The downfall of Amazon $AMZN has started.
Investors and consumers need to know this very important fact about Amazon (Marketplace). They just dug their own grave. Third party sellers make up about 65% of the sales generated on Amazon and recently they did a dirty move to third sellers that will have many leaving the platform or raising prices so high that Amazon becomes uncompetitive to consumers. Amazon just announced/implemented two new double-dip fees that will crush third party sellers and that's not even an exaggeration.
The first fee which has been implemented already is an "inbound placement fee" which is a shipping fee Amazon tacks on to send inventory to Amazon "Prime" for Amazon FBA (fulfilled by Amazon). This fee has increased the shipping cost for third party sellers by 6-10x. For example, a seller sending a truckload of inventory (prior to this inbound placement fee) to Amazon traditionally spent about $600-$800, sometimes way more. Now on top of this they are charged with the inbound placement fee of about $3,000-$5,000.
This essentially wipes out a huge chunk, if not most, of the profit margin for a seller on Amazon. Add in the additional fees Amazon charges: 15% referral fee (just to list on their site), 8-15% fulfillment fee (FBA; picking, packing and delivery), storage fees (around $0.78 per cubic foot) and advertising costs (about 2-15% of the price of each good depending on the market).
The second fee which will take place in about a month is a "low inventory fee" which is a fee imposed by the Amazon algorithm when inventory is starting to run low at Amazon fulfillment centers. This fee can be anywhere from $0.32-$1.11 PER ITEM. The kicker is that the Amazon fulfillment center receiving process is a huge cluster fuck that can take 30+ days to inbound and check-in from when the Seller ships it. That is, if Amazon doesn't lose or damage the goods at the warehouse OR during delivery. $Amazon(AMZN.US$
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JDKDX2 : It says 24%, not 65%. Amazon Web Services is also working on establishing a Quantum Computing Service which helps researchers and developers use quantum computers and simulators to build quantum algorithms