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Thread: Article: Amazon's sellers unhappy about fee hikes, eye rivals
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speck666

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Posted on: 18 Mar, 2013 6:24 AM  
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I don't think a few things in this article are completely accurate (especially regarding the Walmart "marketplace"), but it covers the bases regarding the fee increases, going back to when Amazon put the FBA long-term storage fees into effect -

Analysis: Amazon's sellers unhappy about fee hikes, eye rivals

SAN FRANCISCO | Mon Mar 18, 2013 7:08am EDT

(Reuters) - A brewing conflict between Amazon.com Inc and its merchants over fee hikes could benefit rival eBay Inc, and provide an opening for Wal-Mart Stores Inc and Google Inc, which are just getting into the space.

Amazon's online bazaar generates margins many times higher than traditional retail as the company takes a cut of every sale on its site made by a merchant, known as a third-party seller, and charges extra fees for handling logistics.

The growth of this business, which now accounts for almost 40 percent of unit sales, has helped push Amazon shares to record highs.

But a series of fee hikes over the past year and a half have alienated many merchants, and some are threatening to defect.

"If they increase fees too much, some sellers will decide to not sell there anymore," said Niraj Shah, chief executive of furniture retailer Wayfair, which uses Amazon, eBay and Wal-Mart's online marketplaces, as well as its own websites.

"That's against Amazon's plan, which is to get as much selection as possible on their site," Shah added. "The vast majority of Amazon sellers are perfectly happy to go to any marketplace offering meaningful volume."

Amazon said many of the fee increases have been driven by rising costs, such as higher gas prices and hence transport expenses. It said it has also invested in changes to get products to customers quicker - a push that third-party sellers will benefit from because faster shipping should increase sales.

But sellers see it differently, complaining on online seller forums that Amazon's fatter returns came partly from putting a heavier burden on their shoulders. "Shipping & fees are killing my margins," wrote one seller last month.

Another, in August, complained about higher fees for selling electronic accessories that were due to kick in early this year: "Holy crap! 8% to 15%?! Goodbye good deals from 3rd party sellers on Amazon in the electronics section."

A third ranted in August about higher costs for shipping products to multiple Amazon warehouses. "Amazon just pulled a fast one," the seller wrote. "Now that Amazon has all the power, they're imposing increased fee hikes to all those cozy sellers who have supported Amazon since Day 1."

The complaints became so raucous last year that the company took the forums down and re-launched them. The new forums let sellers give each other ratings for their posts - a move that some sellers viewed as a way to reduce extreme complaints.

"The updated forums were created to be more responsive to the needs of the seller community and give them information they need to help build their businesses," Amazon spokesman Erik Fairleigh said.

MULTIPLE CUSTOMERS

EBay used to be the top online destination for sellers, but Amazon's marketplace ended its reign after its launch over a decade ago, helped in large part by "Fulfillment By Amazon," or FBA, a service that stores and ships items and even handles customer service on behalf of sellers.

Fees are a touchy topic for sellers with skimpy margins, as eBay knows from merchant revolts it has struggled to quell in the past. Fee hikes by Amazon are particularly irksome to sellers because they compete with the company, a seller in its own right, in many categories on the site. EBay does not hawk its own wares.

When Amazon introduced a new long-term storage fee for items that sit in its warehouses more than a year, some sellers elected to have the company destroy their unsold inventory as it was cheaper than getting the items shipped back to them.

Kat Simpson, a third-party merchant who also trains others how to sell on Amazon, said the company charges her 50 cents per item to return unsold inventory from its warehouses but just 15 cents per item to destroy it, she said.

"I would have said everybody needed to try FBA last year. Now I would say no," she said. "If you are selling items under $25, you won't do as well on Amazon as on eBay profit wise."

It costs $3.92 to sell a $10 item on Amazon and $2.72 on eBay, according to Bill Vogel of The Cumberland Companies, which sells on both. But eBay takes more time and most merchants store inventory themselves, adding other costs, he noted.

For now, many merchants remain tied to Amazon's marketplace, which has two million third-party sellers.

"Customers like lower prices, but customers also like greater convenience, faster shipping and great selection," said Tom Taylor, vice president of Amazon's FBA business.

Some seller fees, particularly for some larger products, have been cut, he noted.

COMPETITORS

Wal-Mart's marketplace now features just six merchants: Wayfair, Plumstruck, eBags, ProTeam, ToolKing and Shoebuy. Spokesman Dan Toporek said the world's largest retailer is trying to expand available products and it "is a key component of that strategy to accelerate the growth."

Google may be the bigger threat. It already owns most of the necessary pieces, such as product search, listings and a payment service -- it just hasn't combined them yet.

It began testing a same-day delivery service with retailers in recent weeks, sparking speculation it's building a marketplace. A spokeswoman said Google is always working to improve the user experience, including shopping.

"If somebody comes in, a Google for instance, and says you can list with us and we will give you wide exposure at much lower cost, that would be a problem for Amazon," said Scott Tilghman, an analyst at B. Riley Caris.

Consumers want selection, bargains and fast shipping, which all cost money. Getting sellers to cover those expenses could drive them elsewhere. Yet if marketplace operators cover such costs, their profits suffer and shareholders grumble.

"There's always a trade-off," said Ken Sena, an analyst at Evercore Partners. "There's always that risk that sellers could defect."

http://www.reuters.com/article/2013/03/18/us-amazon-sellers-idUSBRE92H0CR20130318
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a_starving_actor

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Posted on: 18 Mar, 2013 7:09 AM   in response to: speck666 in response to: speck666  
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Thanks for posting this--I always appreciate you posting these stories.
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Lake

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Posted on: 18 Mar, 2013 7:20 AM   in response to: speck666 in response to: speck666  
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It's always a pleasure to read about sellers who are too stupid to survive.

And even better when we learn they need to supplement their income by spreading their stupidity to others (for pay).

And there is even more pleasure in seeing the press naively believing the losers.

A good start to the week.
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cdsrus4

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Posted on: 18 Mar, 2013 7:31 AM   in response to: speck666 in response to: speck666  
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The more the merrier who go to Ebay.
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ASB

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Posted on: 18 Mar, 2013 7:51 AM   in response to: speck666 in response to: speck666  
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Wayfair is selling both via WalMart and also Amazon.

Once I purchased something on WalMart New, and WayFair sent me a Used item, they took it back later.

They had a different name, C... something CNSstores perhaps but I forgot their exact name by now, they changed it on Amazon right in front of our eyes.
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ASB

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Posted on: 18 Mar, 2013 7:51 AM   in response to: Lake in response to: Lake  
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Lake wrote:
It's always a pleasure to read about sellers who are too stupid to survive.

And even better when we learn they need to supplement their income by spreading their stupidity to others (for pay).

And there is even more pleasure in seeing the press naively believing the losers.

A good start to the week.

So "journalists" are now trolling this message board to get their material, and "news".

They could rewrite the class action lawsuit story then to include our views, LOL.
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Advantage CSR

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Posted on: 18 Mar, 2013 7:52 AM   in response to: speck666 in response to: speck666  
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"Fees are a touchy topic for sellers with skimpy margins, as eBay knows from merchant revolts it has struggled to quell in the past. Fee hikes by Amazon are particularly irksome to sellers because they compete with the company, a seller in its own right, in many categories on the site. EBay does not hawk its own wares."

I was very confused when I read this last sentence until I realized they meant hock.

Oh the difference one word makes.
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bingo

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Posted on: 18 Mar, 2013 7:52 AM   in response to: speck666 in response to: speck666  
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Oh, that's great news! Thanks for sharing, Speck.

That's an interesting bit in that article about Kat Simpson, who spent all of last year "selling" FBA on Facebook to the naive. I believe she was Team Chris Green, author of Retail Arbitrage. What a racket.

Edited by: bingo on Mar 18, 2013 7:53 AM
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Twin_Rivers_Books

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Posted on: 18 Mar, 2013 7:55 AM   in response to: cdsrus4 in response to: cdsrus4  
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And then go to the Ebay boards and hear them complain about Ebay and how things are better on Amazon. And it goes back and forth all day everyday.

In 10 years the only fee hikes we've ever had here are the one's for CD's and DVD's. That's nothing to complain about.

If people are looking for happy and perfect, then online selling is not the way to find it.

Edited by: Twin_Rivers_Books on Mar 18, 2013 7:56 AM
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ASB

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Posted on: 18 Mar, 2013 8:00 AM   in response to: Twin_Rivers_Books in response to: Twin_Rivers_Books  
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Amazon had the fee hikes in Electronics Accessories and also various fee hikes on FBA inventories and sales too.

Those were fee hikes for Sellers, from the buyers' money or for sellers mainly as in FBA long term storage.
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Dommie

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Posted on: 18 Mar, 2013 8:03 AM   in response to: Advantage CSR in response to: Advantage CSR  
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Advantage CSR wrote:
"Fees are a touchy topic for sellers with skimpy margins, as eBay knows from merchant revolts it has struggled to quell in the past. Fee hikes by Amazon are particularly irksome to sellers because they compete with the company, a seller in its own right, in many categories on the site. EBay does not hawk its own wares."

I was very confused when I read this last sentence until I realized they meant hock.

Oh the difference one word makes.


It makes sense if you read the article with a Long Island accent.

For the record though, I am eagerly anticipating a Google marketplace if one ever comes into existence. Though I don't think Google would go that route. They already do just fine with their product searches and Google Wallet. No need to host the marketplace website when the individual businesses on both product search and Wallet do all the heavy lifting already. And they recently launched Goggle Trusted Stores, which is basically adhering to a set of Google selling guidelines in order to get the Google Trusted logo and icon on your product searches. I doubt they would take it to the next level of hosting a website-specific marketplace in addition to all this.
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bingo

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Posted on: 18 Mar, 2013 8:05 AM   in response to: ASB in response to: ASB  
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ASB wrote:
Amazon had the fee hikes in Electronics Accessories and also various fee hikes on FBA inventories and sales too.

Those were fee hikes for Sellers, from the buyers' money or for sellers mainly as in FBA long term storage.


Not to mention other costly FBA changes, such as the advent of the add-on program and split shipments.
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Lake

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Posted on: 18 Mar, 2013 8:08 AM   in response to: ASB in response to: ASB  
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ASB wrote:
Amazon had the fee hikes in Electronics Accessories and also various fee hikes on FBA inventories and sales too.

Those were fee hikes for Sellers, from the buyers' money or for sellers mainly as in FBA long term storage.


Given the nasty behavior of many sellers in the Electronic Accessories category, I'd say the fee hike was need to pay for human beings to deal with all the counterfeiting and brand disputes. Certainly the cell phone case folks qualify, and many of the cable sellers too. And there are way too many sellers of identical commodity products. If Amazon lost 50% of them they'd not lose any sales.

The FBA fee hikes seemed targeted to make people with the wrong products in FBA to go away.

The article fails to recognize the possibility that some departures were exactly what was desired.
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doodlebutt

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Posted on: 18 Mar, 2013 8:13 AM   in response to: ASB in response to: ASB  
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My point exactly. The last couple of weeks there were hit and run posters, that sounded too wacky to be true, and in Googling their names....no account. (Virgin seller, for one)
Maybe this is an explanation. Journalists "lurking"
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speck666

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Posted on: 18 Mar, 2013 8:48 AM   in response to: Lake in response to: Lake  
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Lake wrote:
It's always a pleasure to read about sellers who are too stupid to survive.

And even better when we learn they need to supplement their income by spreading their stupidity to others (for pay).

And there is even more pleasure in seeing the press naively believing the losers.

A good start to the week.


So your esteemed opinion is that sellers (both FBA and MF) who are unhappy will all of the fee increases are nothing but "stupid losers"? Sounds like sour grapes from a bitter old seller who knows the world has passed him by.....
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