Last week, I shared a number of interesting stats about the eCommerce industry as a whole and Amazon’s dominance in particular. One of the conclusions of the post was that the industry features a monopolized middleman (Amazon) whose core growth is driven by a “bunch of unhappy sellers.”
This week, we’re delving into the story behind the idea those unhappy sellers. And too paraphrase Levar Burton’s famous line…“you don’t have to take [our] word for it.”
Between A Rock And A Hard Place
Amazon’s Seller Forums — the place on Amazon’s website where sellers can go to ask and answer questions that support one another — are a monument to frustration. As of writing, the top two posts are “Bye Everyone!” and “I’m leaving too.” They are far from the only negative posts. In fact, the vast majority of the conversation is about challenges with the relationship between Amazon and it’s third party sellers.
In his article “The Amazon Squeeze: You Choking Yet?” Robin Lewis called the relationship between Amazon and the brands and sellers who use it a “dance with the devil…The third-party vendors are between a rock and a hard place. They are both friends and enemies with Amazon.” Why? We’re going to let the sellers answer that in their own words.
The challenge of selling on Amazon
On a post called “What did selling on Amazon used to be like?” the more than 65 sellers in the conversation articulate the full gamut of challenge with the relationship.
Higher fees = Lower profitability
- “I’ve been selling on the site since October 2001. Profitability has gone way down, primarily because of brainless listing changes: no details for media products listed as “new.” No direct contact with buyers. Automatic refunds, etc.” [writerinresidence]
- “Profitability: Much better back then. The fees were lower.” [W_White]
- “Over the years changes I have noticed are increased fees, increased scammers, increased returns, increased supposed INR’s, decreased seller protections…” [Forum_Friend]
- “Started selling in 2002. Back then, my minimum price on a used book/CD was $7.99. I am slowly changing that to $9.99, due to increased postage costs & increased Amazon commission. My net profits have plummeted in the last 2 yr, as I’ve been slow to raise my prices.” [corazonbb]
- “I have been selling since 2003, very profitable until…excessive fees were added.” [pro_spin]
Inability to personalize or customize marketing
- “Things I miss about the old days: The ability to send my own personalized “your package has been sent” email, because I think it helped build a relationship with the customer. If they knew there was a person on the other end of the deal, not just some faceless company, it made things go more smoothly.” [jcwr]
- “STOREFRONT — totally screwed this up in the past couple years when Amazon changed your storefront to show BEST SELLERS and no option to see RECENTLY ADDED ITEMS. As a seller, if you have regular buyers that would like to shop your store, now there is no way to show them the new items added. Leaving us 3rd party sellers with a poor marketing strategy.” [NonaMe]
On Amazon being directly competitive
- “I would love to sell more but fees and prices kill me on top of competing with prime free shipping and Amazon itself on some items, just ain’t worth it” [Shorthair801]
- “I’ve sold on Amazon many years as a private seller…there is no way I can compete, most of the time, with Amazon’s prices.” [depawindu]
The direct competition is one of the most frustrating and challenging parts of the seller relationship. In the piece quoted above, Robin Lewis writes:
“The irony lies in the “devil’s” ownership of all transaction data, giving Amazon real time information of consumers’ shopping behavior, what they like, what’s hot or not, and all other key details of the shopper’s journey. As a result, Amazon can quickly fill white spaces and knock off products in high demand for their own private branding program (for lower prices of course).”
Of course, what many consumers don’t realize is that Amazon can charge lower prices precisely because they don’t have to pay their own commission fees.
The Impact: Sellers Leave Amazon
The posts that sit on the top of the Sellers forums are all about leaving and the straw that broke the camel’s back for the sellers involved.
- “Since mid last year I have been planning my exit here and I’m happy to say I that I will be shutting down my seller accounts and leaving Amazon for good. The past few years have been challenging to say the least and the environment here is no longer conducive to small sellers and the rising FBA fees have become untenable.” [a_starving_actor]
- “I too, have been selling on Amazon more years than I can remember, but the fun and pleasant experiences have fallen away and it is a real struggle to just survive here, with the unrealistic metrics constantly making life miserable (especially when one tries so hard to do things right).” [hey_buy_from_me]
- “I be on my way out too in coming months I’m tired of this ridiculous system. Honestly selling in Amazon has became a nightmare. Amazon does not care about third party sellers anymore Amazon has forgotten that thanks to third party seller they become so big.” [celinda_garcia]
- “not only you feel this way. amazon for sure is to big today and it seem to me they do not wish to deal with small sellers.” [Major]
- “Years ago, most of the replies to you would have been “Don’t let the door hit ya where the good Lord split ya”. No longer. We’re all ready to jump ship with you. Selling on Amazon has become a terrible experience.” [darknessvisible]
A Broken Relationship
Ultimately, beyond any one specific issue, a significant number of sellers on the forums feel that the relationship between sellers and Amazon has simply been broken.
- “One only has to look at the numbers of sellers on the forum complaining about low sale[s] to realise that there is a problem, now we can argue till the cows come home what those reasons are but that there is a problem is beyond dispute…That’s it in a nutshell for me, Amazon is no longer a place its pleasant to sell for anyone whose chooses not to go down the FBA route to line Amazons pocket.” [Pennine_Books1]
- “I’m sorry to see a good seller go. Such a sad thing, but Amazon’s percentage of bad sellers will continue to rise for the reason you stated. Amazon does not care about third party sellers anymore. They see us as a problem and not a solution and business partner.” [Sellerocity]
- “Amazon does not hate its third party sellers. However, we are highly dispensable…As a result, they know that if you leaving the platform there are probably several other new sellers that will take your place. When there are other 3rd party selling avenue’s that are as competitive as Amazon and begin to lure sellers away with more benefits, lower risks and more profitability, you will notice a change in Amazon treatment of third party sellers.” [Living_In_A_Van]
This last point feels particularly salient. It is not, necessarily, Amazon’s job to create a good work environment for third party sellers. Amazon is a for profit company free to do anything it feels like is in its shareholders’ best interests.
If continuously increasing fees and taking margin out of seller’s pockets and putting them into it’s own, keeping all the data for themselves, launching product lines that are directly competitive with sellers based on that data, and generally treating sellers like they are dispensable is best for Amazon’s shareholders — then so be it. However, the sentiment of the seller community leaves the company vulnerable to an alternative that charges lower fees, provides access to data, promises to never compete, and fosters an environment that respects the value that sellers create. This alternative — we at Public Market believe — needs to be built on the backs of a fundamentally new business model that only blockchain technology has been yet to provide.
At the end of the day, the question is simply this: can someone else create a viable alternative better for sellers? Because as Jeff Bezos himself famously says, “your margin is my opportunity.”