In 2019, Amazon pocketed $60 billion in seller fees and this year, its take will soar to $121 billion, according to the report titled ‘Amazon’s Toll Road’ by the Institute for Local Self-Reliance. Even as these exorbitant fees bankrupt sellers, they are generating huge profits for Amazon, a fact that the tech giant conceals in its financial reports.
“These profits are not only the spoils of Amazon’s monopoly power. They are the essential fuel that feeds its market-domination strategies, enabling it to absorb massive, predatory losses designed to lock-in market control and fund breakneck expansion,” said study author Stacy Mitchell.
Over the last few years, Amazon has faced growing scrutiny for spying on sellers, copying their products, and giving its own brands preferential placement in search results.
Amazon Founder Jeff Bezos recently told the US Congress that the increasing amount of money going from sellers to Amazon is something of an “optical illusion”. “I think what you’re seeing there when you see these fees going up, what’s really happening is that sellers are choosing to use more of our services that we make available,” Bezos had replied to a question.
In a statement, Amazon called the report “inaccurate,” and added it “conflates Amazon’s selling fees with our optional add-on services”. According to Mitchell, the staggering scale of these fees provide evidence of Amazon’s monopolisation of the online market and the high costs that come with it.
“Using a variety of fees, Amazon now pockets a 34 per cent cut of the revenue earned by independent sellers on its site, our analysis found. That’s up from 30 per cent in 2018, and 19 per cent in 2014,” she noted.