In November, Amazon announced that it had no plans to raise its merchant fulfillment and referral fees this year, and that despite inflation and greater investment in employee pay and benefits, it had managed to reduce costs through innovation, greater efficiency, and reducing defects, so therefore it would not raise fees or introduce new ones.
Until…
It turns out Amazon very specifically meant that it wouldn't increase fees on fulfillment or referral — but that left a very big window open to increase fees elsewhere like on advertising, deals, and promotions, which is what happened last week.
Amazon announced that it would be changing its pricing structure on deals and coupons. The company wrote:
“Deals and coupons give you access to additional merchandising benefits that make your products more discoverable, drive customer reach, and may generate additional sales. We’re making several changes that are designed to make it easier to test deal and coupons strategies by giving you more control on deal duration, lowering up-front deal costs, and making deals and coupons fees performance-based so they are better aligned with your business.”
However the outcome for most sellers will be HIGHER costs to run deals and coupons.
Jon Elder of Amazon Insiders broke the fee changes down on a LinkedIn post:
- Lightning Deals: Used to cost $150 fixed, now $70 per day + 1% of sales (capped at $2,000).
- Best Deals: Used to cost $300 for 7 days, now $70 per day + 1% of sales (ouch!)
- Coupons: Used to be $0.60 per unit redeemed, now $5 per coupon + 2.5% of sales.
- Prime Discounts: Doubled from $50 to $100 per PED.
Several sellers commented on Amazon's announcement with their projections and recent experiences:
- “24∗2.5%=0.6 For anything priced OVER $24, the coupon cost SKYROCKETS like crazy. This is a total rip-off! This is highway robbery!”
- “If my product is priced at $500, and I set a fixed coupon discount of $50 with a redemption limit of 200 times, my total sales would be $90,000. Under the original coupon policy, I would only need to pay a redemption fee of 200 * 0.6 = $120. But now, with the new coupon policy, I have to pay Amazon $5 + $90,000 * 2.5% = $2,255 in fees. $120 vs. $2,255—has Amazon completely lost it?!”
- “We have tallied recent coupon sales, 95 redemptions, sales of $9,003, and costs before and after the change of $57 and $230 respectively, a four-fold difference in cost.”
- “This is some serious “Day 3″ energy. $100 item in a 15% category, means Amazon makes $15 when you sell it. Put that item on a 10% off coupon, so your GMV is $90, Amazon now makes $15.75 (+the $5 fixed fee) when you sell it. That's right, you give a customer a $10 savings and Amazon puts their hand into your wallet for an extra $0.75 vs. selling it full price. At 15% off, Amazon makes $0.125 less; at 20% off, $1 less. Amazon wants YOU to discount, but they don't want THEIR fees to be discounted.”
Sellers are bracing for other not-so-surprise new Amazon fees this year on the self-proclaimed “Year of No New Fees.”