Did you know Amazon makes MORE money from Black Friday and other coupon sales even though products are cheaper? Yep.
This is how the coupon scam works …
Amazon charges a fee for product sales, typically 15% for many products.
So if a seller offers a product worth $30 and Amazon usually charges a 15% fee of $4.50 then the seller receives $25.50.
But when a coupon “sale” is done, such as Black Friday, Prime Day, other endless sales during the year, two things happen – PAY ATTENTION TO THIS:
1. Amazon charges its 15% based on the original product price – not the reduced coupon price.
2. Amazon charges the seller a “redemption fee” when a customer uses a coupon.
So if a seller offers a product worth $30 and Amazon usually charges a 15% fee of $4.50, if a $5 coupon is offered, the buyer will pay $25. The seller will only receive $19.90: $30 minus the $5.00 coupon minus the $4.50 Amazon fee based on the non-sale price minus a coupon redemption fee of $0.60.
Instead of making 15% ($4.50) on a $30 sale Amazon makes 20.4% ($5.10) on a $25 sale.
By using a coupon sale Amazon increased its cut of the buyer’s purchase by a whopping 36% from 15% to 20.4% by basing its fee on the non-sales price and charging the seller a redemption fee.
Wow.
This is a zero sum game where Amazon’s increased cut causes a reduced cut for sellers.
Customers get a deal. Amazon increases its profits 36 percent. Small business owners get screwed.
*** Note that Amazon INCREASES its profits from sales. Amazon is NOT offering a sales discount for itself when advertising coupon “deals” ***
But do customers really get a deal?
Sellers obviously have to increase their regular price accordingly which leads to higher prices for customers.
Bottom line: Coupon sales events such as Amazon’s Black Friday, Prime Day, other days lead to overall higher prices for customers, bigger profits for Amazon, and shrinking profits for business owners.
If Amazon were truly offering a “deal” it would not charge a coupon redemption fee and it would charge its commission based on the sales price paid, as well as decreasing its 15% rate. For example, if Amazon really wants to offer a 25% price discount it should not charge a coupon fee, base its commission on the sales price paid, and also reduce its commission rate and give the savings to buyers. Right?
One solution is to simply lower prices for product sales without needing to use a coupon – as happens in normal retail. It is the “coupon” which is the scam because it allows Amazon to maintain the product price for its commission rate and to extract a fee for use of the coupon. Business owners and customers would be better served if a $30 product was simply on sale for $25 without the need for the phony “coupon” which serves to increase Amazon’s profits and necessitates overall price increases so sellers can stay in business despite Amazon’s money grab.
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