Amazon s $185 Billion Pay-to-Play System – The American Prospect

Amazon now takes 45 cents in fees out of every dollar of third-party sales at its marketplace, according to updated statistics in a new report from the Institute for Local Self-Reliance.

The e-commerce giant s extraction from third-party sales revenue was just 19 percent in 2014. It grew to 27 percent in 2017, 35 percent in 2020, and reached 45 percent this year, according to ILSR s figures. This has imposed significant pressure on sellers ability to make a profit, and is contributing to inflation woes as fees get passed on to customers in the form of higher prices.

Overall, Amazon is projected to make $185 billion in fees from third-party sellers in 2023: $125 billion from U.S. third-party sellers and another $60 billion from foreign-market businesses and vendor ads. In 2014, that number was $13 billion. Put another way, in nine years, Amazon has increased its fee revenue 14-fold.

The fees far exceed Amazon s costs. For example, Amazon has already made $82 billion in fees from domestic and foreign third-party sellers in the first half of 2023, enough to cover all of its fulfillment facilities, which ship products sold by both third-party sellers and Amazon itself. In other words, Amazon doesn t have to build warehousing and shipping costs into the price of its own products, because it s found a way to get smaller online sellers to pay those costs, writes Stacy Mitchell, ILSR s co-executive director and author of the report. In this sense, the third-party seller fees subsidize the below-cost sales that allow Amazon to drive competitors out of the market.

via prospect.org

Antitrust law, especially as it practiced, is fiendishly complicated. I don’t know if the claims in this article are true, and if that are true, if they amount to Amazon having a monopoly. One hopes, though, if this is all true, that the FTC comes down on them, which is what they should do, and is unlikely.