Grappling with slowing sales growth and rising costs, Amazon is squeezing more money from small businesses struggling to make money. Read on.
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Consumers are far more deal-conscious than they were during the pandemic, so Amazon merchants are loath to raise prices. That reality, along with the steady increase in fees, means many sellers are struggling to make money — prompting some to handle shipping themselves and to spend less to advertise on Amazon’s site.
It’s getting harder and harder to be profitable because they are spending more and more money on Amazon fees“Many selling partners have built and run their businesses without advertising,” she said. “If they choose to advertise their products, they have many service providers to choose from. Sellers are not required to use our logistics or advertising services, and only use them if they provide incremental value to their business.
In response to rising costs, Amazon increased the annual price of a United States Prime subscription by US$20 in 2022. Last month the company announced plans to levy fees on online grocery orders of less than US$150. But charging customers more is risky. Merchants, many of whom generate 80 per cent to 90 per cent of their sales on Amazon, are less likely to rebel.Chuck Gregorich, who sells fire pits and outdoor furniture, says turning a profit on Amazon is getting harder.
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