Amazon, the giant in e-commerce, almost entire monopoly lays beneath their feet, anyone who wants to be relevant in e-commerce needs to play their game and off-course pay staggering fees. Small businesses and lawmakers in Canada are hoping that the nation’s competition watchdog would imitate American regulators and pursue Amazon for its business practices.
Tuesday saw the filing of an antitrust lawsuit against the e-commerce behemoth by the U.S. Federal Trade Commission (FTC) and 17 states, accusing it of illegally maintaining a monopoly over the American retail and technology markets by stifling competition and charging small businesses who use Amazon’s services exorbitant fees.
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Around a year after the FTC started looking into the corporation, the Competition Bureau of Canada announced an investigation into Amazon’s business practices. Since inviting market players to submit comments in August of that year, however, there has been no update on the probe’s status.
There is no information on the status of investigation and if there is any base for criminal charges or for illegally maintaining a monopoly.
Anyone who is selling on Amazon platform or wants to sell on Amazon knows how many fees need to paid in order to have Amazon account, advertise, storage products at Amazon facilities, sell on Amazon and even withdraw their products from Amazon storage.
Selling products on Amazon.ca can be a lucrative venture, offering access to a vast customer base and a robust e-commerce platform. However, for sellers, understanding the fees associated with this opportunity is crucial for making informed business decisions and ensuring profitability. In this article, we will delve into the various fees that sellers need to consider when operating on Amazon.ca.
Seller Fees on Amazon.ca
Individual vs. Professional Seller Account:
When sellers start on Amazon.ca, they have the option to choose between an Individual or Professional seller account. Individual accounts are suitable for those who plan to sell fewer than 40 items per month, while Professional accounts cater to sellers with higher volumes. Individual sellers pay a fee of $1.49 per item sold, while Professional sellers are charged a monthly subscription fee of $29.99.
Regardless of the account type, sellers are subject to referral fees. These fees are a percentage of the item’s sale price (varies by category) and are applied whenever a product is sold. Referral fees typically range from 6% to 45% of the item’s sale price, depending on the category.
Certain categories on Amazon.ca, like Books, Music, Video Games, and DVD products, have additional closing fees. These fees apply when an item is sold, and the amount varies based on the category.
If sellers opt to use Amazon’s fulfillment services (Fulfillment by Amazon or FBA), they are charged fulfillment fees. These fees cover storage, packing, and shipping costs. The fees vary based on the size and weight of the item.
Subscription Fees for Professional Sellers:
Professional sellers pay a fixed monthly subscription fee of $29.99, regardless of the number of items sold. This fee grants them access to additional seller tools and features.
Other Optional Fees:
- Advertising Fees: Sellers can opt for various advertising services on Amazon.ca, incurring additional costs based on their ad campaigns’ performance and budget.
- Refund Administration Fees: In case of customer refunds, sellers might be charged a refund administration fee, which is a percentage of the item’s referral fee.
Since April 2022, in addition to the regular fulfillment costs, Amazon FBA has demanded a 5% Fuel and Inflation Surcharge. Additionally, Amazon is charging a $0.35 premium for any item sold in the United States or Canada between October 15, 2022, and January 14, 2023.
Amazon FBA inventory storage fees:
starting at $0.75/cubic foot
Long-term storage fees:
This fee starts at $1.50/cubic foot for items stored between 271 to 365 days
Returns processing fees:
If a customer sends back a product you sold on Amazon that includes free return shipping fees range from $2.12 to $3.41 for most items but may go higher for oversized items.
FBA removal order fee:
You must pay this fee for any item you want to have shipped back to you from an Amazon fulfillment centre. Fees range from $0.52 to $1.51 per unit for standard size items.
Enough of fees? There are more fees but they apply on individual items, sizes and so on. Fees on Amazon are about 50% of the fully priced item, percentage varies depending on the size, price and type of goods.
If you wonder why the online price is same as buy in store price, now you now why.
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Lawsuit and possible outcome
According to the FTC’s lawsuit, Amazon has allegedly tried to “bury” listings from American sellers who are discovered to be offering lower prices elsewhere and has financially squeezed merchants by routinely increasing the fees assessed to companies that rely on the company’s listing, delivery, and storage services.
Amazon has refuted the FTC’s allegations and stated that they are “wrong on the facts.”
One of the assertions is that Amazon will contact suppliers of goods that are popular when sold by independent Canadian companies so that Amazon can sell them directly. Then, those Canadian listings “seem to disappear” from the screen.
If the inquiry reveals any violations of the Competition Act’s requirements, the Competition Bureau investigation may lead to a negotiated settlement or a proceeding before the Competition Tribunal. The tribunal might impose financial penalties as well as an injunction requiring Amazon to alter its business practices.