Will Amazon Third-party Sellers keep having higher costs?

Amazing FBA Amazon and ECommerce Podcast, for Amazon Private Label Sellers, Shopify, Magento or Woocommerce business owners, and other e-commerce sellers and digital entrepreneurs.

Hey folks, I have some bad news that I think Amazon third-party sellers need to know based on Amazon's recent earnings call. Stay tuned. 3 insights for Amazon sellers from Amazon's recent earnings call So there are three facts in the recent earnings call, which I thought are a little bit scary for Amazon third-party sellers, and we need to join up the dots and think this through as Amazon sellers. Here they are: 1. Amazon's profits are up - largely due to third-party sellers paying more for ads! Number one profits on advertising up a metric ton, which means more expensive sales for us. So Amazon should say thank you to the third-party sellers. And of course, we all know this from experience, but it is a fact, and it's clear that Amazon is, as it has been, continuing to prioritize using advertising as the main way of making not so much revenue as profit from its third-party marketplace and indeed the entire marketplace. That's the first one. 2. Investment in FBA is down - bad news for third-party sellers Second one. Investment in the FBA system, which has been a big percentage of their capex, the capital expenditure, is going to be less as a percentage going forward. So that means less fulfillment capacity relative to demand, which is not good news for third-party sellers, of course. It means that also our money is not being spent and being reinvested in the fulfilment system. So where is it going? Is it just going to the shareholders? Well, no, they're not interested in giving away dividends. It's still a growth stock as far as the stock market's concerned. So where is it going? 3. Investment in AWS is up The percentage of capital expenditure going to AWS is booming. Now that makes sense for Amazon because AWS made about 65 per cent of their operating profits in the past year - and their view is that that is going to grow like topsy because most computing power is desktop. So in other words, it's not on the cloud yet, but that is going to be a huge growth story. Now that's probably true for Amazon. And if you want to buy a stock market investment, well, I'm not a stock market investor, but there is a little bit of a hint. Well, I don't, I mean, I invest privately, but I advise publicly. There's a bit of a hint there, isn't there? So you might want to consider Amazon as a great stock, not based on it being an e-commerce company, but it'd be in a pure sort of tech play as a platform for other people to do their tech work - famously, even the CIA uses AWS! Implications for Amazon 3rd Party Sellers Now, what does that imply for Amazon third-party sellers? Well, they are taking money from us. They're not giving it to the shareholders, but they're not reinvesting it in the FBA system either. They are investing it in their most profitable division. And that makes sense, but you should be aware that those are two bad things for us. Bad thing 1: We pay more of our revenue to Amazon Not only is the percentage of money that we're getting taken off. Gonna be bigger as we go because Amazon's squeezing it. Bad thing 2: Amazon will invest less in the E-commerce Marketplace But quite clearly it's seeing the, the future is AWS and the marketplace as a cash cow to squeeze, which means the investment in that I think going forward is gonna be less as well. And that's speculation on my behalf. I don't have any in one on the inside of, of Amazon telling me that, but there's a bit of a major hint and that it's certainly true for the latest earnings calls. So some bad news. What should we do about this? What does that imply We should do? 1. Increase or maintain fat margins Well. I think you've got to first of all, see the increase in costs coming and make sure you have nice fat margins. 2. Renegotiate with Chinese Sellers The good news is you can renegotiate with your Chinese suppliers if you buy from China, because they are experiencing deflation at the same time...