Could Amazon.com Inc. (NASDAQ:AMZN), the world’s largest online retail marketplace, be getting a little too big for its britches? While the marketplace on Amazon has been a golden opportunity for small businesses to sell their products and services on a large platform with more traffic than many of these businesses could see in a decade on their own websites in certain respects. But is Amazon now exploiting those sellers?
There are reports that Amazon.com Inc. (NASDAQ:AMZN) has been hiking its fees that it charges to third-party sellers for Amazon to offer logistics and customer service for the sellers. And the company has increased its fees several times in the last 18 months or so, and some of these third-party sellers have voiced concerns and even outright anger over their scrawny margins being squeezed all the more by these increases.
Third-party sellers pay Amazon.com Inc. (NASDAQ:AMZN) about 30 percent of everything they sell, plus for the privilege of having Amazon handle logistics, storage, shipping and customer service, these sellers may pay an additional amount. But now, some of those retailers are considering looking at alternatives like eBay Inc. (NASDAQ:EBAY) or the online market with Wal-Mart Stores Inc. (NYSE:WMT). These two competitors aren’t as big, but they offer cheaper rates to list on their marketplaces – though many alternatives require sellers to handle their own logistics and shipping.
Could that be problematic?
Niraj Shah, CEO of Wayfair, an online furniture retailer which sells on Amazon.com Inc. (NASDAQ:AMZN), eBay Inc. (NASDAQ:EBAY) and the Wal-Mart Stores Inc. (NYSE:WMT) online platform, said of Amazon, “If they increase fees too much, some sellers will decide to not sell there anymore. 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.”
Do you think Amazon.com Inc. (NASDAQ:AMZN) could be running a risk of leveraging its platform on the backs of third-party sellers to grab larger margins? Might Amazon actually create more competition in the e-commerce space due to this frustration? Let us know your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.
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