Amazon Marketplace rip-off

A week ago today I decided that the best way to get rich would be to list a bunch of books for sale on the Amazon.com marketplace. Those who helped us move a while back will remember that we had something like 25 boxes of books from our bookshelf. These boxes were the first ones into the moving van (while everybody was still feeling strong!), but they were thus the last ones out of the van when we arrived at our new place (when almost everybody but Jonathan and Keith had abandoned us). We decided it was time to get rid of some of the books, even if it is just so the Elder’s Quorum doesn’t have to move as many boxes of books down the road.

Selling our own books on Amazon, however, turned out not to be the way to make it rich quickly.

The first book we sold happened within 30 minutes of placing the books for sale on Amazon’s website. The book was listed for sale at $4.50. Amazon added $3.49 to cover shipping, so the buyer paid $7.99 for the book. How much do you think I ended up with? Just over $3.00. Where did the five dollars go? Well Amazon took a commission of almost three dollars, and it cost me another 2 dollars to buy packaging for and pay for postage on the book.

I was surprised that Amazon got a three dollar commission on a book that sold for $4.50. Sounds a little steep doesn’t it? Well, turns out that Amazon’s selling fees for books are as follows: (1) 15% of purchase price of book for Amazon’s commission. (2) $1.23 closing fee (this isn’t a house. Why are there closing costs?). And (3) a $.99 fee that I call the “Just because we can” fee. Amazon calls this a “per-transaction fee.” This is a fee that Amazon charges to sellers who aren’t registered for the “professional merchant” program. You see, for $39.99 a month you can become a “Professional Merchant” and can avoid the “just because we can” fee. If you sell more than 40 books in a given month, you save money. If you sell less than 40 bucks, you’re better-off paying the “just because we can” fee.

How does the fee structure break down in real-life selling situations? Here are some examples.

1. Our first sale was for $4.50. The shipping added was $3.49, so the buyer paid $7.99. Amazon’s 15% commission was $.68 (15% of $4.50), the closing fee was $1.23, and the just-because-we-can fee was $.99. That means Amazon got $2.90 of the total price, bringing our cash income to $5.09. From that, we had to pay for packaging ($.50) and postage ($1.50), so our net gain on the book was $3.09. (However, our friendly buyer, after the book shipped, decided that she really didn’t want this book, so she is going to return it. Amazon requires that merchants offer returns, so now she gets to return the book to us, but we get no compensation for the packaging or the shipping. We’re out two dollars on the purchase just because she decided that she didn’t want the book anymore.)
2. Our next book had hundreds of books in the marketplace, so we priced it kind of low. We sold it for $.50. With shipping, the buyer paid $3.99 for the book. Amazon got a $.09 commission, plus the $1.23 closing fee, plus the .99 just-because-we-can fee, bringing our cash income to $1.69. From that, we had to pay for packaging ($.50) and postage ($1.12), so our net gain on the book was a paltry $.07. Amazon’s fees on a $.50 book were $2.31. You can’t even justify the time involved for seven cents.
3. Another book sold for $3.75. With shipping, the buyer paid $7.74. Amazon’s commission, closing fee, and just-because-we-can fee added up to $2.78. Our cash income was $4.46, but this book was heavier. Packaging cost $.50, and postage was $2.00. We ended up with $1.96.
4. Our highest-price sale to date was for $15.50, so the buyer paid $18.99 with shipping. Amazon’s total commission, closing fee, and just-because-we-can fee totaled $4.55, leaving us with $14.44 cash income. Packaging and postage cost us $2.50, and we ended up with $11.94.

The way to make money from Amazon’s marketplace program is to be a high-volume seller, and join their merchant pro program, so you can pay them $40 a month, but not pay the just-because-we-can fee. Then you make a lot of sales, so that the little amounts you make on each book add up in the end. It helps if you can find books that people are willing to buy for more than $.50. Helps a lot actually.

The Amazon marketplace probably isn’t the place for the average low-volume user to make a ton of money on the books sitting in their bookcase. It turns out that the old saying really is true: there just ain’t no free lunch.