Amazon’s Value Proposition: What It Claims vs. What Sellers Really Experience

When Amazon highlights the value it provides to third-party sellers, it’s worth asking: Does it truly offer the best value, or is there more to the story?

Amazon recently shared updates about its fees and services, emphasizing "cost-effective tools" and support for sellers. But as someone who’s worked across platforms, I can’t help but question: Are we paying for value, or just paying to access Amazon’s customer base?

Fee Structure: Transparency vs. True Cost

Amazon’s fees sound competitive on the surface:

• Professional Plan: $39.99/month with no per-item fee.
• Referral Fees: Averaging 15% or less, with some categories as low as 5%.

While this might work for some sellers, platforms like Shopify and Walmart.com offer different types of value:

• Shopify: While you pay for hosting and marketing, it gives you full control over your brand, pricing, and customer relationships. No 15% slice of every sale.
• Walmart Marketplace: Its referral fees are comparable to Amazon’s, but Walmart isn’t competing with you by launching private-label products in your category.

The Question: Are Amazon’s fees about delivering value, or just a cost of entry for its massive customer base?

FBA: Convenience vs. Control

Amazon touts Fulfillment by Amazon (FBA) as a money-saver, claiming it’s 70% cheaper than major U.S. carriers for two-day shipping. While true for high-volume sellers, FBA often comes with:

• Seasonal Storage Fees: These skyrocket during Q4, eating into margins.
• Surcharges: Aged inventory penalties and additional fees for returns or overstock.

On the other hand:

• Shopify Fulfillment Network offers more predictable costs, without the constant fee adjustments.
• Walmart Fulfillment Services gives sellers access to Walmart’s logistics network, with fewer penalties for aged inventory and greater control over product placement.

The Challenge: Does FBA provide enough value to justify the hidden costs and lack of control?

Advertising: Growth or Pay-to-Play?

Amazon’s advertising tools are powerful, but they’ve made pay-to-play almost mandatory. Organic visibility feels increasingly out of reach as ad placements dominate search results.

Compare this to:

• Shopify: Sellers own their traffic strategies, relying on direct customer acquisition and email marketing to build loyal audiences.
• Walmart.com: With fewer sellers competing for ad space, costs for Walmart Connect ads are generally lower, making it easier to maximize ROI.

The Reality: Is Amazon empowering sellers to grow, or just charging them more to stay visible?

Amazon vs. Shopify and Walmart: The Real Comparison

While Amazon excels at giving sellers access to a massive audience, platforms like Shopify and Walmart offer distinct advantages:

• Shopify: Perfect for sellers who value ownership of their brand, customer relationships, and marketing.
• Walmart Marketplace: A growing competitor to Amazon with a loyal customer base, fewer competing sellers, and no private-label competition.

Amazon is ideal for businesses that prioritize speed and scale, but if you’re in a low-margin or niche category, platforms like Shopify and Walmart might offer better profitability and control.

My Takeaway

Amazon remains a strong platform for third-party sellers, but it’s not always the best choice. It’s crucial to ask yourself:

• Do the fees align with the value I’m receiving?
• Am I okay with sacrificing control for convenience?

For some, Amazon’s trade-offs are worth it. For others, Shopify and Walmart may deliver more sustainable long-term growth.

I’ve broken this down further in my newsletter—check it out here: [insert link].

What do you think? Does Amazon’s "value" justify the cost, or are platforms like Shopify and Walmart better alternatives for your business?

Ruben A.

CEO at PAS