Amazon's SMB Sellers Bear Brunt Of Slowdown, Shell Out More Sales Commission

Amazon.Com, Inc AMZN squeezed more money from the nearly 2 million small businesses that sell products on its sprawling online marketplace to beat weaker sales and cost headwinds.
For the first time, Amazon’s average sale commission surpassed 50% in 2022, said Marketplace Pulse, which sampled seller transactions back to 2016, Bloomberg reports.
Sellers paid Amazon more per transaction for six years in a row but could absorb the increases because the company attracted new customers and rapidly increased sales. That abruptly changed as people began traveling and dining out again on pandemic recovery.
In 2022, Amazon generated the slowest sales growth in its history.
Recovery-driven deal-sensitive consumers, coupled with the steady increase in fees, prompted some struggling sellers to handle shipping themselves and spend less to advertise on Amazon’s site.
Amazon sellers choose to use its logistics services because, on average, they cost 30% less than alternatives from other shipping companies, and merchants are free to buy advertising anywhere, company spokesperson Mira Dix said.
Juozas Kaziukenas, Marketplace Pulse’s founder and CEO, said, “Amazon might be tempted to keep increasing fees because it’s in a tough spot, but you have to reach some kind of equilibrium.”
Without Amazon Web Services, the profitable cloud computing business, Amazon would have posted a $10 billion operating loss last year.
Amazon hiked the annual price of a U.S. Prime subscription by $20 in 2022.
In January, Amazon shared plans to charge for online grocery orders of less than $150.
But charging customers more is risky. Merchants who generate 80% - 90% of their Amazon sales are less likely to rebel.
Price Action: AMZN shares traded higher by 1.68% at $99.25 on the last check Monday.

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