I think that the biggest source of income for Amazon is AWS (Amazon Web Services). According to the latest survey of the US NPO "Institute for Local Self-Reliance (ILSR)", the leading role has been replaced by the store opening fee.
Fee income doubles in 2 years
The graph above shows the growth in fees that Amazon collects from sellers. As you can see, it has skyrocketed from 19% in 2014 to 30% in 2018 and 34% this year.
Fee revenues have grown faster than any other Amazon business unit in the last few years, doubling in two years, and doubling AWS sales this year. is!
Nominal fees also increase
While the number of names is increasing, there are so many existing names just by arranging them roughly.
・ Listing fee
・ Basic contract fee
・ Sales commission
・ Delivery and storage fees
・ Advertising fee for high-ranking display
With this or that, even if you sell the product, an average of 34% of the sales will go to Amazon's pocket ...
Stopping a store is equivalent to stopping being on the Web
However, no matter how low the profit, the seller cannot stop opening the store. In the United States, more than 60% of people search on Amazon instead of Google when buying things online. With 15 of the 23 major product categories, Amazon monopolizes over 70% of online transactions. When it comes to a marketplace that controls 60% of consumers and 70% of transactions, there is almost no option not to put out products there.
The report raises the question that Amazon may be working hard to raise prices by taking advantage of this monopoly position, reducing the competitiveness of retailers.
Why did the fee go up so much?
Jeff Bezos, then CEO, said when asked in the U.S. parliament last year that he was using the market's monopoly to raise fees, based on last year's ILSR report. "That's never the case. It's just more opportunities to use our services," he said, but the latest ILSR survey shows that the rate of commissions that Amazon receives when sales are closed is also rising. I already know.
The top display is full of sponsor products
Until just a few years ago, it was OK to pay 15% of sales, and if the reviews gave a high rating, the product was automatically displayed on the first page of the search results.
However, these days, such organic search hides a shadow, Amazon brand products come up with Dawn, then sponsor advertisement products are lined up, and if really popular products are not good, scroll down to the bottom. If you don't, you won't be able to see it.
If you do not pay the advertisement fee, the product will be buried, so everyone pays the advertisement fee separately to secure the space for high-ranking display, but that is the case, and in 2016 it was 1.1% of the product selling price. Fees will rise to 3.4% in 2020 and an average of 4.6% this year. "This isn't a service, it's just a charge hike," ILSR points out.
Algorithms that give preferential treatment to sellers using FBA
Amazon is developing a service called "Fulfillment by Amazon (FBA)" that undertakes everything from product storage to delivery, but at the same time it also adopts an algorithm that preferentially displays sellers who use this FBA. As a result, sellers who used other delivery services are switching to Amazon one after another, and in the United States, the distribution volume handled by Amazon is growing to the same level as postal services. Of course, storage and shipping fees are rising on this front as well.
Exhibitors cannot reduce prices on external EC sites (excluding Japan)
If you post your products cheaper on EC sites with lower fees, both sellers and Amazon rivals will be win-win! However, Amazon has a "fair pricing policy", and when listing, other companies will not make it cheaper than the Amazon listing price! It seems that you will be asked to agree to the provision.
If you violate this and discount, the algorithm will impose sanctions such as stopping the display of the item in Amazon's search results and sales will stop, so it is scary and you can not do that (about this price constraint) Was investigated by the Japan Fair Trade Commission on suspicion of violating the Antimonopoly Act, and Amazon Japan voluntarily abolished it in 2017). Is this the reason why the prices are set higher than Amazon everywhere when looking for products in the United States?
Handling of own brand is covered by a commission from the seller
Products that look exactly like popular products have been put up for sale under the Amazon brand (a brand name that you don't understand), and more and more are displayed in more prominent positions. The price is a little cheaper than the original popular product, but that's right. With your own brand, Amazon won't take one-third of your sales. It is said that the company's branded items can cover almost all costs from ordering to packing and shipping, if you apply a huge fee rolled up by other sellers.
When I read this, I feel once again that what I can do for small and medium-sized sellers as a consumer is really limited. Even the products of sponsor advertisements seem to be fire cars because the cost per click has risen recently. Where and how can the cellar be saved ...
