The seller's expenses are getting higher and higher, contributing the largest revenue to Amazon?


Author:Blue Ocean Yiguan
Source: egainnews

Are cross-border information sellers paying more and more, contributing the largest revenue to Amazon?

On Amazon's entire website, 56% of the goods come from third-party sellers, who pay increasingly high fees to Amazon, and may have become the largest source of revenue for Amazon.

This year, Amazon sellers' expenses exceeded 120 billion dollars, doubling in two years

The local self-reliance association (ILSR), an American research institution, recently released the Amazon's Toll Road report.

The report shows that in 2014, the fees paid by third-party sellers to Amazon added up to an average of 19% of sales, and the proportion rose to 30% in 2018. Now,Seller expenses have accounted for 34% of sales.

Obviously, Amazon sellers' fees are getting higher and higher, contributing more and more revenue to Amazon.

According to the report of Amazon's Toll Road, Blue Ocean Yiguan also learned that,In just two years, Amazon's revenue from "seller fees" has more than doubledIn 2019, it will reach US $60 billion (about 53 billion euros), and in 2021, it will reach US $121 billion (about 107 billion dollars).

According to the report, today, Amazon's income from "seller fees" has exceeded the annual sales income of most large enterprises, including Bank of America, Facebook and P&G.

Previously, it was generally believed that Amazon's largest revenue came from Amazon Web Services (AWS). However, according to the data reported in Amazon's Toll Road, it is almost certain that the seller's fees contributed more revenue and profits to Amazon.

two thousand and twentyIn, the platform opened to third-party sellers made Amazon $24 billion(about 21 billion euros), which is a net profit, while AWS only contributed 13.5 billion dollars (about 11.9 billion euros) to Amazon.

However, ILSR said that the "net profit obtained through the platform" mentioned above is not just the seller's fees. Because Amazon's financial report combines the seller's fees with the revenue of other business departments, including Prime member subscription services, it is unclear how much profit the seller's fees contribute.

How does Amazon defend itself?

For ILSR's survey results and reports, an Amazon spokesman said it was "deliberately misleading" because the data provided by ILSR confused the seller's basic fees with the fees for optional services (such as Amazon FBA logistics and Amazon advertising).

Amazon said that for most products, the seller's fees only accounted for about 8% - 17% of the product price, and the station in the United States remains basically unchanged.

The author of Amazon's Toll Road said that althoughAmazon Salescommission(referral fee) has been stable, but the number of advertising sellers and sellers using Amazon FBA logistics has been increasing, which means that Amazon is getting more and more revenue from advertising and FBA logistics.

in fact,Now it seems to be a "must" to open stores on the Amazon platform, advertise and use FBA logistics

In the past, sellers could rely on good buyer ratings to make their products appear on the first page of search results. Now, it is necessary to open advertisements to show the listing of products to consumers.

Compared with 2016, if the seller wants to get the sales at that time, it will spend four times the advertising expenses now.

In addition, although FBA logistics is optional, it is actually "mandatory", because if Amazon logistics is not used, product listing will be "degraded" by Amazon algorithm, which is to reduce exposure, leading to loss of sales, and even a single order cannot be issued. Conversely, if FBA logistics is used, products are more likely to appear in important display locations.

Today,84% of the top sellers on Amazon platform use FBA logistics.

Can't sellers leave Amazon?

Blue Ocean Yiguan has learned that with Amazon FBA logistics, the seller's products are also eligible to provide "Amazon Prime free delivery" service, thus opening up more than 200 million worldwidePrimeMember consumer market.

Although most Prime members are in the United States, according to data from Kantar, a research organization, Prime members play an important role in Amazon's largest European sites.

More than half of British households and 46.4% of German households have registered Amazon Prime membership accounts.

Once consumers register as Amazon Prime members, they often regard Amazon as the first shopping platform they visit, or even the only one.

The potential market is so large that it is difficult for sellers to leave Amazon.

(New media of cross-border e-commerce - Domainnews Riley Huang)Coupang, Wayfair, Wal Mart, Mercado Libre and other platforms settled, brand copywriting planning, whole network promotion, e-commerce training and incubationPlease contact us for other services. No unauthorizedRewriting, reprinting, copying, clipping and editingIn whole or in part.

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