Amazon's search page is designed to steer shoppers toward paid placements, but the bigger story is how its fee structure shapes prices far beyond its own site. Sellers on Amazon hand over a growing share of each sale, with the basic 15% commission in most categories joined by fees for fulfillment, storage, returns and advertising. Although the referral fee is the only mandatory cost, the other charges are effectively unavoidable for sellers who want to keep Amazon's sales, the FTC has described Prime eligibility and advertising as a "virtual necessity" for doing business there.
Because roughly half of each sale goes to Amazon, sellers cannot absorb those costs and must raise their prices. Since Amazon's referral fee is a percentage of the price, higher prices also increase Amazon's own cut. The pressure does not stop at Amazon's borders. Under its Fair Pricing Policy, Amazon can remove the Buy Box or suspend a seller that offers an item cheaper elsewhere, so sellers must raise prices on their own websites and at rival retailers as well.
The result, the article argues, is that shoppers pay Amazon-driven prices even when they never visit Amazon. Reports cited include Amazon sellers losing the Buy Box after Target discounted products, a California attorney general lawsuit alleging Amazon pressured brands to push Walmart and Target to raise prices, and a seller suspended over a one-cent price gap with Target. Normally, competition would push prices and fees down, but when sellers cannot undercut Amazon anywhere, there is no cheaper alternative for shoppers.
For sellers, leaving is difficult because Amazon is where many shoppers already are. This system sits at the center of the FTC's upcoming antitrust case against the company.
Source: Hacker News · Summarized by HeadlinesBriefing