Andrew Maff 00:03
A good profitability on Amazon it's getting more to a point where Amazon is still an amazing place to be if you leverage it for customer acquisition, and then you get them over to your website and you can control the customers' journey.
Narrator 00:15
Welcome to the Ecomm Show podcast. I am your host Andrew Maff, owner and founder of Bluetuskr From groundbreaking industry updates to success stories and strategies, get to know the ins and outs of the e-commerce industry from top leaders in the space. Let's get into it!
Andrew Maff 00:30
Hello, everyone. Welcome to another episode of the Ecomm Show. As usual, I am your host Andrew Maff, and today chances are things are going to get a little heated. So I'm going to be talking about how ridiculous Amazon is getting. Now I will caveat it with: there is a time and a place where it is extremely useful, but there is a part of me that is really feeling like we're probably several years away, maybe even less, from seeing a significant change in the e-commerce space mainly hedging from Amazon. So, if you've seen me at conferences like that in the past, nine times out of 10, I'm doing some type of presentation on like omni-channel marketing, diversification, things like that. And one of the slides I always put up there is always the one that kind of I always get the most questions on. So, over the past year, sorry, over the past five years, Amazon's fees have averaged an increase of 10% year over year. CPCs have averaged an increase of 8% year over year, and competition averages about a 6% increase year over year. Now, the average consumer is using Amazon pretty frequently, but there's only only so many users that you can sell to, especially specifically here in the states. So the amount of user growth is not like skyrocketing overnight, like obviously it once was. It's just got its steady growth. So what we're seeing is single-digit percentage points in terms of net new users, but there's significantly more competition, which is obviously bringing in significantly higher CPCs, because there's only so much real estate to work with.
Andrew Maff 02:04
Hence, why Amazon keeps pushing things like DSP and all these other all these other ad strategies, because really anything directly on the platform is extremely limited. Then, on top of that, Amazon wants to make more money all the time, and so they are constantly increasing FBA fees. So that is something that I brought to everyone's attention originally at Prosper of 2024 was when I first used that slide. Right, so it was like March of 2024, somewhere in there. Right after I did that presentation, the thing that was absolutely hilarious to me was Prosper decided not to tell me that I would be doing this presentation literally right next to Amazon's booth. So here I am doing a 30-45 minute presentation, whatever it was, on how everyone should stop being so reliant on Amazon, and it's it's just a cash grab for them at this point, more or less. I got a little bit more realistic at the time because it wasn't as bad as it seems to be getting. But of course, I'm sitting next to Amazon as I'm doing this, so I finish this presentation and one of the Amazon guys pulls me aside. Now I take this information with a grain of salt. I don't know if maybe this guy just hated his job, but it was a very eye-opening situation of what he told me.
Andrew Maff 03:28
So he said he's like that slide was wild. He goes, it's incredibly true, and that Amazon is leaning more towards other elements of their offering because the platform isn't growing at the speed that they need it to, people are still buying it. They are still making stupid money. I'm not saying Amazon's going anywhere by any way, shape, or form. That is absolutely the exact opposite. It's just the reality of anyone being successful on the platform. So what he told me was that the year before that? So 20. This would be 2023 now. Wait a minute. It's 2026. No, I'm sorry. No, this presentation was in March of 2025. He told me the year before, so it was 2024. That 73% of all Amazon U.S. sales 73% so a strong majority came from overseas sellers.
Andrew Maff 04:29
It was a mix of sellers that are either A here in the states and have a entity here in the states, I should say, but they're from they live overseas or they are literally just overseas. So it's all stemming from businesses that are actually overseas. 73%-that's wild. It felt, it felt unrealistic as I started to think through. Like, I mean, the amount of sellers I know, the amount of business that some of them do. Compared to the amount of business that Amazon, like that, just didn't it didn't line up, but it still was a shockingly high number. Even if you cut it in half, that's still kind of wild.
Andrew Maff 05:09
So let's you know let's say that it's less than that because it just doesn't seem accurate. It was clear that there is a lot of growth coming from overseas sellers that are undercutting people, and this is not a surprise. Chances are, if you're listening to this podcast, you know this. This I'm not telling you anything you don't already know. The numbers might have been interesting, but otherwise, you know that there are people coming from overseas undercutting costs and putting out in many cases a lot of cheap product that's basically just undermining a lot of premium, like better-made product, but that is more expensive. So that was something that I would talk about. I did it. I spoke about in 2025. Obviously, it got adjusted. I did it earlier this year, so 2026. This is not including the following, and I had to do notes. This is the first time I've ever done this podcast, I had to notes because there were so many things that I wanted to give specifics on for Amazon. Since january 15, fees went up again, so FBA fees were up eight on average about eight cents per unit. Not a huge jump; they've done way bigger, but still, so it's it's relatively small on paper, but obviously that compounds pretty damn fast.
Andrew Maff 06:27
It's not evenly spread, so small items over $50 went up 51 cents a unit. Larger items between large small items over 50, yeah. Large items, yeah. 50 items and up, only about five cents a unit. So the larger items didn't take as much of a hit. The smaller items did, which is obviously stemming from shipping costs. That was their first increase since 2024. There wasn't an increase in 2025, but they had done so many increases prior that it averaged over the prior five years and an average increase of 10% year over year. So now, if I updated this to you know the last you know five years, you're probably take it's probably still about 10% give or take.
Andrew Maff 07:16
Then on top of that, you had an over max handling fee. They're it's like they're making shit up at this point. So there was a 17 to $25 unit surcharge on oversized items. A so basically like a 33 fulfillment $33 fulfillment cost could jump past $50. Then you had a low inventory level fee, which is hilarious to me, because they love to give you what is it overstock, like warehouse fees of if your product's sitting there for too long. But now, if it's not sitting there, if you don't have enough there, it's a new problem. So now they've calculated per variation, not just per parent. So if one week skew gets penalized. Even the even the rest of your line is fully stocked. So like you could have like, hey, here's you know I have this one parent with 10 variations, and there's two variations that don't do very well. Well, you're gonna get penalized on those two if they're sitting there. So it's almost like Amazon is forcing you to liquidate stuff that maybe isn't selling fast enough, but you also need to have enough inventory so that they can continuously sell it and not go out of stock. But at the same time, you can't have too much because then they'll hit you with other fees. Then you've got FBA prep and labeling services. By the way, I'm only about halfway through this, so those are gone as of January. So you now have to self-prep, or do it through a third party now, or you risk inbound defect fees, defect fees, defect, defect.
Narrator 08:51
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Andrew Maff 09:23
So now something that they used to offer, they're no longer offering. So there's another fee that you've got to do through either doing it yourself, so time spent, or you have to go through a third party. And if you do it wrong, then you risk those new fees. Now you have inbound placement fees. I can't believe I'm still going. So they're up five cents a unit. So it's more like it's basically just more ways that you charge differently at this point. It's like a more like weighted tier granularity kind of thing. Now there was a silver lining. There was one relatively good thing that I took kind of with a grain of salt. Items that were less than $10 got a bigger FBA discount this year, so they were averaging almost 86 cents off per unit, which was up from 77 cents in 2025. So a little bit of a bigger discount there. I think the thing that's interesting there is it's products that are under $10, like your those are products that like you really can't run ads on because CPCs are so low, or I'm sorry, CPCs are so high that unless your conversion rate is obscene or you have like the world's best LTV, that's probably not going to work out. So, I mean, that's nice, but it's also a product that's probably just sitting there and you really can't do much except SEO based stuff.
Andrew Maff 10:44
So bigger pictures. So the fee hikes obviously are landing on top of like new tariff stuff, which I think there was some new stuff that went into play last week or two weeks ago. I'm sure by the time this airs, there will be new stuff. So there's always some type of tariff being involved too, on top of all of Amazon's fun stuff, and so obviously sellers already raised their price once this year, maybe even last year when tariffs got involved, and so the costs from your COGs that you were trying to probably work together with your manufacturer and/or pass, unfortunately, some of those costs over to the consumer, Amazon started to eat into it too.
Andrew Maff 11:26
So the interesting thing is like it's not. Amazon's got this massive like there's no single fee that kills you, right? Like yeah, there's the bigger ones like your FBA fees and stuff like that, but we know those are going to be a case because of fulfillment, but either way, there's not like a single fee that ever kills you. It's like one of it's like death by 1000 cuts type of thing. It's like there's they're coming up with new reasons to charge sellers for fucking everything, and it's obscene. It's ridiculous.
Andrew Maff 11:57
So here, here's the other thing too, by the way. So if you don't know, we actually were oddly enough lucky enough to win one of Amazon's agencies of the year last year. However, we were on basically more for like our omni-channel approaches, right? So we do a lot of work with the different teams at Amazon that help sellers diversify, so they're not so reliant on Amazon itself. Amazon knows that they need brands to be successful. They're not blind to that. They need brands to be successful, and they need businesses to stay open because otherwise, then they don't have any product to sell, and they're not going to constantly steal product. Don't worry about that. That's a different podcast for a different rant, but so the interesting thing was A I would say the one thing that we found. So I was a huge fan of Buy With Prime and still am. I think it's an amazing. I think it's awesome. I think that if you've got a product line that is one of those things that people just prefer to buy off Amazon, or if you have a like a newer brand and people aren't as educated on it, so you need to lower the barrier to entry to make people more comfortable to actually purchase your product. I think Buy With Prime is another fantastic move. We've done countless case studies and seen that it can help improve conversion rates. So, like, if you factor in, yeah, Amazon's got their fees for it. It's not FBA fees, but it's still a fee. If you factor in those fees, but you also factor in the conversion rate improvements, you usually come out net positive. So, it works out better. And then, obviously, our suggestion is leverage that data to incentivize these users that you've now acquired that clearly prefer to shop on Amazon to shop on you, shop with you, kind of more the traditional way next time, so you can kind of keep them in your ecosystem instead of training them to just go to Amazon the whole time
Andrew Maff 13:53
But I digress. So big fan of that because obviously our approach on the D2C side and building out omni-channel and basically leveraging Amazon as more of a customer acquisition channel, which is still 100% what I think it's best best used for. That worked out really well. It made a ton of sense. Then things changed. So last year, I'm wondering if I get in trouble for last year. Things changed, so I was on the advisory council for the. At the time, it was the Buy with Prime and MCF team. It's now changed to something, and I can't actually remember what it's called. It's some long acronym. But last year, the advisory council meeting was very different. It was very MCF heavy. Buy with Prime was like a cool thing that like they had, but like I think they talked about it like for 20 minutes out of like four hours or whatever it was. MCF was the big thing. So if you don't know what MCF is, basically there's no branding on your website. There's nothing like that. Zero. So you don't. No one knows anything.
Andrew Maff 15:03
Someone places an order on your website. It goes through Amazon, and Amazon fulfills it for you. However, through MCF, it's not a guaranteed like two days like Prime. It's usually like four or five, and then you can pay a little bit extra to have it come faster. And basically, you're leveraging Amazon as like a three PL. So their goal is that whether you sell on Amazon, whether you sell your products directly on Amazon or whether you don't, you're sending all of your product to Amazon's warehouses, and they're going to fulfill it for you.
Andrew Maff 15:31
So basically, Amazon has come to realize that they have hit. I don't want to again. I don't want to say they've hit a ceiling with the platform, but they're probably realizing that the platform is only going to take them so far. So how can they continue to grow? Their fulfillment is 100% probably the greatest thing for consumers, right? Like, yeah, there's the benefits of Amazon. There's 5 billion products on there, or whatever it is, and you can go there and buy whatever it is you need and find. Like, yeah, that makes kind of things a little bit quicker and easier. Obviously, they may be tested the UX/UI until they physically can't anymore. Like it's it's in a pretty damn good spot. So from a user perspective, obviously they have that benefit. But the real thing that users love, which is what they've loved since day one, is two-day shipping. Right? Sometimes it's same day. Like I know it can vary, but still, like that's what they loved and the reliability of it.
Andrew Maff 16:25
So Amazon said, "How can we take that and still provide it to consumers through these brands? So they said, "How do we basically get a piece of the pie from their other website, their other business efforts outside of just what they do on Amazon, and so they started doing MCF. So obviously they start leaning on MCF more and more and more, which I've heard is going well-ish. They've started to care a little bit less about the buy with Prime side, and then so what they changed is now they're getting even deeper into it. I wish I could remember the acronym, and I feel bad because I just had a call with them yesterday. But they started to get involved in freight now too. So they're basically handling from A to Z. So you're shipping from wherever you're getting product from, whether it's overseas or whatever, over to either it's from a manufacturer or you know over to your manufacturer and then to fulfillment wherever it is, so yes, they've always been doing last mile. Now they're starting to do first mile, so they're basically taking the entire fulfillment supply chain, like from A to Z. They're handling everything, and so they've leaned really heavily into the operations.
Andrew Maff 17:42
I tell you all this because I think it's very interesting to see what they're doing to grow Amazon helps me understand what's most likely happening in their heads in terms of what's going on that's going to affect e-commerce sellers, right? And so, to me, it's really showing me that they're leaning in real heavy in fulfillment, and they are trying to make more and more money from e-commerce sellers, even outside of just selling on the Amazon.com platform.
Andrew Maff 18:15
They're trying to make money off of orders that get purchased on your website, they're trying to make money off of shipping your product from manufacturer to a fulfillment center. They're trying to handle all of that. So what that starts to show me from a marketing side of things is the platform is going to only get more and more expensive. However, it will get to a point, in my opinion, when they stop having ridiculous fee increases and start putting in all these 1000s and 1000s of different random fees. I do think it will hit a wall, only because at a certain point they will just have kind of steady increases every now and then, and then that'll be it because they're going to hit a point where it's just not possible to be successful on Amazon anymore. You remember the days of like, like you'd get there was people used to do videos on this stuff all the time of like where they would do different stuff within like Helium 10 or Jungle Scout or whatever, and they would find high search volume keywords that had a limited amount of competition. You don't really see those guys much anymore because we're pretty capped out in terms of like people offering product, especially once the overseas sellers started coming in.
Andrew Maff 19:33
So now what's happening is people are creating new types of products, or they're completely inventing brand new things, which are going to require some additional education, which basically means the joys of working at home. I had to pause before my dogs lost their minds. So basically, what that tells me is they're going to hit a wall with these fees where they can't continuously do it. And the products are obviously being coming from overseas sellers and all this stuff, so we've kind of hit a wall with that. So Amazon has now become what I've I've been saying it for a really long time. I've always preached diversification and things like that, and I still obviously stand by that. That has not changed, but Amazon's still an amazing channel. I think it's almost a requirement in certain scenarios, because of two different reasons. One, either a you need to use it as a customer acquisition channel. It's fantastic. People are actively searching for products on there. 55% of all product searches start on Amazon. So if you have a certain type of product, I love working at home. If you have a certain type of product that has people actively searching for it, Amazon's a great place to be. Then you can get in front of them when they're actively looking for the product. You can acquire them, but then the product's got to be quality. The customer service has to be quality, and you have to do what you can to get them into your ecosystem. So get it, get them to purchase your product on Amazon, and then find a way to get them either to follow you on social media, sign up for an email list, or ideally purchase from your website next time. Or you have the other option, which is you have a very differentiated product, and there's not really a lot of search volume around it. Or even if it's like, hey, my product does exist, people know it exists, but it's so different from the competition that if I, you know, run ads on more general search terms, I'm never going to win. That still means you're going to have to educate the audience, which means you're now educating the audience off Amazon. Well, you're going to have a lot of people that, even though they go to your website or they may go to TikTok shop or wherever else you're selling, they still prefer to shop on Amazon, which means you're going to have to have your product listed on Amazon, so that where your customer is more likely to shop, you are available.
Andrew Maff 21:47
So it's still a necessary evil, and I still think it's an amazing platform for customer acquisition because it's you can actually, if you didn't look at your ROAS, you're not looking at ACOS or tacos, but you're actually looking at customer acquisition cost, very very low on Amazon most of the time. The question is, what can you put into play to get them to go from Amazon to your website? And that's the big thing that sellers have to start focusing on.
Andrew Maff 22:12
You have to look at your business as an entire brand, not just an Amazon product, because that's where you're going to struggle. E-commerce, I know this. I will stand by it. I will get back on this podcast on my high horse two or three years from now if I'm wrong. That basically brands are going to have to be on multiple channels. There's going to be a lot more adoption from the average user using AI, in which case AI is going to only show them a couple of products, not hundreds like Amazon does, and you're going to have to really lean into quality. It's going to be about quality product, quality customer service, and quality marketing putting out content because the more that people talk about you in a positive manner, the more that these AI platforms are going to pick you up, and the more that people are going to talk about you positively on social media, so that they can be educated to learn about your product, where they're then asking these AI platforms about you, or where these AI platforms are already suggesting you because there's so much positivity around your product line, and then they're going to let people shop wherever they're most comfortable.
Andrew Maff 23:24
And you just have to accept it. It's going to be your website. It's going to be Amazon. It could be Walmart. Could be Chewy if you're in the pet space. Wayfair if you're in homes. Like it could be all over the place. But 100% two three years from now at most, especially as consumers start to take in AI more and more, you're going to have to diversify. You're going to have to stop being so reliant on Amazon because these fees are getting obscene. It's getting absolutely ridiculous. It's almost physically impossible to be profit like extreme like a good profitability on Amazon. It's getting more to a point where Amazon is still an amazing place to be if you leverage it for customer acquisition, and then you get them over to your website, and you can control the customer's journey.
Andrew Maff 24:07
That's my rant for today. I appreciate y'all joining me as usual. Do the normal thing: rate, review, subscribe, all that fun stuff on whichever podcast platform you prefer, or head over to theecomMshow.com to check out all of our previous episodes. But as usual, thank you all for joining me. If you have any questions, shoot me an email, andrew@bluetusker.com. I'm always happy to voice my clearly loud opinion, and I appreciate you all joining me. We'll see you next time. Have a good one!
Narrator 24:31
Thank you for tuning in to the Ecomm Show. Head over to ecommshow.com to subscribe on your favorite podcast platform or on the Bluetuskr YouTube channel. The E-comm Show is brought to you by Bluetuskr a full-service digital marketing company specifically for e-commerce sellers looking to accelerate their growth. Go to bluetusker.com now for more information. Make sure to tune in next week for another amazing episode of the E-comm Show.