The Verge writes about "Amazon Toll Road, a report from the nonprofit Institute for Local Self-Reliance (ILSR), found that Amazon charged third-party sellers a total of $121 billion in fees this year alone. According to the report, written by ILSR co-director Stacy Mitchell, those fees — for things like advertising, referrals, and shipping — usually mean that small businesses lose money to Amazon; Mitchell said that in 2014, sellers paid Amazon $19 of every $100 in sales, and today, it’s more like $34 per $100 in sales.
"And, Amazon obscures the profit it makes from these small businesses in its financial reports, lumping it in with other less lucrative divisions 'because showing that they generate these profits from small businesses is not a good look,' Mitchell said."
These fees, the report suggests, subsidizes Amazon's low prices on some items and programs like Subscribe & Save that create a steady base of regular customers.
According to the story, "Brooke Oberwetter, an Amazon spokesperson, said in a statement emailed to The Verge that the ILSR report was 'intentionally misleading' and that it conflated Amazon’s selling fees with the cost of 'optional services' that some sellers purchase, like logistics and advertising. Those fees range from 8 to 17 percent of the selling price, Oberwetter said. 'These selling fees are highly competitive when compared to other selling options such as marketplaces like Walmart, Target, eBay, Etsy, and others, or direct-to-consumer via companies like Shopify and BigCommerce.'
"In addition, Oberwetter said, some Amazon third-party sellers buy its Fulfillment by Amazon logistics service, which she said offered fulfillment services 30 percent cheaper than other logistics providers, as well as faster shipping."
- KC's View:
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I can understand why, if this is true, third party vendors would be upset with this.
But isn't this what every retailer does - subsidize low prices in some segments and categories with higher prices elsewhere?
