Recently, Amazon has come under fire for price targeting and the overall inflation of prices on their site and marketplace. Amazon originally gained traction in the early 2000s because of its convenient online marketplace that offered competitive prices. Current numbers indicate the company is going down a different path.
Amazon’s global recognition and its value as a convenient marketplace have made it a dominant business, beating out other online businesses as well as competing heavily with established retail stores. Amazon no longer relies on low competitive prices to carry its business because of its popular Prime service and two-day shipping through its fulfillment centers.
Why Sell a Book for One Cent?
In the Amazon marketplace for used books, you will often see books being sold for a mere one cent. It seems absurd that anyone would make one cent in a transaction, but sellers use shipping fees to make money. Amazon used to charge $1.35 plus 15 percent of the item price, but fee changes are set to roll out March 2017. Amazon will charge sellers $1.80 plus 15 percent of the total price, which includes the item price and shipping. In response, marketplace sellers will have to increase their prices to continue making the same margins. The changes will hurt the sellers of extremely low-priced used books the most.
All They Do Is Win
The situation is win-win for Amazon. They receive an influx of money from increased fees, and the increase in used book prices drives buyers to Amazon’s Kindle eBook market. Publishers will also sell more new books as the price gap between new and used books shrinks. The changes get two thumbs up from publishers and Amazon, but consumer reactions will range from indifferent to displeased. Consumers may be happy to buy more new books, but ultimately, they probably won’t enjoy the rising prices of used books.
Diminishing profit margins will force sellers out–mainly those who sell extremely low-priced used books. Amazon marketplace sellers should be wary of the March 2017 changes, especially since new fees apply not only to books, but to music, videos, DVDs, software, and video games. The new fees many not sink sellers immediately, but they’ll be bailing out their boats in the coming months.