Report claims Amazon collects over a third of seller revenue, bringing in $121B in 2021 – TechCrunch

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According to a new study, Amazon earns far more from the price of the Marketplace platform than the dollar box known as AWS. According to the report, the price to effectively participate in Amazon’s store has increased to the point where sellers give the company about 34% of their revenue, which has recently become Amazon’s main source of revenue. The company disagrees with the findings of the report.

Report “Amazon Toll Road” by Local Independence Research Institute, Make two main claims. First, ILSR researchers say that in 2021 Amazon will bring about $ 121 billion from sellers in the form of commissions and ad payments, which will bring about 34% of their total revenue. According to the report, this was twice the estimated $ 60 billion in 2019, at the time 31% of sellers’ revenue.

Founder Jeff Bezos himself said that the increase in the amount of money going to Amazon from sellers is an optical illusion because he chooses to pay for add-on services like better placement in keyword searches. When I told this story, I tried to counter this story by using Amazon’s own shipping and warehousing infrastructure.

In a statement to TechCrunch, Amazon called the ILSR report “inaccurate” and said it “confused Amazon’s sales price with an optional add-on service,” which competes with other online retailers. He said he had power. ..

However, as its author, Stacy Mitchell, points out, add-ons have become mandatory from the options as Amazon has benefited the sellers who use them.According to reports over the last few years, the number of ads and sponsored lists in general product search is Dramatically increased..And Amazon Give a score bonus For sellers using the “Fulfilled By Amazon” service, it will greatly contribute to whether or not your item will get a particular coveted spot on your list.And this is without consideration Shady business of Successful product duplication..

Amazon did not address the allegations that sellers spend four to five times more advertising and placements in 2016, contributing to a significant increase in revenue. The company simply said that there are different types of ads and processes, “a great way to help sellers raise awareness of their products.” As the link above shows, it seems to do so by indirect means, but denied favoring FBA users in search results.

Another claim from the report is that Amazon uses creative accounting to conceal the huge revenue generated by seller fees, grouping the huge profits of the Marketplace division and the huge losses incurred in building the delivery infrastructure. Is to become. Sure, they’re related — but we rarely present two very different numbers of aggregates and claim that they represent the business exactly. This isn’t a new claim, but Mitchell has given concrete numbers for 2020, which is more than a general idea.

Image credit: ILSR

“We conclude that seller fees are more likely to generate more profit than AWS. This contradicts traditional knowledge about the company. In news articles, AWS is usually the source of most of Amazon’s revenue. Is explained, “Mitchell wrote in the summary. “Using the margin analyst estimates that Amazon is likely to earn from seller ads and other seller fees, Marketplace could generate $ 24 billion in operating profit in 2020. This is Amazon. Significantly outperforms the $ 13.5 billion profit reported to AWS. AWS has long been considered Amazon’s dollar box, but this report shows that high-tech giants have a second cash cow. I found that.

Amazon told me that it was “unpredictable” about the 2021 revenue figures for the year, but did not answer the follow-up question asking if the previous year’s figures in the ILSR report were accurate.

Some of these practices have been scrutinized by various government agencies, including the FTC, which is probably led by Lina Khan, the world’s most famous Amazon business practice interrogator. The ILSR report is just information and Amazon can shake it off, but if the FTC Task Force investigates similar questions and draws similar conclusions, there may be a reason for the company to start sweating. not.

Report claims Amazon collects over a third of seller revenue, bringing in $121B in 2021 – TechCrunch Source link Report claims Amazon collects over a third of seller revenue, bringing in $121B in 2021 – TechCrunch

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