If you’re a shopper that pays attention you will have noticed prices in Amazon have been escalating the past few years – and Amazon has said its prices will go higher with tariffs as an excuse.
At the same time Amazon’s stock has floundered – dropping 6 percent over the last year as this is written, and substantially lagging the overall market for years.
What is going on?
As an Amazon seller let me pull back the curtain a bit as to what has happened with Amazon.
1. Fees have skyrocketed. As you would expect, when a business has higher costs they are typically passed along to the consumer. When Amazon adds new fee after new fee after new fee sellers raise their prices.
It’s not just new fees but an avalanche of new metrics sellers must meet. For example, Amazon cut by almost 40% the time allowed for an order to be delivered by the post office, UPS, FedEx, etc (from 8 days to 5 days), and if more than 10% of deliveries fail to meet the new standard then a seller can lose their ability to sell – UNLESS – they pay Amazon “protection money” by buying shipping from Amazon. Then, so long as Amazon is paid for the shipping Amazon doesn’t care how long it takes an order to be delivered.
If that sounds like mafia extortion – having to pay X to be “protected” from X – well yeah. I spoke with an account manager and my takeaway was that many sellers are complaining about this and the arrangement smells.
2. Amazon has shifted emphasis from making sales to making money from advertising clicks whether or not a sale is ever made.
There is supposedly a document saying Amazon has been “poisoning” the search results to not immediately show what someone is searching for and using tactics designed to cause someone to “click around” to find a product they want. The “click around” is a payment from the advertiser to Amazon.
The advertising situation is related to reason #1 – increased costs. When a seller has to pay more for advertising to get a product seen and sold that additional cost is going to be reflected in the product price.
It’s also a bad experience for shoppers. Amazon has turned into an advertising flea market where the company would rather pound a consumer to death with a ton of ads instead of showing a product the customer actually wants to buy.
3. Backend disaster. The general public would be stunned at how many functional problems exist for sellers. Programming is continually broken and features are continually changing, make no sense, or are broken. Bots and now AI run amok making bad decisions. It is a daily adventure for sellers that can consume a significant amount of time. Time is money and that also causes prices to increase.
There is no question that Amazon is – by far – the most time consuming marketplace I have ever experienced for a seller to navigate.
4. Lack of support. Amazon long ago outsourced its seller support to India because one of the poorest countries on the planet happens to have a lot of people who can somewhat read English due to British colonialization.
The result is jaw dropping incompetence. There are online reports of support employees admitting they just simply close cases rather than try to provide actual support. In part, I believe due to metrics of how they are evaluated. Apparently, the faster a case is closed the better than appear.
But that is par for the course. There are now reports that even programmers are now being pushed to be faster and faster because of AI, and they feel akin to fulfillment center employees who have long been pushed to be faster and faster.
There are thousands upon thousands of complaints about support in Amazon’s seller’s forum. Many say they just give up on issues, often resulting in products being deleted and sales lost. I’ve done. At some point the hassle, aggravation, and emotional harm combined with lost time is not worth trying to correct a problem. Just delete the product and move on.
.
The result of these issues is there are times I feel like I could spend 24 hours a day, every day, trying to deal with Amazon.
I have no reason to believe the situation will get any better.
But I have learned to shop around more to find better deals. I am finding many products are cheaper on other sites. Amazon does have value for giving out refunds like candy so if a product looks questionable I might buy on Amazon just to make use of the refund policy.
The ironic result of all this, looking at the stock and company income statements going back a few years: is that while the company continues to grow more revenue, the actual revenue growth has dropped in half. Ouch. Operating expenses have almost doubled but growth has not.
Perhaps the new fees and shift to advertising revenue are an attempt to make up for this problem, but I see them as short-term bandaids that actually make the marketplace worse and longterm financials more iffy.
I say the company should focus on how to simplify selling for sellers, cutting fees, scaling back the advertising overload, and actually trying to show customers what they want to buy (even if there is no advertising for it) so that sales increase. Simplicity should reduce all the broken issues and cut costs, and more sales lead to future more sales outweighing advertising lost revenue.
Overloading buyers with a ton of ads for products they are not actually searching for, while burying relevant products because they may not be as profitable in the click around for Amazon, is as piss-poor longterm strategy. It is not good for buyers. It is not good for sellers. It will eventually not be good for Amazon.
In other words – get back to actually being consumer focused instead of pretending what is happening is actually good for anyone.
Cut sellers costs so they can cut prices. Show the most relevant search results a buyer is searching for to increase sales. And finally, once again, the tsunami of ads is an incredibly bad experience. Showing more and more and more ads is a bad strategy that Amazon has embarked on.
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