Clarifying the Costs of Selling on Various Marketplaces

In my piece on e-commerce in 2020, I made a mistake.

I wrote "In 2013, Amazon’s expenses as a percent of Amazon sales were 33.16%. In 2018, they were 49.70%. In 2020, they were 51.75%."

I made a mistake in equating two different calculations.

The first calculation is what Amazon charges us divided by our Amazon sales.

The second calculation is what it costs to sell on each marketplace.

eBay does not have an FBA offering and we don't use Walmart Fulfillment services. Therefore, the green bars for Viahart.com, eBay, and Walmart represent the shipping costs we pay to USPS and FedEx. The green bar for Amazon is the sum of the shipping cost we pay to USPS and FedEx plus our FBA shipping fees. In this way, it is a true apples to apples comparison of the costs of selling on each marketplace.

Why is the cost of selling on Amazon 51.75% of our Amazon revenue, but Amazon’s expenses only 45.62% of our Amazon revenue? Because not everything we sell on Amazon is shipped by Amazon. Sometimes we ship Amazon orders from our warehouse using USPS and FedEx. Our Amazon expenses as a percent of Amazon revenue fell between 2019 and 2020 because Amazon’s warehouses had month long delivery times in April 2020. As a result, Amazon orders were shipped from our warehouse instead of their fulfillment centers. When we ship from our warehouse, Amazon can’t charge us shipping. That is the main reason why our Amazon expenses as a percent of our Amazon sales fell in 2020.

To put things in perspective, Amazon charged us 45.62% of our Amazon Revenue in 2020. Walmart charged us 15%. eBay charged us 13.5%. Our website was 2.9%.

In summary, I made a mistake, but after having double checked the underlying numbers that formed the article, I stand by the conclusions. Amazon is still the most expensive marketplace to sell on and their expenses as a percent of our sales have risen over time.