Amazon FBA & 3P Sales: A Seller's Perspective

This is a snippet of the transcript, sign up to read more.

For a typical Amazon seller, what is the biggest challenge?

Today, it’s profitability because Amazon has almost become like a traditional brick and mortar retail company. If you’ve ever done business with them and you’re trying to get a product into brick-and-mortar retail, it’s almost as if the retailer has this idea that they can make money on the buy before they even sell one product; they’re going to make money on you, they’re going to charge you fees and slotting. With Amazon, especially the FBA, it’s 15% listing fee, 15% FBA fee, plus your storage fees, plus various return fees and things like that; hidden fees. They raised the fees this year, in January, then they implemented a fuel surcharge, and then they just implemented a surcharge for the fourth quarter for warehouse expansion or warehouse growth, for the warehouses, for the additional labor and the additional costs it’s going to take them to bring in your product over the holidays.

This is a snippet of the transcript, sign up to read more.

Without advertising.

Amazon’s advertising platform can get efficient. If you’re paying around 42% in fees, plus you’re paying another 20% of sales and advertising, your product cost has to be 30% of your total sales in order for you to make any money.

This is a snippet of the transcript, sign up to read more.

As you get up to $2 to $3 million, if you can run a warehouse and fulfil for $300,000 to $400,000, it’s more accretive to do it for yourself?

Yes, and then you do your traditional wholesale off your website and if you’re working on Walmart.com, if you’re working on any other websites that you’re selling on, then you just fulfil all your orders yourself. My preference is always to fulfil my orders myself in all my businesses. I’ve done FBA, but my preference is always to handle it myself because I want to control the experience to the customer. With Amazon, yes, you get the stuff fast, but sometimes you get a box that’s so big and it’s just a small product and sometimes it’s damaged, sometimes it’s broken, sometimes it’s the wrong product. We’ve experienced it for our brands. There’s a lot of issues and, when you’re an FBA seller, you spend a lot of time focused on fixing these issues and also doing a lot of accounting work to try and figure out where all these fees are that Amazon is hitting you with.

This is a snippet of the transcript, sign up to read more.