Amazon And Big Tech Are Squeezing Sellers Dry...Here's What's Happening

is it just me or is every big tech company going to crap Amazon sucks right now eBay sucks Etsy Sucks Facebook sucks Google sucks every company continues to get worse and charge higher fees as they nickel and dime you to death and they all follow the exact same pattern when any of these companies first start out their only chance of succeeding is to go above and beyond for their users by solving a key problem and as a result their service is amazing in the beginning but then as they become more and more successful their service slowly gets worse and more expensive let's pick on Amazon first since I've been selling on Amazon FBA for over a decade when Amazon first started the Amazon FBA program over a decade ago I remember thinking to myself this is a great thing most e-commerce sellers don't want to deal with inventory and customer service and Amazon was willing to store and ship your inventory at a very reasonable price in fact back then it was a no-brainer to use Amazon FBA you simply have your goods sent to an Amazon fulfillment Center you focus on marketing and optimizing your product listings and Amazon does the rest back in 2010 the Amazon FBA fees were a very small percentage of your revenue and you could ship in as many or as few products as you wanted to without any additional fees Amazon had tons of warehouse space and they were literally begging people to try out the Amazon FBA program soon after it's not surprising how many people flock to selling an Amazon FBA you got free Prime shipping for your customers Amazon offered crazy crazy low UPS shipping rates to their warehouse and everyone was making money hand over fist in fact within a couple of years of Amazon FBA becoming popular everyone and their mother started offering Amazon FBA courses because selling on Amazon was like having a private ATM machine all you had to do was go on Alibaba import some products send it to Amazon and make instant cash without having to deal with inventory Amazon became the everything store and the deao place to shop and sellers making lots of money it was a win-win all around but then things changed as soon as Amazon had a foothold on the buyers completely locked into shopping on their platform they switched their focus to acquiring more sellers now because of Amazon's generous return policy and low prices they knew Shoppers weren't going anywhere and if Amazon can manage to control both the sellers and the buyers they could own the entire e-commerce market now the buyers would stay because of the vast selection low prices and a generous return policy and the sellers would stay because that's where the customers were shopping and that's when they decided to start recruiting Chinese sellers heavily in 2016 Amazon invested tons of resources into programs like the dragonboat program which allowed Chinese sellers a fast track directly into Amazon's fulfillment centers in the United States all of a sudden a factory in China could with Amazon's help sell directly on amazon.com in the US and bypass the middleman directly and within about 3 years Chinese sellers flooded the platform with dirt cheap products that very few us sellers could match in price they started knocking off existing sellers blatantly copying their IP gaming the reviews the rankings everything and Amazon just sat there and basically did nothing for many years now from Amazon's point of view as long as buyers were happy it didn't matter if legitimate hardworking sellers went out of business because there would be instantly another seller to take their place Amazon made money no matter what but it didn't stop there after they knew they had the buyers and the sellers after they knew they were by far the most convenient way to shop online and after they knew they had the best prices from suppliers in China they added a third stage to their master plan now this is the point where Amazon and every other big tech company in this position takes all the profit for themselves because one they can and two Because by the time a company reaches this stage more than likely they are a public company which means that all the decis aren't being made by one passionate founder any longer but by many different shareholders instead and because shareholders aren't as invested in the long-term health of the business they just want the business to earn quick money so that their shares of stock are more valuable their objectives often boil down to how much can we squeeze the sellers to pay the fees up until the absolute limit of what they're willing to but not just past it and then how do we get the buyers to continue buying while slowly deteriorating the quality of service and this my friends is when the company goes to crap by the way if you're enjoying this video so far make sure you sign up for my free six 6-day e-commerce minicourse Below on how to start your online store and stop depending on Amazon let's look at the Amazon search results just as an example back in the good old days you could get lots of free traffic on Amazon by ranking an Amazon search but today you'll notice that the entire front page is flooded with ads and you actually have to scroll down to see the first organic search result and today if you perform just about any product search on Amazon you'll notice that the search results are about 50% ads Amazon charges sellers a feed to make their listing visible and then they charge Hefty fees when a sale is made for example today Amazon charges a 15% referral fee about 10 to 15% for Amazon FBA and another 20 to 30% for advertising if you are lucky this year alone Amazon started charging a brand new receiving fee in addition to their other FBA fees and basically you now have to pay a fee between 21 to $6 per unit for Amazon to accept standard and llarge bulky products into their warehouse this fee is supposed to reflect the cost of Distributing inventory to multiple fulfillment centers but whatever Amazon also introduced a low inventory search charge this fee applies if you consistently carry low inventory levels of your products relative to your unit sales now it's one thing to get charged if you have too much inventory in Amazon's warehouse but now you get charged if you have too little inventory as well and here's how the fee Works let's say you typically sell 1,000 units per month and you let your inventory levels slip to 500 units in stock well this means that you'll get charged a fee for those 500 units because Amazon wants you to have 1,000 units in stock NOW Amazon has tried to justify this fee because they need to place your inventory close to their customers across their network but Amazon sellers are legitimately Furious now let's talk about how buying from Amazon has gone to crap next I don't know about you but I rarely get my products within the Amazon Prime shipping window anymore especially during the holiday season this past Christmas I don't think I received more than 25% of my packages within Amazon's promised delivery window here's another thing I've noticed recently as well Amazon sometimes has a minimum order quantity to get free Prime delivery even though that I'm a Prime member and they often pre-select the slower delivery option as default think about it you're paying a monthly subscription for unlimited Prime delivery but then by default you get the slower delivery method because you forgot to check the fast delivery radio button I've actually accidentally gotten slower delivery this way and they raised the price of Amazon Prime to $139 a year now to add insult to injury most of the products on Amazon are now just cheap repackaged products from Alibaba and you can't really trust what you are buying for example one YouTuber who fixes electronics for a living purchased a bunch of different sets of 5 amp fuses from Amazon and found that none of them actually blew out at 5 amps the product quality on Amazon has been getting worse for years and Amazon doesn't seem to care 50% of the top sellers on Amazon are from China and they violate trademark and copyright laws with impunity and constantly gain the system this is what the crapp ification of a company looks like sellers are getting squeezed on fees and barely making any profit meanwhile buyers are getting lower quality from China with longer shipping times Amazon makes money no matter what and here's an interesting statistic if you look at Amazon's income report for 2023 Amazon's Q4 earnings for thirdparty seller Revenue was 43.4 billion which was up 20% year-over-year but while Amazon's Q4 earnings for third party seller Revenue was up 20% their online store Revenue was only up 9% this means that most of their profit was due to increased fees past on to Sellers and despite the increased fees customer service for sellers is horrific back in the day when I first started selling on Amazon you could actually get a hold of a human on the phone but today it's impossible and if you do manage to get a response from customer service it's always a canned response anyway I don't want to just pick on Amazon Facebook is equally as guilty of crapp ification as well I can't tell you how many times that I've been burned by Facebook in the past two decades back when Facebook Pages were delivering tons of traffic to websites I invested an enormous amount of time to build up my fan page but then overnight Facebook nerfed the reach of all fan pages and forced people to pay for their traffic now shortly after Facebook groups became all the rage and once again I spent a lot of effort building up a private Facebook group of 20,000 users before Facebook pulled the plug on Facebook group reach in order to fill more advertising inventory now You' think that I would have learned after getting burned twice but I fell for it yet again when Facebook released Facebook Messenger marketing the ability to send direct messages to users for free was extremely effective and I spent a lot of effort building up my messenger subscriber list before Facebook decided to shut it down and charge people for messaging here's the number one lesson I've learned over the years every service starts out great and then goes to crap as soon as it gets big and it's just a fact of life and the million-dollar question though is what can you do about it well the secret to long-term success for your business is to ride the wave as it comes and then jump on newer waves as they appear running a business is never a stagnant Affair and services and companies come and go when Facebook started charging for Facebook Messenger I moved to SMS when Facebook nerfed their organic reach I doubl down on email and today the focus of all my businesses is on owned marketing platforms now what is owned marketing basically it's a marketing channel or asset that you control entirely for example when you have a customer's email address you can email them as much as you want and no company can really stop you the same goes with SMS Amazon continues to squeeze all their sellers every year by increasing fees and introducing new ones so guess what you should focus more of your efforts on your own website that you physically own right now Tik Tock shop and Tik to organic marketing is still the Wild Wild West so you should try to catch the wave now before the platform turns to crap as long as you expect the company to go to crap that will keep you on your toes to find the next wave to jump on so what do you think about the crapp ification of tech companies do you agree with me and what can be done about it let me know in the comments below but now that you understand how everything goes to crap eventually watch this video here on exactly what I would do if I were to start all over in business today

Channel: MyWifeQuitHerJob Ecommerce Channel

Views: 26,359

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Id: kC-12bps14I

Length: 11min 24sec (684 seconds)

Published: Tue May 14 2024