As I am sure most reading this blog are aware that on the 4th April Amazon are increasing some of their fee categories. It was announced first on the e-commerce news site Tamebay. You can see the original post here: http://tamebay.com/2013/02/amazon-fee-increases-for-electronics-accessories.html.
This announcement has led to much uproar on forums around the web from angry third-party sellers that will be affected. The general fear from third-party sellers is that this will be the first of many fee increases to come and that Amazon are going to start squeezing out third-party sales. If this is the case, then it will leave a lot of smaller businesses wondering what to do. Many already struggle to compete with Amazon as it is and by being priced out of the marketplace it could really affect their turnover.
What are the effects?
As anyone who sells on Marketplaces will tell you, fee’s only ever tend to go up with the very odd exception, and prices only ever tend to come down. This can be a sort of double whammy for third-party merchants. They end up selling their products for less and the marketplaces want to take a bigger cut of their sale price.
As for the cause of Amazon doing this, some people online is guessing, it is because Amazon envisage having to pay more tax. To be fair though for a company who made a loss of $274 million alone in just Q3 of 2012. You can’t blame the company for looking at ways to increase profitability.
What Can You Do?
As you would expect this hits most sellers with a bit of a problem. Amazon is just too big to ignore. They are Amazon and they can do what they want in effect. The obvious one is that if you don’t already then strongly consider opening an eBay account and building your brand on this channel. eBay got a similar number of unique visitors a month and they will never compete with you as a retailer. Chances are however that you already sell on multiple channels in which case you need to work on steering your dependency away from Amazon (If you need any help or advice in how to build up an eBay or website presence then please get in touch with me here.)
The next obvious choice is to look at potential new streams of revenue. If you have Amazon and eBay ticking over nicely and a website which is bringing in good sales, then looking at new channels to drive sales to your business. One of the newest and most exciting channels is Flubit. They offer a totally unique buying journey to their customers and best of all they do not charge any fixed channel fees. To find out more about Flubit check out the website here, you can also get in touch with them using the instructions on the page. In case you have missed it you can also see the Flubit buying journey from a blog I wrote back in September
I would love to hear your thoughts on this, are you being affected by Marketplace fee increases? Or do you run a business and are noticing that you are working harder to make the same amount of profit? Please let me know in the comments below, it would be great to hear from you.