon is exploiting its gatekeeper power to extract a growing cut of the revenue earned by these sellers. It’s doing this by imposing ever-larger fees on them. This tactic is hobbling sellers and often dooming their businesses. It’s also enabling Amazon to entrench its monopoly grip on e-commerce, while expanding its dominance into logistics and advertising.

Key Findings:

  • Amazon keeps an average of 30 percent of each sale made by independent sellers on its site, up from 19 percent just five years ago.
  • Seller fees netted Amazon almost $60 billion in 2019, nearly double the $35 billion in revenue from AWS, Amazon’s massive cloud computing division.
  • Since 2014, Amazon’s revenue from seller fees has grown almost twice as fast as its overall sales. Seller fees now account for 21 percent of Amazon’s total revenue.
  • Amazon is extracting more from sellers by tying their ability to generate sales on its site to their willingness to buy additional Amazon services, including its fulfillment and advertising services.
  • Amazon’s high fees make it nearly impossible for sellers to sustain a profitable business. Most fail. Yet Amazon has no risk of running out of sellers; its monopoly ensures there’s an endless stream of people, both here and abroad, willing to try.
  • and more
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Rama-Gudipudi

Rama Gudipudi Head of Audience Growth The Australian