Amazon charges money, say 5% of transaction value.
If an item is 100$, seller gets 95.
Ok their own website, noone takes a cut, all money goes to seller.
In this case they might want to sell for 98$, and then both customer and seller wins.
If an item is 100$, seller gets 95.
Ok their own website, noone takes a cut, all money goes to seller.
In this case they might want to sell for 98$, and then both customer and seller wins.
But the reality is they are a store that dwarfs every other in customer reach making it difficult for small businesses to grow without utilizing Amazon as one of their sales channel. Hence, Amazon's 15% commission gets baked into everything even if it's not sold on Amazon. I think the law needs to evolve in a way to recognize scenarios like this where there is massive asymmetry - not necessarily a monopoly - between one dominant market player and others which is harming the consumer.
Amazon's response of course would be "no fair; you're using us for product discovery but then giving the sale to the brand owner". Which has some validity. If you took away the commission, then they would be relegated to a search engine that relies on ad revenue only. But that would mean lower prices so consumers would win in the end.
Almost as bad as someone walking into a brick and mortar store and then going to some big website to actually buy the TV. No fair indeed.
If I'm at the store and i can put something in my cart and buy it then I'm not going to order it online and wait for delivery to save $5. Also delivery is extremely unreliable these days...
From watching other people at stores, it's maybe 15%? For goods that need to be installed or carefully handled, it's less common. Headphones? Pricecheck. Mechanical Keyboard? Pricecheck. Washer and Dryer? Most people pricecheck even though it seems like something they wouldn't. Turns out that most people shop around for those, so internet pricechecking is part of it. Food items that seem too expensive? Pricecheck. You can save a bunch on dry/bottled goods. Amazon Prime feels like a Costco membership. You have to make sure you use it, to justify it.
No they are not. They are setting the price on their platform to be the minimum price. That's very different and bad for consumers.
No, they are making sure they get the biggest cut
They'd also still be a major corporation / quasi-monopoly that powers like 80%+ of the internet and is wildly profitable. I see no problem with taking a small cut of their revenue away that they only have due to shady business practices. But Wall Street would cry Won't anyone think of the shareholders?
I wouldn't give a shit if that caused Jeff's net worth to drop 5% or 10% - the guy would still have more money than the rest of the world save for 4 or 5 people rather than just 1 or 2 people.
They use the ad money to give five percent cash back on purchases.
Manufacturer advertises "effectively pay 5% more on our web site or Amazon will club a baby seal (or worse)!"
The advertising campaign falls flat.
Consumers are killed/maimed by a counterfeit item they bought on Amazon.
Manufacturer costs go up 10% (spent on lawyers and training customer support as emergency response workers).
Amazon begins production of a higher-margin, but less expensive and non-deadly knock off, and promotes it above the original product.
Repeat.
Play around with this (and don't enter 0 for shipping, because they have a divide by zero error):
https://sellercentral.amazon.com/hz/fba/profitabilitycalcula...
The higher margin on the left is what amazon charges for fulfillment (which can be quite a lot).