Amazon revenue is dropping! The company chooses the simplest solution: raise prices

News hardware Amazon revenue is dropping! The company chooses the simplest solution: raise prices

In Western countries, Amazon is by far the largest online retailer. If the firm created by Jeff Bezos is a hit as much (no pun intended), it is largely thanks to its advantageous prices. Yes, but here it is: times are tough and Amazon prices will soon increase.

Inflation also affects Amazon: third-party sellers will have to pay more

As often with this kind of article, we prefer to start by telling you that we are absolutely not sponsored by Amazon or any competitor of the American giant. We have chosen to deal with this subject for information purposes and we are free in its drafting.

That being said, let’s get back to business. Finally, to our boxes. You know it as well as we do, right now, everything costs more. The galloping inflation of energy prices, freight costs or raw materials lead to an overall increase in almost all sectors of the economy.

In this context, it is difficult for Amazon to maintain its current prices without cutting too much into its margin. To cope, Jeff Bezos’ firm has decided to force merchants who use Amazon to give it a larger share of their profits… only during the holiday season.

Yes, all the big online merchants are already preparing for the Black Friday / Christmas period, which is by far the most important of the year. Billions of dollars are at stake.

LAssociated Press (a kind of huge global AFP based in the United States) got its hands on ‘the statement that Amazon has just sent to its third-party sellers. 3 major points to remember:

  • The new price will be $0.35 per product. Translated into euros, the sum is more or less the same.
  • The new price will only apply over the period from October 15 to January 14so for 3 months.
  • For now, only sellers based in the United States and Canada received the news.

Amazon: understanding this special Christmas price increase (fixed price, case of France, etc.)

There, some people may wonder why the price to pay for third-party sellers is a fixed sum and not a percentage. In fact, it’s because these 35 cents are requested in payment for a specific service.

This service is called Fulfillment by Amazon. It allows almost anyone to benefit from the logistics of the giant: stock in warehouses, packaging, shipping… in short, to act as if the product of a third-party seller was an Amazon product. Fullfilm by Amazon is decorrelated from any additional percentage linked to the promotion on the e-commerce site.

Amazon justifies this temporary increase by saying that the density of the holiday season systematically leads to higher logistics costs. According to Amazon, the mega-corporation used to pay for this increase on its own but, due to inflation, this became impossible this year.

This is the second time of the year that Fulfillment by Amazon raises its prices. In addition to these new costs, third-party vendors are also experiencing widespread inflation. The pressure that falls on them is stronger than ever. As a result, even if the price increase does not apply directly to products, we can expect

Should we be worried about a similar rise in Europe? We don’t want to give you false hopes, it’s a safe bet that France and its neighbors will be in the same boat as North America.

It would not be the first time that price increases across the Atlantic preceded ours. For example, the Amazon Prime subscription increased its prices in February in the United States and it was only 5 months later, in July 2022, that we were informed of a similar increase, which will take effect from the month of September.

Even without this example, it would be absurd if only part of the world suffered this special Christmas increase. If the reason invoked by Amazon to justify its increase is true, and it undoubtedly is, we are as concerned as the Americans: the end-of-year celebrations systematically lead to a sharp increase in logistics activity in France.

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