I ran a small FBA business for a year nowhere near any scale and it was an interesting lesson. People who weigh in on these tech topics should actually try these things out to understand them better.
It's nothing like listing on eBay where there's some haircut off the top and that's that.
There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget. Depending on the fee it is - fixed, % of $, weight based, volume based, or some combination.
The fees change constantly with not much notice. So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?
Like Uber drivers, I imagine some % of FBA sellers don't know they are losing money in real time. You need to do some decent accounting to track as all these different fees hit at different times. It's not like Amazon gives you the data & tools to track your all-in costs per sale.
> So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?
You've skirted around the obvious question: Why did you pick FBA to begin with? Amazon sellers existed long before FBA. They did their own shipping, so almost none of those fees apply. Many sellers continue to do well on the Amazon platform while not being part of FBA.
If you can't succeed without participating in FBA, then all that's happened is Amazon created an environment for previously unviable businesses to succeed, and has merely tightened it.
Edit: Amusing that this comment is being downvoted, whereas my other comment saying pretty much the same thing is being upvoted.
AWS works this way too but I’ll get dogpiled by Amazon sycophants and other people who have built their careers around getting witless companies sucked into the Amazon machine.
Steve gave examples for the different kind of fees and that it's hard to track them and why. I wanted to ask you for examples for AWS. Would be good to know concrete pitfalls and traps.
egress fees, inter-DC transfer fees, IP fees, ebs storage fees, transactional fees on things that are transactional. If you don't carefully engineer everything you'll get left with a $15,000 AWS bill. This doesn't cost Amazon anywhere near $15k to provide, so they just "waive" the fees if you promise to be a good little user.
Don't disagree with this, but this is the same in almost all cloud providers. Want to get started with Digital Ocean's app platform? You're paying for Container Engine to store your containers, then App Platform Business just to support scale-outs, then multiply this for the number of services you're deploying and make sure you don't have egress overages etc etc.
At least AWS gives me an invoice each month with a break down of fees. GCP just sends an invoice for the total amount. No detail, no breakdown. And I have never gotten any of GCP's many different pages under their billing system to spit out any numbers that make sense. Pick your poison?
If I remember correctly, they charge for the BigQuery table you use for the detailed export. In other words: there's a charge for seeing detailed charges!
All other clouds provide a detailed cost breakdown report for free.
> There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget.
Have you ever run a business where you have to manage your own inventory? What you listed and likely the 5 things you omitted constitute real work. Perhaps amazon's fees are capricious but they're doing all the work for you. You can manage your own inventory and shipping logistics and still sell on Amazon
Those fullfillment fees are nothing new. I worked for a publisher thirty years ago and they had a similar network of fees.
The only difference was they were predictable in that the fee schedule changed only at time of contract renewal.
Whats different is that the fulfillment centers then couldn't see our books and weren't looking over our shoulder seeing our accounting figures, so as to grab the profits the moment it crossed the threshold of feasiblility.
Uber was easy and profitable in the beginning and clearly a superior value to car services and cabs. Many drivers took on debt to buy bigger better cars, never imagining the goalposts were adjustable by design so as to centralize all the profits.
It is obscene, like Ducth East Indian trading corporation, or Rockerfeller.
People will walk away, there's no choice and MegaCorps know this, so they will subtly lock down movement.
Medium sized businesses are the buttery smooth, slippery slope to hell these days.
Attention management and product discovery has to be done by permenantly white organizations, monasteries, regulated-to-inaction government arms, independent offshoots of a benevolent billionaire's philanthropy...
The panopticon doesn't just effecy day-to-day life... it also strangles the power and wealth of businesses to death.
I have been saying it for years, and people just dismiss it, why would a billion dollar company prey on a million dollar company, they have bigger opportunities...
The nature of Uber being easy and profitable in the beginning was a heinous dishonest trap engineered by venture capitalist subsidizers.
It should be illegal to convince people economically that a certain lifestyle is worth switching to when you are keeping secret your plan to slowly boil the ocean tweaking it so that you can get your exit.
Correct. My point is that people only casually familiar don't realize how vertically integrated the FBA model is.
FBA is like eBay, PayPal, FedEx, Google Ads and a warehouse all wrapped into one.
But they charge you varying types of fees based on different measures, at different times, for each of those parts of the stack. And you cannot cross shop, mixing and matching other vendors in to keep them honest on pricing.
It's easy to use, but you are locked in to their stack.
Why shouldn't they? You've arranged to have product you didn't create shipped to a warehouse you don't operate to be stored by a system you don't maintain to be sold on a storefront under a brand you made up and that you didn't create to be fulfilled by a shipping apparatus instead of you going to the UPS Store. What exactly are YOU doing here that merits a payday? Mediating a relationship between Amazon and a Chinese manufacturing firm? They already have tons of those.
The entitlement these entrepreneur types exhibit is the economic equivalent of wind-drag. If buying stuff from random AliExpress sellers and charging 300% markup to sell it to people who don't know better on Amazon isn't working out for you, maybe you should find a way to contribute to the economy instead of just inserting yourself between existing profitable businesses and demanding money for sending some emails.
If it's legal they should do it because it's evidently profitable. If it's not legal then they shouldn't do it because it's illegal. Which is really the question at hand.
You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor). But that's not really relevant to the question of did Amazon utilize anti-competitive behavior that violates the laws that govern how businesses are allowed to behave.
> If it's legal they should do it because it's evidently profitable.
Is it? The moaning from higher in the comment tree seems to disagree with that assertion.
Maybe it was once profitable, but it seems as Amazon's reputation for hosting tons of cheap resold goods gets worse, it's becoming significantly less so. I personally have known for years that it's possible to oftentimes find the gadgets sold for $15-20 on Amazon on AliExpress for a few bucks. This isn't exactly arcane information anymore.
> You're criticism seems to be grounded in a distaste for the kind of business being done (and I think it's quite fair to be critical of the business model based on cheap Chinese labor).
My criticism is that the same people who cry from the rooftops about how free commerce is essential and how they have a right to sell marked up goods under any name they like to people who can't trace their supply chain have zero basis to complain when consumers get wise to their shenanigains and go elsewhere. It's literally this kind of "business owner"'s fault that Amazon is becoming near unusable now. I'm not shocked one bit that Amazon is cracking the whip; their reputation is on the line and has been trending steadily down for years.
"Buyer beware" they chant. Until the buyers start bewaring, and then they start whining about unfair competition and high fees for their store that is entirely operated by a third party and literally cannot exist without it.
Amazon is no angel here either of course. They have monopolized the absolute shit out of online retail, one of the ways they did was offering reseller services and getting businesses on their platform in the first place. Neither "side" of this is right, per se. Both of them would send me as a customer up the proverbial river to make a single dollar. As far as I'm concerned, them fighting in court is strictly entertainment, apart from whatever precedents get set that might affect other businesses I actually give a shit about down the line.
But like, the businesses I give a shit about are like, local ones. Ones run by people, to serve people. Not ones pulling tag clouds from trending social media topics or buying ad space on instagram to sell an egg beater shaped like a cat for $35 that they got from a Chinese manufacturer for $5.50/10,000 and dropshipped to people. This is just that, with an extra step. And the entity that's the extra step is realizing how raw of a deal it is, and they want a heftier cut to put up with these middle men. And on that particular point I don't blame them one bit.
It's always a signal that you're on to something when you get a bunch of pedantic rebuttals like this. Attacking the central argument isn't possible, so they nitpick.
You literally just said that they did the hard part, which is apparently identifying a product that consumers want and cannot buy. The commenter then says: why don't they just do all the apparently easy shit, which is making it, holding the inventory, shipping it, and handling returns/customer service.
Maybe your point just sucks because finding some cheap garbage on AliExpress that you can sell with instagram ads isn't actually all that hard, or that much work, which is probably why this exact business model was sold to people who, as stated by people selling it, had low skills and no interest in acquiring them, so they can generate passive income by operating an automated storefront on Amazon.
They did the unscalable part. That better? Are you happy now? Can you go find something else to nitpick?
> finding some cheap garbage on AliExpress that you can sell with instagram ads isn't actually all that hard
It's very hard. What you're missing are all of the thousands of people who try it and fail. And you see one person succeeding and say that's easy, they're just buying shit from China. No, they combined skill and a lot of luck to find a product in China people want. That's not just ordering shit from China. If it were, Amazon would do it themselves and cut out all of these middleman. Which they can't, because it's not scalable. Which was my original point.
Unscalable is not synonymous with hard for the vast majority of people. If you communicate confusingly, you'll be asked for clarifications. That's not nitpicking and you can avoid it by using words for what they're for.
> What you're missing are all of the thousands of people who try it and fail.
It's not easy or hard. It's lucky. It's getting your ad seen in the right place with the right audience and taking off with enough sharing to build virality. Then your store will do a brief burst of good business before you fall back into irrelevance and continue.
It's highly analogous to gold rushes. And then as now, the people who get reliably rich off gold rushes aren't mining gold, they're selling shovels and pickaxes, namely: hustle influencers, shopify, and indeed, Amazon.
> That's not just ordering shit from China. If it were, Amazon would do it themselves
Buy some Amazon Basics stuff and check where it's made, then get back to me.
> and cut out all of these middleman
Which is what they seem to be doing.
Like again, for emphasis: Amazon is not a good guy here. They are neutral, at best. But I have very low sympathy for people who build their entire way of life on one single platform that could at any moment tell them to kick rocks. It's bad when YouTubers do it, it's bad when instagram influencers do it, and it's bad here too. And all of these usually end in similar ways. You're only as good as your last post, your last sale, your last quarter of profits and if your and the platform's interests diverge enough, you'll be dropped like a flaming bag of dogshit.
> Unscalable is not synonymous with hard for the vast majority of people.
> It's not easy or hard. It's lucky.
Great, thank you for teaching me about the English language. None of this addresses a single thing about my point, it's just nitpicking my choice of words.
Use whateeeeeeeever words will make it through your compiler, insert those in place of mine - and that's what I meant.
> Buy some Amazon Basics stuff and check where it's made, then get back to me.
> Which is what they seem to be doing.
Nitpick 2, Electric Boogaloo. Now you have a problem with the way I've used some other words or the absence of some qualifiers.
> Use whateeeeeeeever words will make it through your compiler, insert those in place of mine - and that's what I meant.
Until I do it incorrectly, and then I'm deliberately misconstruing your point into something you didn't say. Or if I do it in a way you feel makes you or your argument look stupid, at which point I'm arguing in bad faith.
No thanks. If you'd like to discuss things I'm happy to do that, that's why I'm here as Obi Wan says. But I'm not responsible for steel-manning your point for you because you lack vocabulary.
> Nitpick 2, Electric Boogaloo. Now you have a problem with the way I've used some other words or the absence of some qualifiers.
This is still not nitpicking. You have repeatedly put the notion of product acquisition on a pedestal, including the fact that pulling goods from China is this difficult, laborious task (which, it does take labor, that is true). But Amazon knows how to do that, it's basically how it became the retail juggernaut it is.
And that includes Amazon Basics products, which without even looking at one, I'd be willing to bet non-insubstantial amounts of money are manufactured mostly in China. That doesn't make them inherently bad: Chinese firms will make your products as good or as bad as you're willing to pay for.
No one is nitpicking. They just don't buy your argument."nitpick" implies a person is addressing a minor detail and not addressing the central point. This person, and the comment above (by me) is directly addressing the central point you made, and saying it's weak.
Building all the infrastructure required for FBA is much more difficult than choosing products. The proof is in how many people have done one v the other. Amazon does a decent job on both sides - building the infrastructure, and figuring which products to sell, at scale (they do 100's of billions of non 3rd party sales every year).
And it's still wrong. Amazon does 100s of billions of 1st party sales. As does Costco, Walmart, Target, and probably a dozen other stores I'm not aware of. It scales, big time. Choosing products to sell when you have a giant distribution engine is one of the most scaleable things in business.
If you want to trot out the principle of charity, it goes both ways. You assumed people were nitpicking. It was wrong. Every way you want to spin it by changing words, wrong.
> Amazon does 100s of billions of 1st party sales.
And the remainder is not scalable. All of that done by their sellers. As evidenced by the fact that they are not doing it themselves.
I'm beginning to think this thread is being astroturphed. All of you are employing an identical strategy of latching onto minor issues with how things are phrased. A standard PR tactic. And Amazon has a long documented history of astroturphing.
You are human? You must be amazon's first gen astroturfing infra, mechanical turk style. I'm part of amazon's skunkworks Astroturf-LLM service. Automated, at scale astroturfing. I believe we will make it public facing via AWS soon.
It's nothing like listing on eBay where there's some haircut off the top and that's that.
There are fees for - accepting inventory, holding inventory, returning unsold inventory, shipping sales, processing returns, destroying returns, transaction fees, ads to promote your listings in market, and probably 5 other things I forget. Depending on the fee it is - fixed, % of $, weight based, volume based, or some combination.
The fees change constantly with not much notice. So every time you think you've got just the right size/weight/price balance you get screwed. And where else are you going to go?
Like Uber drivers, I imagine some % of FBA sellers don't know they are losing money in real time. You need to do some decent accounting to track as all these different fees hit at different times. It's not like Amazon gives you the data & tools to track your all-in costs per sale.