Is Amazon Squeezing Its SMB Sellers Too Hard?

In the 25+ years I’ve worked in the eCommerce industry, I’ve met many busy fools. In the past, many of these sellers were burned by careless spending on paid search campaigns, mistaking the massive sales volume and associated turnover it generated for profit. It wasn’t until the end of the year that they realised they had destroyed any margin they had in a product for the sake of vanity metrics.

However, today’s sellers are much more likely to complain that they are “working for Jeff Bezos” rather than running their own independent businesses. So the news that Amazon’s average cut of each sale surpassed 50% in 2022 will come as no surprise to many sellers.

Amazon’s Increasing Cost of Sale

According to research by Marketplace Pulse, Amazon has steadily increased its fees over the last six years.

Marketplace Pulse calculated the total cost of selling on Amazon by totalling the commission on each sale, fees for warehousing, picking and packing, and shipping services. It also added Amazon’s advertising costs. While paying for Amazon’s fulfilment and advertising services is optional, many retailers consider these to be necessary costs on a competitive marketplace.

During the peak online sales recorded during the pandemic, retailers were able to…