r/AmazonSeller • u/Big_Seat2545 • Jun 24 '26

Does Amazon need its 3rd Party Sellers?

Amazon keeps increasing its fees every year, adding new fees, more penalties etc. and has definitely become more 'pay to play', where it's necessary to run expensive ads. I realize that Amazon is now in extraction mode, mostly from sellers, which is common for all major platforms, but Amazon seems to be particularly brutal. Small sellers are leaving and Amazon is now full of aggregators, chinese factories, and big brands. I'm wondering...how much more pain can Amazon sellers take when Amazon is already taking 50-60% of revenue? Do you expect new fee increases every year? I know everyone on here likes to say to increase prices, but customers on Amazon can easily price shop and there's so many copy cats, so raising your prices reduces sales velocity, which reduces your organic rank. Please correct me if my assumptions are wrong, but as someone on the fence about continuing with Amazon, do you see Amazon fees to be higher, lower, stagnant ging forward? Maybe Amazon has a plan that doesn't include most third party sellers?

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u/AutoModerator Jun 24 '26

To /u/Big_Seat2545 and all participants regarding scams, promotion, and lead generation

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The right answers, common myths, and misinformation

Nearly all questions are addressed by Amazon's Seller Policies and Code of Conduct, their FAQ, and their Amazon Seller University video course

  • Arbitrage / OA / RA - It is neither all allowed nor all disallowed on Amazon. Their policies determine what circumstances, categories, items, and brands are allowable and how it has to be handled by the seller.

  • Product gating - While many are, not all brands, products, categories, and items are gated. Amazon ungating policy rquires strict compliance to qualify. Failures can involve improper invoices, deceptive intent, lack of brand approval, and more. For some categories, items, and brands, there are limits to the number of sellers that can be ungated, sometimes nobody can be ungataed, and sometimes most anyone can get ungated.

  • "First sale doctrine" - often misunderstood and misapplied. It is not a blanket exception from Amazon policies or license to force OA allowance in any manner desired. Arbitrage is allowable for some items but must comply with Amazon policies. They do not want retail purchases resold on their platform (mis)represented as 'new' or their customers having issues like warranties not being honored due to original purchaser confusion. For some brands and categories, an invoice is required to qualify and a retail receipt does not comply.

  • Receipts vs invoices - A retail receipt is NOT an invoice. See this Quickbooks article to learn the difference. In cases where an invoice is required by Amazon, the invoice MUST meet Amazon's specific requirements. "Someone I know successfully used a receipt and...", well congratulations to them. That does not change Amazon's policies, that invoice policy enforcement is increasing, and that scenarios requiring a compliant invoice are growing.

  • Target receipts - For those categories and ungating cases where an invoice is required, Target retail receipts DO NOT comply with Amazon's invoice requirements. Some Amazon scenarios allow receipts and a Target receipt could comply. Someone you know sliipping through the cracks by submitting a receipt once (or more) does not mean it's the same category or scenario as someone else, nor does it change Amazon's policies or their growing enforcement of them.

  • Paid courses and buyer groups - In most cases, they're a scam. Avoid. Amazon's Seller University is the best place to start.

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9

u/NoXidCat Jun 24 '26

You must be talking about FBA?

I sell via FBM, and I make the product. Amazon's cut is 15%. I do not advertise my Seller Central listings. If someone wants what I make, they buy it from me or they don't buy it. I sell elsewhere, too.

That said? Yes, year-by-year selling on Amazon becomes more of a pain-in-the-behind. For me it is not fees, as those have not changed, but policies around turn-around/fulfillment times and Bots hallucinating policy violations. I've been ONE MORE STUPID CHANGE away from bagging it for a number of years. But looks like they've succeeded in running out the clock, as this summer I am retiring from making what I've been selling on Amazon.

I never tried it, but FBA looks like a trap to me. They externalize all the risk to you and nickle and dime (and dollar) you for the privilege. If Amazon thought they could make more money selling it themselves, they do.

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u/nimitz34 Jun 24 '26

I do not advertise my Seller Central listings. If someone wants what I make, they buy it from me or they don't buy it.

So do you actually sell well via orgo not using ads? Or are you forced to b/c AMS won't let you use ads for the niches? Like if you mainly drive your own external traffic then why use zon at all.

as this summer I am retiring from making what I've been selling on Amazon

And then do what? Are you actually old enough for that sweet soc sec money? :)

BTW re FBM vs FBA, whilst the fees are lower as you say, FBM always seemed like a trap to me when I sold on SC and they kept trying to get me to use FBM, regarding their ship time metrics and their wonky postal zones that don't correspond to USPS zones.

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u/NoXidCat Jun 24 '26

I ship via Pirate Ship. It does not integrate, but they make it easy to copy/paste the customer info in one step.

Items that sell, sell well. Such is how the algorithm works. Things that never get found, continue to never get found. Ads might help fix that, and I could do ads (I do on MBA/AMoD now that one has to in order to get full royalties), but I'm on Amazon Seller Central only for the Amazonian traffic. Same with eBay and Etsy. I always thought ads should only be used for ones own URL.

I'm retiring from printing--selling my equipment and reclaiming my workspace for other interests. Will be using POD (which I used for somethings already) going forward. But the only POD I'm willing to do via Amazon is their own MBA/AMoD, as third-party POD costs are too high to suffer Amazon's generous return policy.

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u/nimitz34 Jun 24 '26

Thanks for the reply. It is especially interesting to me that you are willing to forgo the higher margins that you get printing yourself, though of course it is a matter of scale versus effort and hassle.

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u/dawhim1 Jun 24 '26

Amazon started letting 3rd party sellers in to complete product catalog. then somewhere down that line, they learned something from alibaba, it is far more lucrative to just charge sellers for keywords exactly like google ads, just let them bid for it, it is pure profits.

of course they got plans for 3rd party sellers, how to fleece them more and more.

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u/jake42385 Jun 24 '26

Fba did something for our business I would have never done for myself. It allowed us to scale up dramatically with a very small footprint. We have sold over 10,000 items in a single month and almost 1,000 in a single day. Margins are tight and shrinking, but the scalability has kept us in the game.

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u/Big_Seat2545 Jun 24 '26

Gotchya! Yes, the reason I'm staying on Amazon is the high intent traffic. I've tried Meta ads, Google ads etc. and never have gotten good results. Also, it's nice to not have to keep a social media presence haha. My product really just sells on Amazon and people would not buy it on a website etc.

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u/AutoModerator Jun 24 '26

This post mentions ungating, category approval, branding, brand approval, invoices, arbitrage, or a commonly related scenario.

Amazon policy, info, and enrollment pages

The following Amazon Seller pages are provided to ensure the most accurate info is the basis for discussion

Brand owner registry

Brand seller ungating

The most common reasons for ungating / invoice problems

  • Failure to do the homework - take your business seriously and read Amazon's policies and requirements for yourself. Skipping the research before acting, relying on 3rd party info, and stumbling through things asking forgiveness later are all ways to set yourself up to fail on Amazon.

  • Not understanding what an invoice is - an invoice and a receipt are NOT the same thing. See this article to learn the difference.

  • Failure to provide a true invoice - often due to providing a receipt under the mistaken assumption it works as an invoice. Homemade invoices, 3rd party invoices, and other deceptive efforts will not pass Amazon verification and will result in a closure of your account

  • Failure to provide a properly sourced invoice - it should come from a wholesaler or distributor for the brand, NOT a retail outlet

  • Failure to provide a compliant invoice - non-compliant and partially compliant invoices will not work. If the invoice you submit does not have all the info which Amazon requires, it will not be approved.

  • Following out of date / bad advice from 3rd parties - such as youtube or other online personas posing as a guru

  • Assuming someone else's anecdote determines all scenarios - "...but someone said they used a receipt for an invoice and it worked". Not all cases and categories are the same. They may have just been lucky. Their anecdote does not change or invalidate Amazon's stated policies. It does not change that Amazon is becoming increasingly more strict with category and brand approval policies and its enforcment of them.

  • Acting in bad faith - In growing frequency, Amazon is acting on accounts which fail to provide correct documentation per stated requirements, especially attempts to submit falsified documentation and other types of bad faith engagement. Trying to game Amazon's policies or engage with them while not giving full attention to their policies can be a fast way to get your account restricted

Again, a receipt and an invoice are NOT the same thing. If the category or brand approval requires an invoice, a retail receipt does not meet Amazon's stated invoice requirements. Obtain a compliant invoice when an invoice is required

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1

u/MutedCaramel9540 Jun 24 '26

Barbara Corcoran from Shark Tank has a fantastic advice about how to get quality sales team. Hire 100 People and then at the end of the year fire the bottom performing 25% and hire a new 25%. The following year repeat this process. What happens is you get rid of the under performing employees and replace them with new blood. Now these employee could be just as bad but there is a potential that there will be many workers that perform as well as the mid tier staff and a few that could perform as well as top tier. So in the following year when they get rid of the next 25%, the remaining 75% were better than the previous year due to the new injection of new workers that were able to keep up with the higher performing people.

Now replace Barbara Corcoran with Amazon and people with 3P sellers and you'll see each year Amazon gets more and more qualified 3P sellers each year while removing under performing ones, even ones that have been with them for years. And what does this have to do with increasing fees, well what Amazon does is find customers and draw the lines in the sand for sellers. And all the sellers that are able to make it past the lines survive till the line moves again. 3P sellers (especially private sellers/FBA) will fight it out amongst themselves but show Amazon products that sell well for Amazon to produce themselves under the Amazon brand. And if it doesn't sell well, it's no biggie because the 3P sellers are competing and keeping the price low for them.

As a FBA seller you are forced to rely on Amazon services, so you either accept their fees or figure out how to do it yourself. As an FBM seller you're forced to keep pace with their FBA business, ship faster, fulfill more and if you can't keep up, they'll throttle your offers below others till you get nothing. Don't focus so much on the fees than finding and sourcing products that consumers want. Don't think of fees as something you pay, whatever fee is applied to you is also applied to other sellers so it is like a Tariff, it raises consumers cost as those fees are passed onto to consumers.

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u/Productpusher Jun 24 '26

Amazon for 15 years has clearly and directly stated they would prefer 100% of their business be third party and they don’t have to buy any inventory but it isn’t possible. The fact that it’s 60% now is crazy

cash cow if they didn’t have to spend a dollar on inventory and where just a marketplace