Amazon Takes Up To 50% Commission From Its Merchants

Amazon Takes Up To 50% Commission From Its Merchants

Trying to cope with lagging sales and rising expenses, is using more of its profits from the approximately two million small businesses that advertise on their vast online marketplace. In 2022, Marketplace Pulse’s research noted that the average percentage of commission fees taken by Amazon for each sale crossed 50%, a record-breaking milestone since 2016.

Amazon Commissions Increasing Day by Day

For the past six years, Amazon sellers have been paying more per transaction year after year. Despite these cost increases, sellers could offset them because of an influx of customers and soaring sales. However, when restrictions were lifted during the pandemic, online shopping began to falter as people started traveling and dining out again. As a result of this shift in consumer behavior, Amazon experienced its most sluggish growth since it opened – ever!

As shoppers are now more mindful of deals, merchants on Amazon are hesitant to raise prices. With this and the constant rise in commission fees, many retailers have been having a hard time earning profits – leading some to manage to ship themselves and reduce their advertising expenditure on Amazon’s platform.

According to Juozas Kaziukenas, founder and CEO of Marketplace Pulse, it is becoming increasingly difficult for small businesses to stay profitable due to the growing costs of Amazon commission fees. While Amazon may find itself in a challenging situation and be tempted to keep climbing these prices, some kind of balance must be achieved.

Amazon Takes Up To 50% Commission From Its Merchants

That site Is Looking For Ways To Make A Profit

To counter soaring costs, Amazon recently announced it will raise the annual price of its U.S. Prime subscription by $20 for 2022 and charge fees on online grocery orders below $150 last month. Despite this potentially risky move, merchants who typically generate 80% to 90% of their income from Amazon are unlikely to revolt against these changes.

Although Amazon sellers have no power over commission fees such as packing and delivery, they can keep a firm grasp on their advertising. There is evidence that reflects this pullback in growth; the holiday quarter’s advertising revenue rose by only 18.9%, compared to the massive 32.2% from the same time period last year! However, even with this moderate progress, it remains an impressive feat for any business venture.

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