The Cost of Selling on Amazon in 2025

Liz, good to have you here.

0:16 Liz Adamson

Hey, it's great to be here. Thanks for inviting me, Stephen.

0:19 Stephen Brown

Now, I want Liz to introduce herself, but Liz is one of the smartest people around Amazon that I have met, and this is going to be an awesome discussion. Liz, give us a little bit of background introduction for yourself, and then let's dive in.

0:33 Liz Adamson

Yeah, absolutely. So I've been in the ecommerce and Amazon space since 2011, so one of the veterans of the space. I like to tell people I started when Amazon was easy, and I've had to grow with it as it's become more complex over the years.

But I've worked for Amazon retailers, that's how I started my career. Launched my own Amazon marketing business in 2015, went through a couple acquisitions, and I'm back in the space doing consulting and advisory work, and currently with Nile, standing up their ecommerce agency at the moment.

Amazon's one of my passions. I love all things about it. And one thing that keeps with Amazon is it's always changing. It definitely is not boring. There's always something to talk about, something to react to, something to strategize for.

1:21 Stephen Brown

It's been hard to sell on Amazon, I think, the last couple of years, and we're going to talk about that.

Let's talk about some of the fees. Start at a high level. You had mentioned some numbers before we started recording. Talk about percentage of sale that are going to fees that you're seeing these days.

1:42 Liz Adamson

It's been increasing. Back when Amazon was easy, FBA was easy, it was maybe 25, 30% of our sales were going to fees, primarily referral fees and FBA fees. This last year, with all the fee increases, and then you add advertising on top of that, we're seeing anywhere from like 45 to 60% of sales going back to Amazon at this point.

Which just squeezes those margins, especially if you're a retailer, you've got a brand with smaller margins, it's becoming harder and harder. Amazon is continuing to take its piece of the pie.

2:10 Liz Adamson

I would say a lot of it has been as Andy Jassy has taken the ropes, he's definitely had an eye on profitability. And good for them, I mean, Amazon hasn't historically been a very profitable company, and that's fantastic. Unfortunately it's coming at the expense of sellers in many ways, where they're trying to pass along their costs to the sellers more than they have in years past.

2:46 Advertising costs, and whether you can skip them

Stephen Brown

So let's talk about some of the key fees that sellers are going to be seeing in 2025. I know there were a lot of changes in 2024, but what are the things that, let's talk about advertising. What are you seeing around advertising specifically with sellers in 2025?

2:50 Liz Adamson

Yeah, cost per click continues to go up. I don't have the number right in front of me, but I looked at it last week as a report came out on Q4. In my head I was thinking, yeah, cost per clicks are still around $1.30. Well, in this report, it looked like cost per clicks were now approaching $1.60. And we're seeing those advertising costs continue to go up.

Part is more advertisers jump on the platform and start advertising, because it is an auction platform, right? Everyone's bidding for certain keywords and the highest bidder wins the prize. And so those costs are going up simply because of the increased competition.

3:20 Liz Adamson

In addition, Amazon rolling out more and more ad products. And so if you want to continue to be competitive, it's not sponsored product, it's not enough anymore. Now you have to run sponsored videos, you've got to get into DSP. If you want access to some of the retail data from AMC, now you're paying a fee there.

And so the advertising piece is continuing to squeeze. I was just telling someone yesterday, when I started in 2011, the Amazon platform was, if you list it, it will sell. It was really fairly easy to grow a business. Then 2014 ish advertising came out, and then by about 2016, 2017, if you weren't advertising you were losing first page search results.

3:50 Liz Adamson

And so it's become this pay to play. If you want to show up on first page, you've got to be advertising. And not just again those sponsored product, but you've got to have a beautiful banner ad and a video, and there is DSP. You can bring traffic off of Amazon onto Amazon.

So definitely a bigger part of Amazon sellers' budget is the advertising piece, and it keeps increasing in cost.

4:15 Stephen Brown

I have a number of questions for you. First of all, define DSP for those who aren't familiar with that.

4:19 Liz Adamson

Yeah. So demand side platform is what DSP stands for, which still doesn't make a lot of sense to anyone who's not in the advertising space.

It allows you to place advertisements, display advertisements, on Amazon properties and off of Amazon properties. So for example, Amazon has kind of a preferred network of 40,000 websites that I can go place advertisements on using video ads, banner ads, display ads. So as I'm browsing CNN.com, I could be exposed to an ad that brings me back into Amazon to purchase something.

The DSP platform is also where most advertisers will access streaming TV. So if you want to be running on Prime Video, if you want to place ads on the Kindle lock screen, things like that, that all gets accessed through DSP.

5:05 Stephen Brown

Got you. And talk about Prime, man. They are pushing so many ads now. I think it was last year that if you're a Prime member, now I have to go through ads even though I've paid for Prime.

5:27 Liz Adamson

It's a way for Amazon to create more revenue for themselves. Most streaming platforms have pivoted to an ad-based platform, and then you pay extra for an ad free platform. So I think we're familiar with that with Hulu and Disney, and Netflix has jumped on that bandwagon as well. And now Prime.

5:40 Liz Adamson

I haven't watched a ton of TV lately myself, but I have heard this year that there's more and more ads coming through Prime that are starting to perhaps annoy some of the viewers.

But as I attended Amazon's Unboxed conference in October last year in Austin, it was clear that they are doubling down on Prime Video ads and streaming TV ads in general. They had a lot of TV personalities actually there at the conference on stage talking about their new show, talking about opportunities to advertise on their new show. And so it was very clear at that conference, Amazon's really pushing advertisers towards more and more video advertising.

6:16 Stephen Brown

Well, they have the NFL contract, the Thursday night games, and I've watched some of those, and you've got a captive audience there. Watch movies, you've got to watch like two minutes of ads at the beginning, and it seems like sometimes there's a mid movie ad now. So they are definitely taking advantage of that.

I want to come back to something you said or inferred. Let's say I'm a Shopify seller and I'm ready to go on Amazon. Am I going to have any success without advertising?

6:45 Liz Adamson

The deck is stacked against those who don't advertise. You can't do it without advertising. If you're Shopify, you're doing a million, two million, three million on Shopify, maybe even more, so let me caveat it with this.

If you're a well-known brand, if you've been selling direct to consumer or you're on store shelves or whatever the case may be, if you're a known brand, the chances are people are already going to Amazon and looking for your brand. And so you will have likely some fairly immediate sales, because people are searching for brand XYZ.

7:10 Liz Adamson

You're wearing a North Face right now. If North Face were to say, hey, I'm going to start selling on Amazon, chances are you, me, and a bunch of other outdoor enthusiasts are going to go to Amazon, search for North Face, find the vest, find the backpack, whatever it is, and buy it.

If you're not a North Face and nobody knows who you are, you have to pay for advertising to get to that first page of search results. If you were to go to Amazon.com today, above the fold part of search results, it's all advertising in one way or form. You have to scroll for a few rows until you see organic search results.

7:45 Liz Adamson

If I'm selling vests and I want to rank on page one for vests, first thing I have to do is go bid on that keyword. Fleece vests, vests for outdoor enthusiasts, warm vests, winter vests. And I need to be paying for those placements to show up on page one. As Amazon then sees traffic coming to your product page, as your advertisements start to work and customers see you, click on you and then buy you, only then will Amazon start pushing you up in the organic rankings.

8:11 Stephen Brown

And for those who are wondering, North Face is on Amazon, I just checked. They have their own store.

So you can maybe get away if you have really good brand recognition. But if you're a no-name brand, and most people are more no-name than they realize, I think their brand's known. I've seen brand studies, nobody knows your brand unless you're like a Nike or an Apple or one of these. It's really hard to penetrate.

Obviously if you're just selling on Amazon, you've got to advertise, is what I would infer. There's no way you're going to succeed without advertising.

8:48 Liz Adamson

Yeah, because if you're not, your competitors are. Including, your competitors are likely bidding on your brand name. Going back to the North Face example, if I am North Face and I'm not running ads for my own brand, then Patagonia might be. I don't know if they are, again, but Patagonia could put a.

9:02 Stephen Brown

They can, because you can keyword advertise against another keyword. No trademark issues there. That's a good point.

Anything else around advertising? We've talked about the cost, we've talked about the competitiveness.

9:21 Liz Adamson

Yeah, I make it sound like a grim picture as we talk about how it's getting more expensive. It is a must have. And that's what a lot of ad practitioners are focusing on, is given this reality, how do we continue to make advertising affordable by creating smart advertising strategies, by smart campaign structures. How do we control the budget, control the bid, control the placement, and things like that.

So it just speaks to the need of designing it in a way that A, you know what you're spending money on, you have a clear goal, you know what metrics you need to watch to understand if you're hitting that goal, and you're not wasting spend. Because you can overspend. Going back to that brand example, I could be overspending on my brand and spending too much.

9:58 Liz Adamson

We actually just had a client not too long ago where they came to us, they were spending a ton of money on their branded terms. We actually cut that spend quite a bit. We did not see a single drop in sales, but we were able to take about 30% of what they were spending on advertising and redirect it towards new keywords that they weren't spending on, and got incremental traffic that way.

So it becomes even more important to make sure that your advertising strategies are focused on getting incremental traffic, that you're not cannibalizing organic sales or other ways that sales are coming in. And make sure you're spending those ad dollars intelligently, and that you know where it's going, and you know that it's driving incremental new to brand purchases, and you're not just advertising to the people who would be purchasing anyway.

11:11 The reimbursement change

Stephen Brown

Very interesting. All right, let's keep going.

So let's talk about the next big yuckiness. FBA. There's so much going on around FBA in the last year. I've been watching some of this. I probably am only seeing a fraction of all of the things that are going on. But maybe let's start with the one that's hitting us very quickly here, which is the changes to the inventory reimbursement fee. I think that's the right name for it.

11:20 Liz Adamson

Yes, the reimbursement fees. So about 90% of sellers use FBA, because that's how you get the Prime badge. And as you ship those products into Amazon's fulfillment centers, sometimes Amazon loses inventory, right? That's just kind of a known thing. So the inventory gets misplaced. Amazon says, oh, you shipped 100, we only got 90.

And so Amazon would reimburse you for the 10 units, and in years past they'd reimburse at retail value. So if my product sold for 20 bucks, Amazon would reimburse me for 20 bucks per unit.

11:50 Liz Adamson

They have changed that, and they're going to be basing reimbursements on cost of goods. And so they will either decide themselves what they think your cost of goods should be, or the seller has to provide invoices showing them this is our cost of goods, and Amazon will reimburse based on that.

So you can imagine, especially if you've got double keystone or triple keystone pricing, you just lost there in your reimbursements. The good news, 1 to 3% of lost. It's still 1 to 3%. That's still dollars that you invested in inventory that's lost, and the money that you've invested into shipping and item setup and everything else. So it's definitely not ideal to only be paying on a cost of goods basis.

12:30 Liz Adamson

And again, we all had to laugh, because Amazon towards the end of last year made a big deal about, hey, we have heard you, we understand that you're tired of us increasing fees, good news is we're not increasing any FBA fees for 2025. So we all felt very happy, and some of us a little skeptical.

And then about a month later Amazon comes back and says, oh, we're going to decrease what we reimburse you, however. And so they found another way to kind of put some more cash in their pockets. I don't think it'll have a major financial impact, but it will, it's 1% to 3% of your margin perhaps that you might need to make sure that you're accounting for, that Amazon's not going to fully reimburse what you've received in the past.

13:03 Stephen Brown

And Steve Chou from My Wife Quit Her Job had a really deep dive on this on one of his podcast episodes, with the apocalyptically titled Amazon Just Destroyed All FBA Sellers. He goes into a lot of thoughts here.

But one of the points he made that I thought was really good was, they're going to reimburse product costs, but all the import fees and stuff, they won't.

13:30 Stephen Brown

And he also noted there's an exposure of, you're now showing your supply chain information to Amazon. And historically this has kind of been the big thing from sellers, is like, they'll be like, I like your product, now I know who you're manufacturing with, now I'm going to see your costs, I'm going to rip you off. Or I know how to compete with you.

So his concern on his podcast was, this puts you in multiple layers of concern. One, you're not going to get that full value back. Two, you're not even going to get the retail value back. And then three, it creates an exposure to Amazon. So you either have to take what Amazon gives you, or provide information that could potentially expose you to Amazon ripping you off. So this is a really yucky change, amongst many.

14:24 Inbound placement and inventory fees

Stephen Brown

Let's talk about some of the other, we could go really deep on this, but like I said, if you want to go deep, go listen to Steve Chou's My Wife Quit Her Job podcast. Let's talk about some of the other things, because there are a lot of other things going on in FBA.

14:30 Liz Adamson

Yeah. And again, as I mentioned before, as Andy Jassy has taken charge of Amazon and had a real focus on profitability for Amazon, I think that this has been one of the focuses, is where can the fulfillment network increase their margins and recover some of their expenses and their fees.

And that's where we saw some of the fees that were introduced last year, where sellers are now forced to split shipments, sometimes three, four, five different warehouses you've got to send your product into. Or you can pay a fairly hefty inventory placement fee to land it in one warehouse, so you're not having to split your inbound shipments.

15:00 Liz Adamson

And so the reason why Amazon does that is, if you were to send your shipment into a single FBA warehouse, Amazon then takes that shipment and distributes it throughout the country. And so that's how they get to their one and two day shipping for their Prime members, is they have inventory located all over the country. And so that does cost them money. You send in your pallet, they break up the pallet, they ship things off to other distribution centers. So rather than them shouldering that cost, they're now asking sellers to shoulder that cost of distributing that inventory throughout their network.

15:45 Liz Adamson

And so that has been challenging. I've seen a couple of sellers who kind of just ignored that and started inadvertently paying some fairly hefty fees. I've seen sellers where the cost of splitting the shipment was actually greater than paying the inbound placement fee. And so it has forced sellers to be a lot smarter about how they set up their FBA shipments, and understand which way is more profitable for them. Including the fact it takes time. If I have to send out four smaller shipments instead of one big pallet, that's more work, that's more hours, that's more pickups and other things.

16:13 Stephen Brown

And let me ask you a question on this. Can you pick where to ship it, or are there specific warehouses that you have to place product in?

16:24 Liz Adamson

Someone may correct me on this, as I have not personally been in that console this year. But generally speaking, Amazon does decide. It's based on where they feel like they need to restock that shipment, what regional distribution. There was a time, I want to say years ago, that you could kind of pick, I want to send it to this warehouse. But I could be wrong on that. Generally speaking, Amazon says, please send it to warehouse X, Y and Z, this is where it's best for us to be receiving that inventory.

16:50 Stephen Brown

Yeah, I mean, it makes sense. If you look at brands, in general you can say there's going to be more sales on the East coast of the United States because there are more people. And then some brands will resonate better in different geographies for one reason or another. I'm sure they know, hey, we want more product here, less product there.

Those of us, Liz and I are here in Utah in the middle of the desert, right? There are not a lot of people around us, and so there's probably not as much demand here versus a West coast or an East coast. And it just makes sense for them to want to have the inventory distributed. They're just pushing that burden back onto the sellers and being like, you know what, you need to have shouldered this now.

17:47 Liz Adamson

Exactly. And they're very good, they've got a world-class distribution system, so they definitely know what they're doing. And like you said, they're just shifting some of the costs back to the sellers now.

17:54 Stephen Brown

What about anything else on FBA? Last year we had the, I forget what they called it, the low inventory fee or something like that.

18:00 Liz Adamson

Yeah. If you didn't have like 30 days worth of inventory they'd start penalizing you with fees, which kind of penalized seasonal products, penalized products that we were trying to close down and go out of stock on intentionally. So they made a few pivots to help soften some of that a little bit.

But before, they would charge on, we don't want to be your storage center. So they would charge on excess inventory. So if you had more than X amount of days of inventory you'd get these long-term storage fees, and that would be charged every quarter or so. And that made sense. They did not want to be a storage center for your product, they're not going to be a long-term warehouse. Although they do have that capability now as well.

18:44 Liz Adamson

This low inventory fee, that's a little bit of a head scratcher. It's already in the seller's best interest to not stock out. Why are we penalizing them even further? There could be supply chain issues, there are always things out of a seller's control. And now we're just penalizing sellers further if they are dealing with a supply chain issue, or if it's a seasonal product and they're trying to discontinue it. So that one made very little sense to most of us. What is actually the point of this? Sellers aren't going to go out of stock because they want to.

19:03 Stephen Brown

They did it because they could.

Well, and it's like you're damned if you do, damned if you don't. Too much, you're going to pay for more storage. Too little, now I'm going to pay for having not enough inventory. So you're between a rock and a hard place.

The other one I remember hearing about last year was the return threshold. Like they have an average for your category, and if your return rate was higher than that average, you had to pay a higher fee.

19:32 Liz Adamson

Yeah, I'd forgotten about that. But yes. I don't have the numbers top of mind, but yeah, it feels like sellers are just feeling really squeezed right now, especially by the FBA fees.

And it's interesting that Amazon is doing this at a time when there are all these antitrust lawsuits in the EU and the United States, about the fact that Amazon has such a, I don't know that it's technically a monopoly, but it's such a must have, and they've structured it in such a way that if you want to sell on Amazon you've got to use FBA, you've got to use the advertising. And that's what's coming under government scrutiny, both the EU and the United States, is, do they have too much power that they're squeezing sellers dry at this point?

20:10 Stephen Brown

I think sellers would probably say yes, they have too much power, but we'll see what happens, if the courts will take any action, if there'll be any legislation, or if it's just going to be, this is the way it is.

Anything else on FBA fees, new or issues that you're seeing that sellers should be aware of in 2025?

20:35 Liz Adamson

I think that's the bulk of it. Again, there were no fee changes technically for 2025, just that reimbursement change. So it should be, if you got through 2024 with all those fee changes, you'll be okay in 2025.

I think just making sure that you're doubling down and understanding what fees are being charged. I've worked with a lot of sellers who don't dive into that part of their business and they don't realize the amount of fees that are being charged.

21:00 Liz Adamson

One thing that I advise sellers, one thing that's not easy to do, but one thing that you do have control over, is go double check first of all that Amazon has got the right measurements for your product. Because they base their storage fees and other fees on, are you standard size, are you oversized, there are some subcategories there. And sometimes Amazon gets those measurements wrong, and you can open a ticket and correct that and even get reimbursed in some of those fees. So that's something that sellers can control. Go double check that you're in the right classification for the size of your product.

21:26 Stephen Brown

Here's a mystery for me, I don't know if you know the answer. Why so often do I see Amazon shipping products in oversized packages? Do you have any sense why that even is? And does that affect sellers, or is that Amazon's discretion?

21:48 Liz Adamson

As far as I know, that's Amazon's discretion, based on the size of your product. So that can go back to, if they've got the wrong dimensions, then yeah, they'll throw out the wrong size box. Probably a lot of it is automated, there are robots and things like that. So definitely be double checking that.

But there's some that just does not make sense. A friend of mine told me a funny story. She ordered a belt on Amazon. And so you think of a belt, you can easily coil it and put it into maybe like a six by six by six package and ship that out. This belt was uncoiled and was in like a, not a 10 foot, I don't know how long our belts, six or seven foot box, laid flat. And it was just an example of sometimes Amazon really does not get that right.

And I think we've all had the same issue where they're just shipping empty air more than they're shipping products. So not a lot sellers can do about that, other than just make sure your product dimensions are correct in the system.

22:33 The Prime badge and Seller Fulfilled Prime

Stephen Brown

Now I want to ask you a question. My understanding has been you need FBA to do Prime badge. And I want to ask you about the Prime badge, the ability to be delivered by Prime. What is the impact to sales at a high level?

22:48 Liz Adamson

It can be, I've taken on clients where they've come to me, Amazon's been kind of a side hustle for them, they haven't used Prime, we get them onto Prime and almost immediately sales go up about 30%. And so it can be fairly large. We have been trained as consumers to get our one day free shipping and our two day free shipping.

23:00 Stephen Brown

Or same day. I am shocked at how much, I mean, it's not always, it looks like there's a minimum order value a lot of times. But I've been shocked at how much I can get same day. I'm like, holy crap, this is unreal. If you're in a more urban geography and have a distribution center close.

30%, that's fascinating.

23:29 Stephen Brown

I have heard, and I would love for you to elaborate, I have heard that you can get a Prime badge under certain elements of FBM, which is fulfilled by merchant. Is that true, and what would you have to do?

23:43 Liz Adamson

There's a program called Seller Fulfilled Prime. It rolled out several years ago and then it closed to new applications and was unavailable for a while. And it was around the same time that these antitrust lawsuits started popping up that Amazon opened it back up again, probably as a way to show, hey no, we're giving people options, they can do Seller Fulfilled Prime.

Seller Fulfilled Prime is very difficult to qualify for, however. And I think the program still, it's kind of open and shut and open and shut, I'm not sure it's permanently open right now. It's not easy to even get it in the first place. They require, if you want that Prime badge as an FBM or fulfilled by merchant seller, you have to have a 99% on time rate, and be delivered within the two day window.

24:25 Liz Adamson

And if you mess that up, then you lose that privilege. They're very strict about that.

The brands who are successful with this, I have worked with a handful of retailers and other brands who are Seller Fulfilled Prime enabled. They have warehouses around the country, they have very good logistics and shipping operations, they've got everything just buttoned up to a T and know what they're doing.

24:50 Liz Adamson

I've had some sellers too who maybe they only have one warehouse, and so they have the ability to turn on Seller Fulfilled Prime just for that region, if you will. So they don't have to pay the two day shipping from the West coast to the East coast, but because they can ship ground, say they're in California and ground will get them two day shipping within California, Nevada, Arizona, I'm making that up, I don't know if that's true. But some sellers will just do regional shipments and not have to pay extra for the two day shipping.

25:20 Liz Adamson

But that's kind of getting into the weeds of it. Short story, there is Seller Fulfilled Prime. It is not easy, and you better have a warehouse that knows how to pick, pack and fill very efficiently, very quickly, to be able to maintain that status.

25:30 Stephen Brown

Okay. FBA, we've talked about FBA fees, fulfillment fees. Anything else we want to talk about here?

25:37 Liz Adamson

It'll be interesting to continue to watch, especially the antitrust suits. Prime is going to be a necessity, sellers are going to have to use that. Not many will qualify for Seller Fulfilled Prime. But it's kind of that cost of doing business, if you will, that you just have to, as a seller, learn how to manage and learn how to operate around.

25:57 Referral fees and Amazon Haul

Stephen Brown

All right, let's move on to the next category. Referral fees.

26:01 Liz Adamson

This is one category that has not had a lot of changes. There were some changes last year where Amazon dropped the referral fee actually for certain categories.

Most categories, the referral fee is 15% of the sale goes to Amazon. And that's your fee for the privilege of being a marketplace seller and basically leveraging Amazon's customer base and things like that. You pay them 15% for that sale. Some categories are a little bit higher or some a little bit lower, especially lower cost items, some of the clothing categories.

26:35 Liz Adamson

Those haven't changed a whole lot over the years. We haven't really seen any major changes, except for, I want to say it was about a year ago that Amazon did drop some referral fees in some of those categories in an effort to compete with Shein and Temu, to kind of keep sellers on the platform, and also attract sellers who are using the Shein and Temu platform, because their referral fees are much lower. And in some cases, and TikTok Shop too, in some cases they're even subsidizing those fees just in an effort to get sellers to jump on their platform and give it a shot.

But Amazon has obviously kind of hit back at Temu with their Amazon Haul marketplace, which are items under $20 shipping direct from China, slow shipping rates, things like that.

27:10 Liz Adamson

So kind of getting off on a tangent here. But yeah, that referral fee, not really a whole lot of news there. But it's those three categories of fees, advertising, FBA, and then these referral fees, that are making up the like 45 to 60% of the sale. They're all somewhere wrapped up in those fees, and it's causing some pressure for Amazon sellers.

27:29 Stephen Brown

I do want to go down that tangent, Amazon Haul. I watch and read the news and keep up for my clients and for some of our content.

Amazon Haul, Temu and Shein have come in and just exploited the heck out of the lower end product categories. They're shipping very quickly, they're doing a lot of air freight, to the point that it sounds like a lot of them are taking advantage of the de minimis rule, which is a rule that allows imports of under $800 in value to not have to go through duties. And so there's a push to close that gap. But in the meantime, Amazon has had to respond.

So talk a little bit about Amazon Haul, what it is and how it might impact a US based seller.

28:20 Liz Adamson

Yeah, so Amazon Haul is basically the Temu model on the Amazon platform, right? So items below $20. I think someone in a blog post I saw was even joking, they found a $20 couch somewhere, which I'm not sure how you do that.

28:31 Stephen Brown

I would be scared to sit on a $20 couch. I mean, IKEA furniture always had a bad rap, but a $20 couch.

28:49 Liz Adamson

But yeah, items under $20, ships direct from China.

If we think about what customers want, historically Bezos is famous for saying that customers will never want slower shipping. He said that way back in the day as he was launching FBA and Prime and all those other things. What we're finding as Temu and Shein launched is customers are fine with slower shipping as long as it's cheap, because Temu and Shein have had that model.

29:20 Liz Adamson

So Amazon, to your point, has had to respond. They've set up this Amazon Haul section of their store where it's all products under $20 shipped direct from China, again using that de minimis threshold to get out of the customs. So it does take a little bit longer.

It's even very similar. I've got a teenage daughter, she's all over Temu, is always shopping on it. And it's very flashy and kind of almost gamified, if you will. Looking at the Amazon Haul section, very similar, very gamified, very flashy.

29:50 Liz Adamson

I think it appeals to a different demographic than perhaps what many in our demographic would maybe relate to. Again, I go back to my teenage daughter. When you think about, they're working part-time jobs and they only have dollars to spend, they don't have hundreds of dollars to spend. So I think this becomes very attractive to the Gen Zers, the Gen Alphas, the up and coming generation, as they're trying to make those dollars stretch, as they are trying to take part in this online shopping as a teenager with a part-time job or allowance or whatever it is. They've got a different demographic, they're cheap goods, they're not necessarily high quality, it's about being able to buy multiple items without having to spend a whole lot of money.

30:30 Liz Adamson

It'll be interesting to see what happens if the de minimis threshold goes away, and the administration has been looking at that.

It doesn't impact most sellers, to go back to your question. In fact, when I work with brands, I typically tell them, if your product is not priced above $20 then I probably can't help you, because you're not going to make any money. Amazon Haul obviously kind of changes that, because there's some different structure there. But most sellers generally speaking won't be affected by Amazon Haul, unless you are a seller that is selling in that under $20 range, which is not very many. Again, most of them are Chinese inexpensive goods that are priced out low.

30:57 Competing with Chinese sellers, and launching now

Stephen Brown

Let's go down another tangent. I feel like Amazon has been flooded by Chinese sellers who, I've heard rumors of them having multiple Seller Central accounts, that if one gets shut down they'll just spin product onto another. And China has historically had no respect for IP, intellectual property. I'm hearing stuff like they are just not paying sales tax, because how do you track them down?

So let's talk about the competitive landscape against Chinese sellers who are trying to skirt laws. How big of an issue is that from your perspective, for an American based seller?

31:39 Liz Adamson

It's growing. It's growing quite a bit. Marketplace Pulse just came out with an article last month, and I've just pulled it up again. The headline was that China-based sellers have increased their market share to more than 50% on Amazon. And so they've got a nice graph here.

31:54 Stephen Brown

And the other 50%, at least 40% of that 50 are manufacturing in China.

32:01 Liz Adamson

There is a high dependence on China in the Amazon marketplace. Like you said, 50 plus percent are direct from China sellers, the other 40% are producing their goods in China. There's the talk of tariffs, and we've seen what happens especially with the whole TikTok stuff. There's a risk there with that much being based in China.

It was just to give perspective, back in 2017 about 20% of sellers were Chinese sellers, and then fast forward to 2025, over 50%. And so you can see that has increased quite a bit in those past eight years or so.

32:40 Liz Adamson

What it means for brands is you have to be focused on building a brand. You can't just be selling widgets, because that's what China sells. China sells widgets. You go on Amazon, you can spot a Chinese brand from a thousand feet away almost, because the brand names are usually a little bit bizarre, they don't make a lot of sense, it's literally brand XYZ or something like that. And they're low quality, low cost, and that's what their value prop is. Hey, here's an inexpensive product that you can purchase on Amazon.

So my work with brands has been, let's make sure you're building a brand. Let's drive brand loyalty and brand awareness. Let's build that brand store. Let's drive advertising, not just to your product page, but let's drive advertising into your storefront, so that we're isolating the customers away from search results. I want to drive more traffic to my actual brand store within Amazon so they're not being distracted by all the other Chinese sellers who are selling things cheaper than I am.

33:30 Liz Adamson

And the second piece, making sure we're optimizing those product pages and that you have a unique value proposition. Why should a customer pay twice as much for my product when it's sitting next to a Chinese product that is maybe half as much as mine? I need to be really good at communicating the value I'm giving you. If I want you to pay $40 and my competitor's charging you $20, how can I convince that customer to pay the $40 instead? What do I, is it longer lasting? Is it more durable? Does it use premium materials? Am I bringing in good reviews from customers who agree with me that this product has lasted me forever, and this other product fell apart in two weeks?

34:10 Liz Adamson

And so it shifts the focus. Again, when I first got into Amazon years ago there were a lot of private label sellers who would go to China, slap their brand on some widget they found at a warehouse or at a marketplace, and then sell it on Amazon, and they would just kind of churn these private label products. That is not going to be as lucrative anymore, because that's exactly what the Chinese sellers are doing.

And so you need to differentiate yourself, build a brand, build some brand loyalty, leverage the advertising, again both storefront and the advertising tools we have are great tools to allow you to do that, to allow you to build brand loyalty. So that, going back to the North Face example, I'm never going to buy another brand again because I purchased North Face, I like North Face, I can rely on their products. So you've got to build a brand like that if you want to be on Amazon for the long term with this influx of competition that comes from China.

34:55 Stephen Brown

And in case anybody's listening, I'm not anti-China. I want free and fair markets. And my big issue is when people are taking advantage, abusing intellectual property, whether that's trademarks, patents, even copyrights, although that's not as big of an issue with consumer products, paying their taxes, adhering to the laws of the country.

And one of my big beefs with what's going on here is they're cheating, right? Not everybody, but it's an unfair marketplace. So it's free and unfair. And what I would hope is that Amazon, rather than shut down those sellers, just make sure that they're playing a fair game, and not abusing sellers that are trying to follow the law. And they've got plenty of advantages as it is, right? It's when they abuse those things that I think there are issues.

35:49 Liz Adamson

Yeah, that's a really good point. And we've seen the pendulum has kind of swung a little bit in terms of Amazon's response to China.

The initial influx of Chinese sellers came, I'm going to blank on the year, it was pre 2020, maybe like 2018 or so, I could be wrong on that year. But that's when Amazon set up its services to help facilitate Chinese sellers selling more easily in the dot com marketplace. There was end to end logistics and customs, and they made it very easy for Chinese sellers to come in and start selling on the platform.

Walmart recently did the same thing, I want to say about a year or two ago, where they basically opened up their doors wide to China and made it as easy as possible for them to import products.

36:40 Liz Adamson

Fast forward a few years, sellers started complaining, because it's not a fair playing field. They're not paying taxes, they're knocking off copyrights. Again, there are good Chinese sellers and then there are the black hat sellers, there's a mix of both.

Amazon started getting pressure and they did crack down, and I'm totally blanking on what year that was, but they did crack down a few years ago and they kicked a lot of Chinese sellers off the platform who were violating one policy or the other, if they were violating Amazon's terms of service in various ways. So for a while Amazon was kind of looking the other way and not really policing it, got a lot of complaints, they ended up kicking off thousands of Chinese sellers.

37:20 Liz Adamson

But to your point, many of these sellers just pop up another seller account and off they go again. And so it's totally whack-a-mole. And so we continue to see that increase.

I don't think Amazon is going to necessarily bite the hand that is feeding them. If over 50% of the sales coming through the platform are from Chinese sellers, they're not necessarily going to do something to ostracize them at this point. They do, I think, need to make a more level playing field, given all the tensions between the US and China with everything else that is happening. It'll be really interesting to see what happens. But I don't see Amazon shutting the door to them, that's for sure. Especially given the fact that Walmart just opened their doors wide open a couple of years ago. It's where marketplaces are going. They're becoming international marketplaces on both ends, supply and demand.

38:00 Stephen Brown

So let me ask you a question, kind of take this all in. I don't even know, I was Googling while we were talking, how many fees are there? I don't even know if there's a number, but it seems like it's in the dozens or hundreds probably of different fees.

How does somebody succeed on Amazon? If somebody's coming new and wanting to go on Amazon, what would you tell them?

38:19 Liz Adamson

It's a lot heavier lift today than 10, 15 years ago. You've got to come with a clear marketing strategy, with a robust marketing budget. You're not going to make money for at least the first six months. You will be investing money, and so you've got to be prepared for that.

I was talking with someone who was like, yeah, I invested five thousand dollars in my son's business so we could sell on Amazon, and it didn't go anywhere. Yeah, those days are over. You can't buy $5,000 worth of inventory and then expect it to sell. You've got to then invest another $5,000 to $10,000 in creatives, in advertising, and so on and so forth.

38:55 Liz Adamson

And so if you're going to launch on Amazon, you've got to be financially prepared to do so. I tell most brands ready to launch, don't expect to be making money for the first year. We might get you to break even towards the end of the year, but don't expect to have money flowing into your pockets right now. Year two, we'll talk about that. Year one, let's focus on getting you launched, doing what needs to happen, and getting you in front of customers, and then getting profitable after that.

39:13 Stephen Brown

But I assume you're still seeing brands that are making plenty of money on Amazon.

39:17 Liz Adamson

Yeah, we see a lot. There are still lots of, I'd have to look at the statistic, but there are still a long tail of sellers who are below the million dollar mark. Obviously, maybe like 50, 60% of Amazon sellers, I might be making that up a little bit, but there's a long tail of sellers who are doing less than a million dollars on Amazon. And then there are very few, there's probably a short tail of these really really big sellers.

And so most launches on Amazon, if you're not an established brand, you'll probably be in that up to the million dollar mark, depending on your product and customer response and things like that. But there are opportunities. I still work with, every day, $10 million brands on Amazon, $60 million brands on Amazon. Some of them have recently launched, some of them are established brands, but there definitely is still opportunity.

40:12 Liz Adamson

It's still 80% of sales that come through marketplaces are through Amazon. And I think it's 40% of all ecommerce sales are on Amazon. That is where customers are going, that's where they're shopping. If you want to be found, even if you're not on Amazon, customers are going to Amazon to look for you. And so it's a platform that sellers should be on and should have some sort of presence on. And it just kind of depends on your financial goals, how much you invest into it, and how much you're just there to control your brand presence.

40:31 Stephen Brown

It just requires more sophistication than ever. It's not a place for amateurs anymore.

Well, this has been a fantastic conversation, Liz. If somebody wanted to connect with you, what would be the best way to do so?

40:45 Liz Adamson

You can find me on LinkedIn, that's an easy place to find. If you have any more questions, or want us to even just take a look at some of your Amazon stuff and have questions you want me to take a look at, you can email me at Liz@ChooseNile.com.

40:55 Stephen Brown

Awesome. Thank you so much for your time, Liz. I'll have to have you back on in the future.

40:59 Liz Adamson

All right, thanks so much, Stephen.