by Alex Harman
Part 9 - Amazon’s Third-Party Sellers Are Engaged in Price Gouging
Part 9 - Amazon’s Third-Party Sellers Are Engaged in Price Gouging
In addition to Amazon’s direct price gouging, third-party sellers continue to engage in price gouging behavior on the site. Because of its financial relationship with third-party sellers, Amazon also benefited from these increased prices across its platform.
Third-Party Sellers Account for 25% of Amazon Online Retail Revenue
In 2019, Amazon reported that the company’s annual share of revenue generated by third-party sellers was $42.75 billion. The latest Amazon earnings report from the second quarter of 2020 showed an increase of 53% to $18.2 billion for just that quarter. This was not gross revenue. This is just the cut that Amazon kept in fees that average around 15%. Some recent estimates have put that percentage much higher as a result of the advertising fees Amazon charges sellers outside of the list and fulfilment fees.
This is compared to the annual gross revenue for the Amazon retail operation of $122.99 billion, which is before cost of goods sold and other expenses. Thus, while third-party sales account for about 25% of the revenue from online retail, the costs associated with third-party sales are not comparable with Amazon retail costs. Put simply, third-party sellers are a very important, and growing, part of Amazon’s revenue.
This financial relationship is important to understand, as it demonstrates that Amazon heavily relies on third-party sellers and directly benefits when third-party seller revenue increases.
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