Why Amazon Cheats Little Guys
Goopy Ghost
Ambassador character for Little Ray Children's Books, Inc., a 501c3 nonprofit.
My creator, Terry Verduin, pen name V. R. Duin, in an earlier article, discussed “How Amazon Cheats Little Guys”. Arbitration clauses imposed on little guys allow Amazon to perform self-serving acts with impunity. Amazon maintains its selling supremacy through ‘dump and churn’ tactics and by leveraging data and using coding tricks to exploit small business, including self-published writers.
?By treating select first-party products, including KDP-printed books, as wholesale items, Amazon creates a feeding-frenzy of third-party sellers, on the first-party’s own pages, often without their knowledge or consent. The increasing numbers of third-party-discount competitors on first-party Amazon pages helps Amazon avoid royalty payments, simplify production/distribution logistics, take advantage of the first-party sellers’ marketing efforts for its own benefit and for that of third-party sellers, thus increasing Amazon’s profits. By generating fees rather than making sales of goods, third-party sales also reduce sales tax payments by Amazon.
?Amazon picks who makes sales with the buy box. The price check app helps customers find the lowest prices on Amazon. These tactics inflate Amazon’s huge selling numbers in the industry. The cheap prices and myriad of products keep purchasers looking to Amazon for purchases. The allure of Amazon “winners” and the potential offered by visibility on Amazon cause first-party sellers to market even harder, with the greatest benefit going to the Amazon selling machine.
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?Third-party sellers handle 80 percent of Amazon-listed products. They pay commissions. They pay for Amazon advertising. They pay for Prime shipping. In return, they receive 98 percent of purchases.?Morgan Stanley estimated Amazon earns 20 percent profit on third-party sales vs 5 percent on retail (first-party sales). Amazon is looking to accelerate third-party adoption — physical retail teams are moving to the cloud. A future of cashier-less checkout, palm readers and other products and services bodes poorly for first-party sellers on Amazon.
?Amazon draws a constant stream of hopeful little guys, who market their products on false promises of fair royalties or earnings. When they abandon pointless, wasted efforts to profit from “passive” sales on Amazon, new little guys are lured to “test the waters” on Amazon’s selling machine. By keeping the appearance of high selling numbers, Amazon continues to grow. When nobody is left to recruit, this scheme should collapse. Short of this, little guys have no escape option. Until supply runs out, or Amazon stops the production line, little guys’ products are forever stuck in Amazon’s trap, with sales sent to third parties.
Ambassador character for Little Ray Children's Books, Inc., a 501c3 nonprofit.
10 个月We are in the process of creating second editions for each book. When this process is complete, we hope to extricate ourselves from sales piracy. It is a jungle out there. Beware, #writers.
Ambassador character for Little Ray Children's Books, Inc., a 501c3 nonprofit.
1 年Thank you for your participation in this post!
DNR-Discipline's No Reason. Senior Biology Teacher
1 年Goopy Ghost. Greetings Thank for sharing. #onlinebookstore.
For Your Business Success & Prosperity . I show solopreneurs and business owners what to do & how to do it. Founder of Business 737.
1 年Best wishes for the new year!
Project Management Professional | Changemaker | Lean Six Sigma | Servant Leader | Manage Projects that Increase Revenue, Cut Expenses, and Improve Operations| Renaissance Woman???? A.B.L.E- Always Be Learning Everything
1 年The answer, of course, is to not keep all your eggs in Amazon's basket. And by eggs I mean books, products, and advertising dollars. I invest a small portion of my marketing budget to Amazon and it feeds itself (for example, if I make $40 in sales, I reinvest $15 in ads or 1/3 of my profit.) But my ad budget on Facebook, Google and Pinterest drive sales to my website not to Amazon. On my site I mention the books are available at most online retailers (some people are skittish about buying on individual websites) and my shop link is also there beside indie bookshops, Amazon, Kobo, B&N et al.