Amazon Prime Day is Amazon’s two-day annual sales event exclusive to their 200 million+ Prime members across 19 different countries. Amazon Prime Day is held over two days — July 12 and 13 of this year — offering prime day deals and exclusive offers to members who pay an annual fee of $139 for Prime membership. Often compared to some of the largest shopping days of the year, it's estimated that consumers spent $11.2 billion during Prime Day last year, up 7.7% from $10.4 billion in 2020.
Amazon has recently centered many of its marketing campaigns around supporting independent brands, small businesses, and artisans with: “Small Business Sweepstakes,” celebrity favorites, and “Amazon Handmade.” However, the reality is that on average, Amazon makes 34% of the revenue earned by independent sellers on its site and the company saw a 35% increase in sales during the pandemic, while small businesses experienced a 12% drop.
Amazon captures roughly 50% of online spending in the U.S., and this dominance allows them to function as a gatekeeper, driving many small businesses to sell products on its site to reach much of the online market. And it comes at a cost.
Today, small businesses pay 15-20% of their sales to Amazon in referral fees on top of a monthly subscription fee ($39.99/mo or $479.88/year) for their professional seller account. These charges often force small businesses into alarmingly tight revenue margins.
In addition, small business owners are forced to pay to advertise their products. While they used to rely on customer ratings to land their products on the critical first page of the more than 12 million products sold on Amazon — today — it’s estimated that small businesses will spend an average of 4.6% of their annual sales revenue to advertise on Amazon.
Plus, if a small business attempts to lower their prices on other sites, Amazon effectively blocks them from doing so, demoting these seller’s products in search results, all the while working to ensure that Amazon’s prices appear competitive.
Furthermore, small business owners are virtually required to purchase Amazon’s inventory storage and fulfillment services — Fulfillment by Amazon (FBA) — since Amazon search algorithms heavily favor sellers who do. These fees have been steadily rising over the years, including this April when Amazon added a 5% fuel and inflation surcharge to all FBA fees. FBA fees range from $3.07 per unit and up to $158.49 per unit for items over 150lbs, plus anywhere from $0.75-$2.40 per cubic feet for monthly inventory storage.
After all of this, even if an independent seller pays for all of Amazon’s offered services, they’re still left to compete with 2 million independent sellers, as well as the 28% of Amazon results that are third-party ads.
All of the fees imposed on small, independent businesses are highly profitable for Amazon. In fact, it’s estimated that Amazon’s seller services generated $103.37 billion in revenue compared to Amazon’s Web Services (AWS) which generated $62.2 billion in revenue, despite AWS being described as the primary source of Amazon’s earnings.
As one report reveals,
Amazon uses rising seller fees to absorb massive, multi-billion dollar losses from Amazon Prime and to subsidize its own retail division, selling goods below cost and allowing the corporation to maintain monopoly power, all the while passing these costs onto independent sellers and small businesses.
At the end of the day, Amazon profits more from small businesses than the small businesses themselves.
Instead of giving your hard-earned money to Jeff Bezos — who’s already pocketed $172,000,000,000 and adds $500 to his wealth every second — consider that:
👉 For every $1 you spend with a small business (independent of Amazon), $0.67 remains in their local economy.
👉 Small businesses are 250% more likely to give back to local community causes than large companies.
To make it easier than ever to support the real humans behind the URLs on Amazon Prime Day and 365 days per year, use goodbuy.
Install the goodbuy Google Chrome Extension and download the goodbuy app to reveal instant alternatives to Amazon and other mega-retailers, or get started shopping instantly with over 183k+ small businesses directly.
Every penny spent with small businesses on goodbuy this July 12th and 13th goes directly into the pockets of small business owners.