Sellers are the real money! Amazon can earn $1 billion just from FBA

According to Amazon's Q3 financial report this year , the performance of its e-commerce division was lower than Wall Street's expectations. The main factors leading to this result include : consumers returning to offline shopping as the epidemic improves , increased labor costs, and supply chain disruptions .

Although the huge profits of Amazon AWS services have reduced the losses of the giant to a certain extent , Amazon seems to have found other solutions to its e-commerce dilemma , that is, to increase FBA fees.

According to Morgan Stanley analyst Brian Nowak , Amazon 's latest fee structure changes for FBA could bring it an additional $1 billion in EBITDA.

FBA is a warehousing and logistics service provided by Amazon to platform sellers . Merchants deliver their products to Amazon fulfillment centers . When buyers make purchases, Amazon will be responsible for packaging and shipping the orders. After deducting the fees charged by Amazon FBA , the merchants receive the product revenue .

There is no doubt that Amazon's increase in FBA fees is bad news for platform sellers , but good news for its shareholders . It is reported that FBA fees have been maintained in the range of 2-3% before , but now they have been increased to 5.2%.

According to Nowak , FBA generated $45 billion in revenue for Amazon in 2021. If the platform 's business growth is 18% and the FBA fee rate is 2%-3% , FBA revenue is expected to reach $54 billion in 2022. However, the newly implemented 5.2 % fee rate will bring an additional $1 billion to $2 billion in revenue, of which $1 billion will flow directly to EBITDA.

In this regard, Nowak further pointed out that although the increase in Amazon FBA fees will not have a substantial impact alone , if this move is combined with other measures on the platform , it will provide Amazon with greater profitability.

At the same time, as the global epidemic gradually improves , the related cost increases and labor shortages will improve , which will in turn reduce Amazon's operating expenses. In addition , Amazon will continue to benefit from its economies of scale, and the subsequent increase in Prime membership prices will also bring it considerable revenue .

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