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Amazon Is Under Fire For Increasing Seller Fees And Advertising Costs

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Amazon Is Under Fire For Increasing Seller Fees And Advertising Costs

(CTN News) – In a report, Amazon has been accused of being “no friend of small business” after evidence of increased fees and advertising costs has surfaced.

According to the study, Amazon has tripled its fees from independent sellers in Europe between 2017 and 2022, including listings, deliveries, and digital support. As a result, the growth in sales more than doubled over the same period.

Among UK, France, Germany, Spain and Italy sellers, delivery and storage costs have more than doubled between 2017 and 2023 in some categories.

Silva accuses the online retailer of exploiting a “captive clientele” at the Amsterdam-based Center for Research on Multinational Corporations, also known as SOMO.

In Europe, Amazon has monopolized online shopping for the past two decades. It has become so dominant that independent retailers who wish to sell online cannot ignore it. As captive clients, the platform’s sellers are a profitable source of monopoly rent for the platform.

As retail sales fell 1% last year, EU Sarl’s earnings rose 6% to €23.5bn from sellers’ fees, according to Somo’s analysis of its European accounts.

Those fees do not include the amount sellers pay to advertise on the site. In 2017, Amazon’s overall advertising revenue was just €0.3bn, according to Somo’s analysis of local subsidiaries who book its ad services across Europe. It is estimated that 51% of that amount, or €2.75 billion, comes from independent sellers.

Advertising revenue at Amazon Online UK,

The subsidiary handling UK ad bookings, increased sixfold from €0.3bn in 2018 to €1.9bn in 2021. In general, the more business clients or sellers bid on a keyword, the more expensive it becomes.

“Amazon’s squeezing of sellers is a crucial pillar of its European business since its revenue from independent sellers’ fees is growing faster than its core business, European retail.”

One UK seller told the Guardian that his fees, including advertising, accounted for almost 40% of his products’ pre-VAT price. He said, “Sales are satisfactory and stagnant, which I can’t blame on Amazon, but fees are quite high and service is poor.”

The UK’s competition watchdog is investigating Amazon over allegations that it gave its own brands and those using its logistics services an unfair advantage over third-party competitors.

As a result of a separate investigation by the European Commission last year, Amazon made a series of commitments to address the concerns, including a centralized complaint mechanism.

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