My Small Store leaves Amazon

My Small Store stops selling on Amazon

We were selling on Amazon and were a successful Amazon seller, being complimented multiple times by AMZ support staff for our customer service. It's not always easy to build an Amazon success stories but we did it, thanks to our customers.

After a few months selling on the marketplace, we decided as of today (Earth Day, 2019) that this Amazon business model isn't for us and we want to explain our reasoning. 

Amazon selling fees

As many marketplaces like eBay, Etsy, AMZ has fees which are becoming a bit too high and are pushed to customers who mostly have no idea of being over charged. These fees depends on who ship the product - Merchant fulfilled (we ship the product to you) AMZ fulfilled, also called FBA (AMZ ships to you).In our demonstration we will chose a Versace Jeans handbag we sell on My Small Store for $100, the weight is 5lbs with packaging. We sell it with Free Shipping. 

Cost of the handbag $75, Cost of shipping $6.99 for a total cost of $81.99 and a net margin of $18.01.

Merchant Fulfilled

  •  Cost of the handbag $75
  •  Cost of shipping $6.99
  •  AMZ selling fee $18 (18% of the sell price 17% +1% selling fee)

Our margin falls to $0.01 which is not viable thus we need to increase the selling price by the value of the selling fees to $118 which increase the fees to $21.24 (18% of $118) reducing our net margin to $14.77…trying to keep our net margin at 18% makes us charge customer $127 or 27% more than what we sell on our website.

Amazon FBA

  • Cost of the handbag $75
  •  Cost of shipping to AMZ warehouse $6.99
  •  AMZ selling fee $18 (18% of the sell price 17% +1% selling fee)
  •  Fulfillment fee $5.26 (shipping cost)
  •  Monthly storage $0.10 (per bag stored)

The new margin drops to $-5.35, losing money thus having to increase our price to $134 or 34% more than the price on My Small Store and I do not include AMZ marketing fees.

We do not feel it's correct upcharging customers north of 30%

Other cost linked to selling on AMZ 

My Small Store sold an average of 400 products per months on the popular marketplace. To do so, we needed to have AMZ approved tools, these don't come on the cheap and increase with the number of product sold:

  •  Publishing and stock tracking tool: $1,000 per month
  •  Selling price tracking and adjusting tool: $350 per month
  •  Feedback management tool: $150 per month
  •  AMZ research and margin monitoring tools: $250 per month 
  •  AMZ store fee: $40 per month 

The total cost of these much needed tools about $1,790 or $4.48 per product sold, reducing our margin even further. My Small Store absorbed this cost as passing it to the customer would have us to increase our price by close to 40%.

Amazon new zero fake program

This is a much needed program (Wired has a great article about it) and even some of our staff bought counterfeit products on AMZ with very little recourse. AMZ now delegates this task to "official" sellers, brands and manufacturers allowing them the tag possible fake products.

The big danger is that a big seller selected as "fake angel" can block other sellers from selling similar products. For example if My Small Store was one of these "angels" we could tag other more competitive products as possible fake thus becoming the only seller for that product. 

Since February 2019, we received almost weekly requests to show that our products were authentic by sending authorization and authenticity letters from manufacturer, copy of invoices etc. Not a really big problem and we have been cleared every time, yet @ My Small Store we do not appreciate being accused of crimes we do not commit. 

Customers' communication

Amazon does allow communication with customers only to provide information about their shipment. Great when you sell handbags, it has a serious flaw when it comes to sizes.

For example, when you order a paid of Sparco sneaker size 45, we need to verify that you understood that these sneakers are racing sneakers and fit very tight. Most of the time our customers select one or two sizes over. If we can't ask our AMZ customers and it generate many returns.

For Sparco sneakers, we got about 50% returns from Amazon customers vs. 0% on our website. 

We call it customer service, Amazon calls it spamming.

Products descriptions

That's another big issue - When you sell an existing product, you can't add/change the description easily. For example the Love Moschino slip-on blue sneakers we sell. The marketplace's description looks like this:

  • synthetic lining 
  • Category_Shoes, Color_Blue, Gender_Women, Love Moschino, Season_Fall/Winter, Subcategory_Sneakers, Women
    Love Moschino
  • Women - Shoes - Sneakers

Ours look like this and has been validated by Love Moschino:

  • These beautiful Love Moschino sneakers are not just to go to the gym, they are now a sign of distinction. 
  • Made in Italy 
  • Gender: Woman 
  • Type: Sneakers 
  • Upper: synthetic material leather 
  • Internal lining: leather 
  • Sole: rubber 
  • Glitter, embroideries, slip-on style 
  • Visible logo

Which one do you prefer? :) us too 😃

Conclusion and decision

We would like to thank all our Amazon customers nevertheless we decided to stop selling on the marketplace starting April 22nd, 2019, we do not feel we have any business selling on Amazon.

The biggest issue that made the break is to overcharge for our products to compensate Amazon fees. For many orders, AMZ had a greater income than we do, yet customers pay up to 30% more compared to our website. We do not feel we need AMZ to build a successful e-commerce.

 

Leave a comment

All comments are moderated before being published