As most Amazon.com shoppers are fully aware, Amazon.com often lists and sells items directly from other retailers. This business relationship is great for smaller, lesser- known retailers because they can take advantage of Amazon’s massive, worldwide reach. It is also great for consumers because they can find practically anything they want to buy through Amazon.com. The relationship seems like a win-win situation for all parties involved and it has worked well for many years.
But now, there is a potential problem for Amazon.com and the problem relates directly to the fees Amazon charges these other retailers for the right to list items in its web site. The fees continue to climb, eating up the profit margins of the third party retailers while fattening up the bottom- line for Amazon. If the fees climb much higher, many of these third party operations may cease to sell at Amazon due to their own shrinking margins.
"If they increase fees too much, some sellers will decide to not sell there anymore," said Niraj Shah, CEO of Wayfair, a business that sells items at Amazon. "That's against Amazon's plan, which is to get as much selection as possible on their site…The vast majority of Amazon sellers are perfectly happy to go to any marketplace offering meaningful volume."
Any loss of business at Amazon.com related to fee hikes could mean added business for other online retailers willing to absorb these third party merchants for a lower fee. In particular, internet heavyweights such as Ebay, Walmart, nd Google are ready to list retailer goods from these defecting merchants for a more competitive fee. Amazon.com’s loss is another retailers’ gain if Amazon doesn’t do something to lower the fees.
Amazon claims the fee increases are necessary in order to cover higher shipping costs, handling charges, fuel, etc., but many of these smaller retailers disagree and accuse Amazon of flexing its online muscles and passing costs unfairly to its third party partners. Unless Amazon can work out some sort of deal with these outside merchants, consumers may no longer be able to purchase so many goods in a single place and may be forced to turn to other online retailers such as Ebay and Walmart for shopping needs.
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