Is Amazon gouging its marketplace sellers?
More than half the sales made on Amazon.com go through its marketplace sellers and the company wastes precious few opportunities to let the world know just how successful these third parties have been on its platform. A new report, however, claims that Amazon has continued to increase the fees it charges the independent sellers on its platform to the point where the corporate giant’s cut now accounts for more than a third of each sale.
The report from the non-profit Institute for Local Self-Reliance (ILSR) asserts that the Amazon system may give the company access to the broadest audience but that all too frequently it is not enough to support third-party sellers who ultimately fail.
ILSR’s report claims the revenues Amazon charges third-party sellers is growing at a faster rate than other revenue sources at the company, including its lucrative AWS cloud business. The report describes Amazon as “operating an unregulated, monopoly tollbooth” generating profits that the company “conceals” within its financial statements.
Amazon, according to ILSR, has gone from taking an average of 19 percent of each sale in 2014 to 34 percent today. The company has explained this in the past by saying that sellers have increasingly taken advantage of services such as Fulfillment by Amazon, which warehouses and fulfills orders for marketplace sellers.
The ILSR report does not compare the fees that Amazon charges to those offered for similar services from a wide range of companies such as Radial, Shopify and Walmart.
In many ways, Walmart has sought to put its own spin on Amazon-like services like a deal this summer with Adobe Commerce to make elements of its online and in-store fulfillment and pickup technology available to sellers on its marketplace.
Walmart has also launched its GoLocal service to provide last-mile deliveries for other businesses across the U.S. The white label service uses third-party drivers to handle orders. Walmart has promised competitive pricing for both national clients and local independent businesses. Home Depot was the first major retailer to announce it would make use of the service.
[RetailWire has reached out to Amazon and third-party sellers on its marketplace for comment. It will update this report if responses are forthcoming.]
- New Report: Amazon’s Toll Road – Institute for Local Self-Reliance
- Will smaller retailers pay to use Walmart’s tech and transform their own businesses? – RetailWire
- Do new Shipt and Walmart programs signal big changes to come in the retail delivery market? – RetailWire
- Are Amazon’s ‘warrant’ partnering deals monopolistic? – RetailWire
- Will marketplace sellers carry the Prime Day for Amazon? – RetailWire
- Amazon marketplace sellers are becoming retail giants – RetailWire
- Why is Amazon footing the bill for defective products sold by marketplace sellers? – RetailWire
DISCUSSION QUESTIONS: Does the Institute for Local Self-Reliance’s report paint an accurate picture of the dynamics between Amazon.com and third-party sellers on the site? Do you think the majority of Marketplace sellers get a fair exchange of fees and services from Amazon?