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The My Wife Quit Her Job Podcast With Steve Chou
578: 5 Dirty Tactics Amazon Is Using To Screw Sellers And Raise Prices
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In this episode, I expose five dirty tactics Amazon uses to undercut sellers and raise prices. - From sneaky fee increases to private-label knockoffs, you'll learn how Amazon stacks the deck against small businesses. -
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Welcome back to the podcast, the show where I cover all of the latest strategies and current events related to e commerce and online business. In this episode I'm exposing five dirty tactics that Amazon is using to undercut sellers and raise prices. From sneaky fee increases to private label knockoffs, you'll learn how Amazon is stacking the deck against small businesses. But before we begin, I wanted to let you know that tickets are now on sale For Seller Summit 2025 over at sellers summit.com the Seller Summit is the conference that I hold every year that specifically targets e commerce entrepreneurs selling physical products online. Unlike other events that focus on inspirational stories and high level advice, mine is a curriculum based conference where you will leave with practical and actionable strategies specifically for an e commerce business. Every speaker I invite is deep in the trenches of their e commerce business, entrepreneurs who are importing large quantities of physical goods and not some high level guys who are overseeing their companies at 50,000ft. I personally hate large events, so the Seller Summit is always small and intimate. Every year we cut off ticket sales at around 200 people, so tickets sell out fast and we've sold out every single year for the past eight years. If you are an e commerce entrepreneur making more than $250,000 or $1 million per year, we also offer an exclusive mastermind experience with other top sellers. The Seller Summit is going to be held in Fort Lauderdale, Florida from May 6th to May 8th. Right now, this is the cheapest the tickets will ever be, so head on over to sellers summit.com and grab your ticket. Now onto the show. Welcome to the My Wife Quit Her Job podcast. I don't usually put out episodes like this, but in the next 20 minutes I'm going to give you an untarnished look at the brutal reality of being an Amazon FBA seller. I'll dissect the predatory algorithms, expose the hidden fees, and reveal the psychological warfare Amazon wages against its own sellers.
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Now, I've been selling on Amazon FBA for 10 years now and I generated millions of dollars from the platform. Once upon a time, Amazon was the go to place to sell your stuff. It was easy, the audience was large, and the FBA program made shipping a breeze. You could focus on marketing your business while Amazon handled the rest. But in the past several years, things started to change. Fees kept going up, Amazon began pushing its own products and their algorithm stopped making sense. Now, instead of being the dream marketplace it used to be, it has gone to total crap. Let's start with Amazon FBA Back in the day, it was amazing. You'd send all your products to one warehouse and Amazon would handle the rest, shipping them to the right fulfillment centers. The costs were pretty reasonable, too, just a small part of your overall expenses. But then things started to change. Every year, Amazon raised their FBH storage rates and piled on more penalties, especially during the holidays when sales matter the most. Next came the inbound placement fees. Now, just to get your products into their warehouses, you're hit with charges ranging from $0.27 to $1.58 per unit. As if that wasn't enough, Amazon dealt another blow by penalizing sellers for having both too much inventory and not having enough inventory in their warehouses. Hitting the exact inventory sweet spot that Amazon expects is nearly impossible and has become one of the toughest parts of running an E commerce business. And here's the kicker. You can avoid all these fees if you switch to Amazon's Warehouse and Distribution or awd. Convenient, right? AWD is marketed as a storage and logistics safety net for sellers. Instead of shipping to multiple Amazon FBA warehouses, you send everything to one central warehouse and Amazon handles the rest. Sorting, storing, and redistributing your inventory as needed. Sound familiar? Well, that's exactly how regular FBA used to work. Except now they've added extra fees for what used to be a standard service. Sure, Amazon pitches AWD as a way to save on storage costs compared to fba, but here's the catch. They've inflated FBA rates so much that using AWD feels less like an option and more likely the only way to avoid getting fleeced. Now, this might be tolerable if AWD actually worked, but this holiday season, AWD has been a complete disaster. When Q4 shipments ramped up, AWD capacity maxed out and and Amazon simply couldn't handle the load. They ran out of space. Logistics fell apart. Pickups were delayed or outright canceled, Inventory wasn't getting transferred from AWD to FBA on time, and deliveries were stalled. I know so many sellers who got completely screwed. Missed pickups, canceled shipments, delayed deliveries, you name it. And just when things could not get worse, Amazon announced that they're raising AWD prices this year. Oh, and last week, they also announced that they're no longer reimbursing sellers the full retail price for inventory that they lose in their warehouses. Instead, they will only reimburse you with what Amazon determines is your true manufacturing cost. That does not account for freight forwarding tariffs or customs duties. So let's say a product you sell for 10 bucks that costs you $2 to source gets lost in Amazon's warehouse. Amazon used to reimburse you the full 10 bucks every time that they made a mistake and lost your product. But now Amazon's not going to even reimburse you the $2 you spent to source the product. Effective in March, Amazon's only going to pay you back what it believes you paid to make the product, minus any shipping fees from China and import duties that you've paid. So basically, you're going to take a loss every time Amazon screws up and loses your product. And here's the kicker. Both the price hike and their new reimbursement policy was announced right after Amazon claimed that there would be no new fee increases in 2025. They flat out lied and are now charging more for a service that was an absolute train wreck this holiday season. And to top it off, 2024 saw the largest price increases Amazon has ever rolled out, not just financially, but in terms of workload and complexity. For sellers, it is becoming harder and harder to sell profitably on the platform without jumping through endless hoops. By the way, if you're tired of getting screwed by Amazon, make sure you sign up for my free 6 day E commerce mini course below on how to start your own profitable online store. It is 100% free and I guarantee you'll learn a lot. Now, the second way Amazon is hurting sellers is through their lowest price enforcement policy. If your products are priced lower off Amazon than they are on Amazon, your listings on Amazon basically disappear. This is a huge problem for sellers because Amazon is where the majority of sales happen. Amazon uses web crawlers to monitor pricing on sites like Walmart, Target and ebay. And if they catch you selling for less elsewhere, your products get buried in the search results. This practice is one of the key reasons why the FTC has sued Amazon. But here's the strange part. For some reason, Amazon doesn't seem to enforce price checks on temu, which ironically makes things even worse for sellers. TEMU doesn't charge listing fees and keeps transaction fees ridiculously low for US Sellers. And because of this, many sellers are listing the same products on both platforms, but at much lower prices on temu. Now, as a shopper, why would you stick with Amazon when you can get the same exact products on TEMU for much less? Take this floor mat. On Amazon it's $40, but on Temu it is only a dollar. Granted, selling on Temu has its own set of problems, but the point is that Amazon's policies and fees are artificially raising the price for consumers and don't even get me started on Amazon's atrocious customer service For FBA sellers, it is nearly impossible to get a human on the phone, and when you do, you're met with canned responses that rarely solve the problem. Take Amanda, one of my students from my Create a Profitable Online Store course. She designs her own custom party supplies and has gone above and beyond to register copyrights and trademarks for her top products. But despite owning the rights, she's constantly dealing with Chinese sellers for filing false copyright infringement claims to take down her listings. Amazon's policy treats sellers as guilty until proven innocent. So every time this happens, Amanda is forced to fight back. And while she eventually clears her name, it costs her months of lost sales. Worse yet, the cycle never ends. It just keeps happening. Recently, an eight figure Amazon seller named Molson Hart had 126 of his products taken down on Amazon last week for infringing on the trademark via Hart. But here's the thing. His company name is viahart llc, his seller name on Amazon is Via Hart, and he owns the trademark Vihart and it's in Amazon's brand registry. But when he complained to Amazon support, he received a canned response explaining that all products using the term via heart would be suspended. Sure, Molson eventually got his listings back, but he lost tens of thousands of dollars in sales during during the 48 hours he was suspended right over Black Friday and Cyber Monday, the biggest sales weekend of the year. Now, for me, it's a different story, but just as frustrating. Almost every single year, one of our competitors buys out all of our inventory so we have nothing to sell during the holidays and then after the season is over, they return everything. Because of this, we don't make any sales for that SKU during the most critical time of the year. And worse yet, we actually lose money after paying Amazon's FBA and return fees. To make matters worse, Amazon keeps piling on more and more promotions. It started with Black Friday, then came Prime Day, followed by multiple Prime Days, and this year, Cyber Weekend somehow stretched into a 12 day event. Every time Amazon runs a sale, sellers are forced to pay deal fees and slash their prices to participate. For example, to join a lightning deal, sellers must pay a flat fee ranging from $150 to several hundreds of dollars per product. If you want your products to be visible during Prime Day, you're required to meet strict pricing criteria like offering a minimum discount off your regular price. Now, on the surface, this might seem great for consumers, but the reality is that sellers have to raise their prices during the rest of the year just to survive these deal days. And keep in mind, these sales often take place during peak shopping periods like Black Friday and Cyber Monday. And the result? All sticker prices on Amazon are completely fake, artificially inflated for most of the year to offset discounts during sale events. But the biggest way Amazon screws its sellers is by actively preventing you from building a strong brand presence. And they make it incredibly difficult for customers to find the brand that they're actually looking for. Take my store, Bumblebee Linens, as an example. If you search for it on Amazon, only 3 out of the top 10 results are my actual products. The rest are from competitor brands. And unless you're willing to shell out a lot of money, your competitors will always take up prime search real estate. Remember Viheart, the brand I mentioned earlier? Despite owning the trademark for their product, Brain flakes, they don't even hold the coveted Amazon's Choice badge for their own brand. Instead, a Chinese knockoff owns it. How does Amazon even allow that to happen? Chances are, if you search for your own brand, or any brand for that matter, you'll see a flood of Chinese knockoff brands ranked ahead of you. But it gets even worse. Even if a customer manages to find your product, Amazon will often place ads for their own private label brands directly on your listing at a much cheaper price. Here's a picture of my friend's emu oil product in Amazon. And right smack in the middle of her listing is an ad for Amazon's own branded emu oil at 30% off. The ingredients are more or less the same. So guess what? Amazon is siphoning away sales from her listing. A listing that she paid Amazon for advertising. So where does this leave us? It's clear that Amazon has no loyalty to its sellers. They'll take your money, bury your brand, and even compete against you with their own products, all while pretending to be your partner. But here's the truth. Amazon doesn't need you. They built a machine that thrives on exploiting sellers, manipulating prices, and feeding consumers a false sense of savings. And as long as there's a steady stream of new sellers lining up, they will keep doing it. So if you're a seller, the message is clear. You can't rely on Amazon. It's time to diversify, build your own audience and take control of your business. Focus on creating a brand that people recognize off Amazon. Invest in your own website, email marketing, and direct customer relationships. Because at the end of the day, the only way to beat the system is to stop playing their game. If you found this video eye opening, make sure to share it with other sellers who need to hear the truth and together we can help each other navigate these challenges and build businesses that aren't at the mercy of Amazon.
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Hope you enjoyed this episode. As you can tell, Amazon is not the same as the platform as it was before. There's still money to be made, but it's a lot harder today. For more information and resources go to My wife quit her job.com Episode578 Once again, tickets to the Seller Summit 2025 are now on sale over at sellers summit.com if you want to hang out in person in a small intimate setting, develop real relationships with like minded entrepreneurs and learn a ton, then come to my event. Go to sellersummit. Com and if you're interested in starting your own ecommerce store, head on over to mywifequitherjob.com and sign up for my free 6 day mini course. Just type in your email and I'll send the course right away via email.