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• Small businesses opt to sell on other platforms as Amazon fees increase

• FBA or DTC?

• Need help financing your next product line? Find out if you're eligible!

• How "#1 Best Seller" scammers are stealing your sales

ECOMMERCE NEWSBusinesses opt to sell on other platforms as Amazon fees increase

According to Capterra research, nearly half (48%) of third-party Amazon sellers say new holiday fulfillment fees will impact profitability—and they’re overwhelmingly looking to competitors for lower costs.

It's not surprising that skyrocketing fees are among the main reasons Amazon sellers flock to new platforms.

📈 In this survey, 50% of small business owners who use FBA express their thoughts on unfair fees. Now, 99% intend to sell on other marketplaces next year, including Walmart Marketplace, Facebook Marketplace, and Google Shopping.

Currently, only 31% of FBA users are selling on other e-commerce platforms. However, this number is expected to rise due to Amazon's increasing seller fees this holiday season, a 30% hike from 2020.

Larger brands and businesses have more opportunities to diversify their selling channels, whereas smaller businesses are affected more severely by fee hikes. Despite the disproportion, 67% of the survey's respondents still say they'll continue to sell through FBA, considering their businesses as successful on Amazon.

HOT TOPICFBA or DTC?

Amazon or Shopify? That is a question many new sellers have asked at one point or another in their e-commerce journey. Now, it's up for debate on Reddit.

Although the commenters sell in various categories, they've all agreed on one major factor: the massive number of users that shop on Amazon.

Here's more of what people had to say:

• With Amazon, so much traffic already exists on the platform. Instead of spending time and money trying to drive people to your website, you can use an existing reliable and reputable channel.

• Amazon-owned more than half of the online sales last year. If you can't compete with it, why not join them?

• The traffic on Amazon consists of millions of customers who are ready to spend.

• Selling on Amazon and selling on your website are not mutually exclusive. You don't have to put all your eggs in one basket.

Indeed, the customer base allows businesses to quickly scale their operations and access customers, which is why many sellers choose to sell on Amazon. But as mentioned in some of the comments, the two are not mutually exclusive. People can and often do sell on Amazon and Shopify, sometimes even using one platform to support the other.

BITES OF THE WEEK

• Amazon buyers beware: Scammers are targeting the Best-Seller badge - Yahoo News

• Meta adds Instagram audience targeting for Facebook and IG Ads - Social Media Today 

• Amazon's plan to kill the barcode - CNET

• Will Amazon’s customers go for its pay-for-data scheme? - RetailWire

• Experts share 5 Amazon predictions for 2023 - JumpFly 

MONEY CORNERNeed help financing your next product line? Find out if you're eligible!

After its launch in November, Amazon's cash advance program will be available for even more sellers in early 2023, as originally reported in this article by ModernRetail.

The timing is perfect, as analysts at CB Insights found that venture funding dropped to $74.5 billion in Q3, a 34% drop from Q2. In addition, the number of deals hit 7,936, the lowest since 2020.

💰 TLDR: Amazon Merchant Cash Advance (MCA)

• Amazon partnered with Paraffin, a U.S.-based provider of growth capital, to give eligible Amazon sellers between $500 to $10 million to help cover short-term costs.

• No minimum payments are required! Instead, a biweekly payment of 1% to 15% of the sales for the given period, along with a fixed capital fee.

• There's no interest!

MCA is Amazon's motion to help sellers get easier access to capital. So if you're planning on expanding your business but are strapped for cash, this may be an opportunity worth exploring. Find out if you're eligible!

BLACK MARKETThis is how '#1 Best Seller' scammers are stealing your sales

A Bloomberg article exposed a black hat strategy involving ranking manipulation.

🎩 How it works:

• Sellers add their popular products to incorrect and slow-selling categories. They trick the algorithm into thinking that a product is the #1 Best Seller in that category when it’s not.

• An example would be a phone mount listed under “new axle shafts.” Although it’s not its category, more customers bought phone mounts over axle shafts. The item skyrocketed to best-seller status because it was listed in a less competitive category.

• According to Martin Heubel, a former Amazon product category manager, sellers can trick the algorithms because the products are technically car accessories. So they don’t raise the alarm when placed in other car-part categories.

• Bloomberg identified over 25 cases of miscategorized smartphone mounts, all offered by China-based sellers.

This scam affects customers’ shopping experience and deprives honest sellers of potential sales. For example, a phone accessories merchant said their monthly sales dropped to 50% during the holiday season. In response, Amazon said they use machine learning to detect miscategorized products. They are also warning sellers that this strategy could result in account suspension.

Many are disappointed with Amazon’s inaction despite their reports. Until Amazon resolves this issue, sellers should consider how these actions could affect their sales.