Amazon News: Amazon Tops Walmart, Rising Seller Fees & FBM Limits

Amazon News: Amazon Tops Walmart, Rising Seller Fees & FBM Limits Unknown Speaker: Welcome fellow entrepreneurs to the Amazon Sellers School podcast, where we talk about Amazon and how you can use it to build an e-commerce empire, a side hustle, and anything in between. And now, your host, Todd Welch. Speaker 1: Hello, everybody. Welcome to another week of Amazon Seller News Live. Got Kevin Sanderson and Dana on here today. So appreciate you guys joining me. Speaker 3: Yep. Always good to be here buddy. Speaker 1: A fun episode. We've got some good news. I think that's going to drive some good conversation anyways with some sales data coming in from Amazon and some interesting tariff things going on as well as some changes to FBM on Amazon. Looking forward to diving into this. So let's go ahead and jump in. And if you're out there watching, go ahead and throw your comments, questions, concerns, whatever in the comments there, and we'll try to bring them into the show and answer them as best that we can. So let's go ahead and dive into the first story here. So Amazon is set to surpass Walmart in revenue for the first time ever, which I think is pretty big. Speaker 2: Wow. Speaker 1: Amazon is on track to report $187 billion in quarterly revenue. That's not even a year. That's in a quarter. Speaker 3: I'd be good with a year on that. Speaker 1: What's up? Speaker 3: I'd be fine if that was my revenue for a year. Be fine with me. Speaker 1: Yeah, that'll be fine for a lifetime. Speaker 3: I'm not greedy. Speaker 2: I'd be okay with a few zeros taken off. Speaker 1: Yes, for sure. So Walmart is projected at $180 billion. While Walmart still leads in annual revenue, Amazon's rapid growth driven by its cloud business, AWS, and the rise of e-commerce has helped to close the gap. For Amazon sellers, this shift highlights the platform's dominance in online retail and reinforces the importance of leveraging its vast marketplace to scale their business. As Amazon continues expanding its ecosystem, sellers should stay ahead by optimizing their strategy to capitalize on its growing customer base. Very interesting to see Amazon passing Walmart. They've got a nice graph here to kind of show where the biggest companies are in quarterly revenue. But it's also important to note that it was largely based on the growth of AWS more than anything, although the retail grew as well. I've got kind of a close story here that we won't go into in depth, but Amazon sales grew 10% in fourth quarter in 2024. So that's on their e-commerce side. So the e-commerce is growing as well, but AWS even faster. Speaker 3: Yep. So that article says that something nearly 50% of Amazon's revenue comes from not AWS. And I always thought that AWS was a much larger percentage than that. But I wonder, like, if we're talking about revenue and then profit after that, right? If we go into like all the ads, Prime memberships, the fact that there are advertisers on Prime Video and DSP and all that stuff, like the costs for them has to be extraordinarily low. Meaning the profit is extraordinarily high, you know. So, yeah, what does that say, though? Revenue at AWS has more than doubled. Speaker 1: AWS is 17% of total. Speaker 3: Yeah. Speaker 1: Not as big as I would have thought, because that's really always... Speaker 2: I would imagine it's a higher proportion of profits, though. Speaker 1: Yes, that's what I was going to say. I believe AWS is highly profitable compared to the e-commerce side. Speaker 3: Yeah. Yeah, unless it's ads. Speaker 1: Ads, yes. I mean, that's just pure profit, basically. Speaker 3: I know. Doing ads management is the most brilliant revenue generation thing ever. You just say, hey, pay to see the audience that you want to see that you're looking to get to anyhow. And everyone goes, oh, yeah, I'm in for that. And then someone goes, well, I'm in for that, too, and I'll pay more. And then the ads manager or the company goes up. Well, if you insist you can pay more, go for it. And then it just goes from there and they go, well, I don't know what to do with all this money. Let me give you some metrics that don't make sense. And then, which is how Amazon ads used to be, used to be able to just click on competitor ads over and over and burn through their budget. And there was no IP tracking. Speaker 2: That's a different side to you, Dana, than I've heard before. Speaker 1: Yeah, I always try not to do that when I'm researching stuff on Amazon. You still accidentally do it sometimes, but I always try not to for the most part. I've got to imagine there's probably User farms out there just clicking on ads. Speaker 3: So yeah, and there have been for a long time like it was an issue with Google when Google ads first came out where competitors could just burn through your budget and Google eventually figured out that there was some some people doing this and and And then they would refund you for what you could see. I can't remember exactly. It was so long ago. But, you know, Amazon would recredit your account for budget that was burned up by people clearly reclicking things. Then they had to put in this this IP tracking to see, hey, is the same IP address clicking on this stuff, but I think it's just gotten more sophisticated both with the tracking and with the, anyhow, we don't have to talk about all that. This is all about Walmart and Amazon revenue, but every click makes Amazon some money. Speaker 1: Well, what I think is interesting on this graph, so Walmart since 2010 has been relatively flat. If you adjusted this for inflation, I'd probably say that Walmart sales in total are down versus 2010 where Amazon has just skyrocketed up the chart. Speaker 3: Well, I'm sure some of the sales have gone from Walmart over to Amazon. Speaker 1: Yeah. Yeah. Big time. Speaker 3: Yeah. Speaker 1: The only place that Amazon or Walmart, I should say, is really leading Amazon when it comes to e-commerce is the buy online, pick up in store. Speaker 3: Let me ask this though. This is Amazon as a company. This is Walmart, which only sells or at least primarily sells only in America, right? Speaker 1: Ah, that's a good question. Does Walmart have stores overseas? Speaker 2: I'm almost positive they have stores in Canada, like Puerto Rico. Beyond that, I don't know. I would imagine Walmart must have some... Yeah, it looks like Mexico. Speaker 1: I see Mexico, Canada, China, Chile, South Africa, among others. Yeah. Definitely international as well. Speaker 3: Yep. International. Okay, fine. I would still say that I'd wager the vast majority of their income comes from the US, whereas when it comes to Amazon, they're generating so much more revenue in so many more places that it's probably an unfair comparison. Speaker 1: Yeah. Yeah, because Amazon is really all over the place compared to Walmart. I don't think Walmart has really anything outside of its retail. Yeah, that I know of. You know, they tried the Walmart video thing. I forget who they bought. But Vudu, I think it was. Speaker 3: Vudu. Yes. V-U-D-U. That's right. Speaker 1: I don't think that's ever exploded very much. Speaker 3: And it's too bad. Yeah, it's too bad too because you could buy, they sell DVDs and if you bought a DVD at Walmart, there was some kind of code that you could put into Vudu and you'd have instant access to the digital version of that. And so you go to their bins and you sift through their $1 DVDs and you get 50 movies and you just added the whole library to your Vudu account. Speaker 2: Hmm. Speaker 1: Yeah, it's a I mean, Amazon is a tech platform that happens to sell products where Walmart is a retail company. That's trying to figure out the tech. Yes, definitely struggled at doing it, unfortunately. Speaker 3: Yeah, I say this every time I want Walmart to succeed. And I was actually thinking about this as I was reading this article and going, you know, I wonder if part of the reason that they're not succeeding is brand image. Speaker 2: Can you guys hear me? Speaker 3: Yeah, I hear you. Can you hear us? Speaker 1: You're quiet though. It sounds like you're far away from your microphone. I don't think you can hear us. I got disconnected or something. Speaker 3: Yeah. Speaker 1: But yeah, we can hear you, Kevin, a little bit. Speaker 2: Can you hear me now? Yeah, that's better. Okay. I had a little tech glitch. We're live, folks. Speaker 3: So anyhow, that's the secret to life. Kevin, you caught that, right? Speaker 2: No, I didn't. All of a sudden I just saw your lips moving. So I will have to, for the benefit of those watching, go back and watch the replay to get the secret of life. Speaker 1: It was a one-time only thing, Kevin. The secret of life was there, it was revealed, and it's been deleted from the recording. Speaker 3: Yeah. Speaker 1: Shucks. Speaker 3: Next time, buddy. Next time. Speaker 2: Next life. Speaker 3: Yeah. Speaker 1: But yeah, it's Amazon is growing. Speaker 3: Yeah. But back to what I was saying, though, like, I wonder if part of the issue isn't the image of Walmart is cheap stuff. Because I think a lot of people hold that viewpoint of Walmart, even though you can go to walmart.com and get all this other stuff now. I wonder if rebranding would Help that without Walmart in it just like I don't know. Let's say they bought Rivoli for 2.2 billion dollars. Please do that Walmart and And they just did Rivoli by Walmart just like Walmart went and bought Flipkart in India, right? It's Flipkart, but Walmart owns it Flipkart was the biggest retailer in India They just went cool. We'll buy it and plug it in. Speaker 1: Yeah, they did that with Jet though, right? Speaker 3: Yeah, they screwed that up. Oh my gosh. Speaker 1: I don't know why they didn't just keep it. They should have just kept Jet as their e-commerce platform and incorporated their buy on Jet pickup at Walmart or something kind of thing. Speaker 3: Yeah, yeah. Speaker 1: All right, branding issues, but you've got target as well, right? And they've got a lot better public image. Yeah, well, they've had some hits lately getting political and stuff. Speaker 3: But oh, really? Speaker 1: They're they've got a lot better image as far as quality than Walmart does. But they've struggled as well. I guess they haven't really tried. They yeah, head to head with Amazon. They're they're kind of okay with a little niche that they've built for themselves. But I believe they've been struggling as far as sales recently. Speaker 3: Oh, really? My understanding is that they are extraordinarily picky on what brands they will allow to come into Target.com, which I personally think is a good thing because let's Amazon China, when they opened the floodgates to Chinese sellers to sell directly on Amazon.com, what did we all see? A flood of crap. Speaker 1: Yeah. Speaker 3: You know? Speaker 1: Yeah. Yeah, that's true. But you still got to get enough sellers to have enough inventory and products that people want to shop there. Speaker 3: For sure. Yeah. But I would never trade quality for momentary profit. Speaker 1: No, definitely not. Definitely not. But I've never heard anyone talk about Signing up for what is it circle or something they call it target program like Walmart. Speaker 2: I've never even heard of it until you just said it. Speaker 1: I think it's called like target circle or something. But I mean, nobody talks about signing up. So they're obviously not doing something right. Speaker 3: Yeah. Or maybe they are and they're just not doing enough of it. Speaker 1: Let's see, I'm curious what Target's 2024 Q4 sales were compared to Amazon. Speaker 3: It's Target Plus. Target Plus. Speaker 1: Target Plus, yeah. Is it Target Plus? I thought it was in circle. Speaker 2: Isn't it Walmart Plus too? Speaker 1: Yes, Walmart Plus. Speaker 2: Okay. Yeah, I think we're Walmart Plus members. Speaker 1: Amazon Prime. So target had 31.39 billion change. Yeah, quite a bit lower than you know, they're definitely not getting to the hundred billion dollar club anytime soon. Unknown Speaker: So yeah. Speaker 3: Yeah, we'll see a crappy company. Speaker 1: Yeah, right. All right, well, let's go ahead and jump on to the next story here. Do you guys have anything to say about the Amazon sales 10% growth in Q4? I mean, it's cool to see that they're still growing and it kind of surprises me based off of the way that everybody is kind of talking and kind of, you know, poo-pooing on Amazon lately. Well, and everything else. Speaker 3: It's pretty easy to skew numbers like this, though. Speaker 2: You know, it was on sales like you can't it's hard to skew sales though. Speaker 3: Yeah, but sales like let's take for instance. Yeah 10% sales increase, but let's say 9% of that was because of Amazon haul and it's all like super low dollar junk that the merchants pay very little to Amazon and So yeah, you get you got top-line revenue, but did you get gross? Did you get profit right? And so I This is why when it comes to the Amazon world, if you tell me you're a seven-figure seller, it doesn't mean anything at all to me. And I don't say that disparagingly, by the way, that's quite an accomplishment, right? But it doesn't mean to me anymore like it used to that, wow, you have made it in life, you are successful. Because I had a buddy that did at a time that I was doing, I don't know, half a million, 400, somewhere between 400, 600,000 and he was doing over 2 million. I made double the money that he did. I took home double the money that he did. And that to me was astounding. I was like, Oh, where's all your, what, what are you doing with your money? You know? And, and so Todd, like if you tell me sales grew 10% with Amazon, I go, well, what about profit? Speaker 2: That is a good point. Like what percentage of the sales increase was, what was the name of it again? Speaker 1: Hull? Speaker 3: Yeah, it was on Hull. Speaker 2: But then again, I don't know if anyone... Speaker 3: Thrash Hull. Speaker 2: Exactly. I haven't heard anyone talk about buying something from Hull. And maybe they just buy it and don't associate the difference, but you kind of have to go looking for Hull and... Speaker 3: You do. Yeah. I mean, I don't know if it's the same way now. Yeah, you have to search it. Speaker 1: And that might be partly because of the results of the election. They're like, okay, we're gonna hide that a little bit. Speaker 2: All hallway. Like, I don't I because I thought it was on the Oh, no, it is. It is there. It's, it's in that little top bar. Speaker 3: Is it? Is it trash.amazon.hall? Speaker 2: Yes. Something like that. Speaker 1: So Amazon's net profit in 2024 was 67 billion. Speaker 3: Okay. Speaker 1: So that's on, you know, the right here, 187 billion in sales. That's just in Q4. Yeah. So 67 billion total is relatively a low number. Speaker 3: Yeah. But anyhow, Kevin, that's that's why I say, like, yeah, you can pad the number. I'm not saying that they didn't grow 10 percent. I'm just saying, like, did it did it affect anything or did you just have to do more work to generate that revenue leading to a net negative or net? A net negligible, let's say. Speaker 2: True. Or they just found a way to increase bids on PPC and other fees to get there. Speaker 3: Yeah, exactly. Or maybe Amazon just launched another Amazon Basics and forced their employees to buy it. That's if they have to wear a vest or a hard hat, you know, you got to buy Amazon Basics from Amazon.com, buddy. Speaker 2: Maybe. Speaker 3: All right. Speaker 1: Yeah. Just calculated. Amazon's profitability is 10.5 percent in 2024. So that's about, I think, average for an e-commerce business. Yeah, these days for selling about 10% bottom line is what most ecommerce companies are looking for. Speaker 3: Yeah. So, you know, if their sales grew by 10%, so 10%, does that mean they're now profiting 11%? Speaker 1: Well, that was for 2024. Yeah, I know. Speaker 3: I'm just posing the question. That's my point is, did it result in anything effective? Speaker 1: Yeah, sure. Yeah, for sure. Well, either way, they're growing, which means more sales on the platform. Hopefully that leads to more sales for sellers out there. Although, you know, there may be more sellers that are splitting the pie. Speaker 3: Yeah. Speaker 1: But we'll see. I think 2024 kind of seen a little bit more consolidation of sellers and shrinking of profitable sellers anyways in 2024. Because of all the fee increases and such. Which is actually the next article here. So lead right into that one. So the mystery inside Amazon's record profits, how much are higher seller fees boosting the bottom line? Amazon reported record profits in 2024 with operating income rising 86% year over year. But much of this growth may be tied to increasing seller fees. Over the past six years, revenue from seller fees has grown significantly now accounting for over 29% of Amazon's non AWS revenue up from 22% in 2019. There's our answer, huh? Yeah. Many sellers are raising concerns that these fees may be more of a tax than necessary costs, especially as Amazon faces an ongoing FTC antitrust lawsuit. So yeah, going from 22% of their profit to 29% of their profit. And what is that five years of time there. So that's a relatively big increase just in seller fees. Hey Amazon sellers, tired of losing money on storage and shipping fees? Well, Amazon Storage Pros is here to take the headache out of logistics. We manage everything from inventory and creating efficient shipping plans to working with 3PLs and Amazon's AWD so that you can focus on growing your business. Start with a free storage cost audit and discover exactly where you're overspending and how to fix it. Don't let logistics eat into your profits. Visit AmazonStoragePros.com. That's AmazonStoragePros.com to get your free storage cost audit and start saving today. And now back to the show. Speaker 2: Yeah, so I just put together a shipment yesterday. In fact, I've got UPS coming to pick it up today. And it's all stuff that's like, not case packed. So it's, you know, multi cases. And this stuff used to cost me maybe 35 to 40 cents a unit to get into Amazon. Now, part of what I'm about to say here was my own fault because I had my person in the warehouse write down basically like this printed out spreadsheet with like what was going in what box. I spilled water on it and then the ink just went away. So that was worthless. So I ended up being like, all right, I'll just pay the 15 cents a unit to have Amazon do it. But then you take that 15 cents a unit plus whatever the non-transparent costs are for whatever they call inventory receiving fee. Yeah, the inbound placement fee. Inbound placement fee. Thank you. And then the just the normal shipping fee. It was almost a dollar a unit. And I'm like, this is a lot. Now granted, 15 cents of that came to me. It was maybe like probably 90-95 cents. Speaker 3: So 15% was your fault. Speaker 2: Yeah, exactly. But the rest of it was, you know, like these fees just keep like, and I'm starting to wonder too, like, have the prices of the boxes started to go up too? Because what I used to pay for boxes, let's say last year, it seemed like it was higher for the same size boxes than it was a year ago. Speaker 1: Yeah, for the shipping costs. Speaker 2: Mm-hmm. Speaker 1: Yeah, they've definitely gone up. I've seen an increase. Yeah, ship station has seen the same kind of increases that you see on Amazon. And what's interesting too is Is that if you take the same boxes and ship them to an FBA location and then ship them to a similar AWD location that's about the same distance away, a lot of times the AWD shipping costs will be cheaper. Speaker 2: Because Amazon's trying to push everyone into AWD. Speaker 3: Yeah. Yeah. This is just like what China's doing offsetting You know, subsidizing, shipping out and stuff like that. You know what this is? For lack of a better, thinking of a better way to explain this, they get you hooked on the drug for cheap and then you're hooked. Now you pay the price. Speaker 2: Yeah. Speaker 3: Right. That's what's happening. That's all they do. So basically they're dealers. Speaker 2: Yeah. I've always heard people talk about, you know, selling on Amazon could be like crack. You know, it used to be a lot easier to break in. I definitely feel for folks starting now, but then again, that's all they know. And people were debating in 2015, like, oh, it's so much harder than it was in, you know, 2009 or 2015. Sellers were saying, oh, Amazon's dead. Right. Speaker 3: Don't don't even bother trying to come on now. It's not worth it. You're never going to make it. It'll it'll never it'll never be true. It's just an evolving, evolving landscape. Speaker 2: The way you did business in 2015 is over. Speaker 3: Yes. Speaker 2: And so like there's these cycles and they go quicker than they used to. Mm hmm. Speaker 1: Yeah. Speaker 3: Yeah. Speaker 1: Well, yeah, it's I mean, there's no doubt that Amazon is getting harder and you need to be more professional to run your business on there. But there's still a lot of opportunity. You just got to run it professionally. And you're going to even need to learn a lot very quickly yourself or hire someone who knows it. Speaker 2: Yeah. Speaker 3: Yep. Speaker 1: Because the barrier to entry has gotten significantly higher, I think. Speaker 2: Now, one thing that's interesting about that $150 billion number, if you think about it, their highest quarter is always going to be Q4. So like that graph showed like a big spike in Q4 every year. That was like $184 billion. So fees for the year were $150 billion. Speaker 1: Yes. Speaker 2: So think about what percentage of, so that's got to be at least a quarter, if not more of their revenue, probably even more than that. Speaker 1: Probably more like 35% to 50% or 40% I'd say. Speaker 2: Now, does this also include PPC in that or is that another revenue stream? Speaker 1: I think it's got to be this is just fees that they're breaking out here. So I would think it'd be separate. Speaker 3: Oh, yeah. Speaker 1: Q4 was 30%. Let's say just be conservative. You're talking 45 billion of that. What was it? 187 billion. of that is fees. Speaker 2: At least. Because in the article, the person had said, you know, they did research and it was about a third in 2016 went to fees. And that particular example they gave included advertising, but they said it's above 50% now, which In some ways, you're actually kind of lucky if you're doing advertising. So between your tacos, your fees, the commission, 15 percent, the FBA fee, the inbound fees, the shipping and fees, the storage fees. God forbid you have long term storage fees or if you don't have enough in storage fees. Fifty percent might actually be conservative. Speaker 1: Yeah, yeah, definitely can add up really quickly. If you're not paying attention to it as well. I mean, you can pay a lot of fees without needing to pay for those fees as well, especially the inbound placement fees, storage fees, those kind of things can add up really fast if you're not managing your inventory properly. Speaker 2: Yeah. Speaker 3: I've started to wonder if it makes sense to go 3PL FBM. Eventually, I think 3PLs are going to get sophisticated to the point where they're going to be able to eliminate a lot of the fees that Amazon is charging you and have the same efficiency to get your products out the door. Speaker 1: Yeah, I could see that happening for sure. You know, because that's Amazon's biggest part of their business is their logistics and inventory storage platforms. Yeah. And so I mean, it would take a lot of work for some of these three PLS to rival Amazon, you know, same day delivery next day delivery, but yeah, I can definitely see it happen. The problem is, is that Amazon has AWS. Which funnels them, you know, and their ads platform, which just funnels them cash, you know, to spend on their logistics side. Speaker 3: Yeah, for sure. But all I'm saying is that the logistics for inbound shipping placement, too much inventory, not enough inventory, just the right amount of inventory, all that stuff, everything's got a fee, right? And so you start off with 100 pennies and go, here's five for you, five for you, five for you, five for you. Cool. I got 80 left. Here's 40 to you, Amazon. Great. I've got 40 left. Here's 20 to you, government. Awesome. I got 20 left. Here's 11 to you, manufacturer and logistics company. Excellent. I've got nine left. Here's income taxes. So that's four more to you. Excellent. I've got five left. Speaker 1: Yeah, yeah, that sounds about right when you break it down. Speaker 3: Yeah. I mean, Amazon, if you think, yeah, if you think about it, Amazon is the new middleman to paying the government and they're using the same. We don't have to get into that, but they're using the same models, right? You get a paycheck and you go, cool, you got federal withholdings and all that stuff, good. You got sales tax, good. You got property tax, good. You've got this, that, and the other, health tax, blah, blah, blah, blah, blah. You work for a dollar and you keep 15 cents of that dollar. That is your real profit as an employee, that 15% of what you make, whatever it is. You know, Amazon does the same thing, like we'll take a little here, a little here, a little here, a little here. And when it comes to FBA, those fees have gotten very expensive. And so that's why I pose the question, well, eventually there's going to be some 3PLs that go, you know what? That's it. We're opening up six massive centers, and we're going to fix what Amazon charges you for. We'll charge you half as much, and people are going to flock to companies like that, I think, once the model is proven. Speaker 2: So, in my opinion, it's kind of possible, but you would still have to make sure that that company has the ability to do seller fulfilled prime. Speaker 3: Definitely. Speaker 2: Because otherwise, you're going to lose out on clicks and conversion rate. Speaker 3: Yeah, absolutely. Speaker 2: Now, if you have a larger product, shout out to where to go, where W-A, like short for warehouse, to the number and then go. They're actually owned by UPS and they're pretty good with larger products. Like cars? Well, yeah, like cars, but more like furniture or they've given the example of like if you have like a baby crib or something like that, so something that's larger and heavier. Amazon doesn't seem to want to do heavy, larger stuff. Whereas, they'll take it, of course. But if you look in the furniture category, a lot of the stuff is FBM. You can tell it's FBM because it's got a prime badge. So that's the potential. But it would be interesting to see if more and more of Amazon's dominance gets chipped away at some point. Somebody is going to and it's not going to be quick, because I remember dating myself here in high school. Taking like an introductory to business class. And the teacher was talking about how like, you know, mom and pop restaurant might care more about like your business if you're upset. But if you go to a big company like Sears, they may not care about your business as much because they have so many more customers. Well, that attitude is probably the wrong attitude for Sears to take. Speaker 1: But yeah, so Yeah, interestingly, I just pulled the revenue for the largest 3PLs out there. Amazon, of course, is the largest at $140 billion. $140 billion estimated comes from their 3PL operations and sales. The next largest is CH Robinson Worldwide at $16.7 billion. Speaker 3: Wow. So just a fraction of amazon's network so there's a so there's some margin to be snagged. Speaker 1: Yeah, it's definitely there. Speaker 3: Yep. Speaker 1: Amazon has just built the platform that's needed to build out a 3PL of the size and scale that they have, you know, because they get profit from so many other places where these 3PLs, most of them are just getting their profits directly from the logistics side. So they don't have as many streams of income to grow on top of. Yep. So this, I just seen this back in 2016, it says Amazon took a one third cut of sales by merchants in 2022. That's a massive 50%. Speaker 3: Yep. That's good to know, yeah. Speaker 1: It definitely was easier back in 2016, that's for sure. You had a lot more profit to work with. Speaker 3: And so I've been telling people that I now pay Amazon four times as much as I did when I got started. It might actually be more than that, because I started in 2010. And at that time, when I started, Seller Central PPC didn't even exist. It hadn't even been rolled out. And so and, you know, I don't even run ads today. You know, that's a that's a cardinal sin in the eyes of many, but I don't have the margin for it any longer because I'm not able to change my price on my product and Amazon's fees have been going up. I've been selling this particular product, this supplement for Gosh, I must be, I'm either at nine years or 10 years this year. Speaker 1: So I'm curious though, Dan, why they haven't increased or why you haven't increased the price? Is it just the brand that doesn't allow you to or what? Speaker 3: Yeah, it's the brand, yeah. Speaker 2: Got it, so you're a third party seller. Speaker 3: Yeah, yeah, so my model is I give exclusivity to someone else's product and basically I am their Amazon division. But because of that, I get the product on consignment. I only pay him once a month for what's sold. I don't have to have any inventory. You know, it's purely a sweat equity and experience relationship. And I just take my profit off the top of that. So for a beans in for beans out situation, like my wife puts in roughly five hours a month on this. It's not a seven-figure brand because we're not advertising or anything like that, but it makes money. And if she's only spending 60 hours a year on it, well, it makes a lot of money, a lot of profit. It costs us nothing. Speaker 1: A lot of hourly profit. That's good. Speaker 3: Yeah. Speaker 1: I do pretty much the same thing with a lot of brands. I sell their products. I'm more in control of the pricing with the brand. I kind of set that for them. Based on the profit level that I'm looking for, but also the speed at which the brand is looking to sell. So we kind of negotiate that in a lot of cases and if I have to get lower pricing, then I push for that or I tell them what we got to have the price at this spot unless you bring my cost down. Speaker 3: Yeah. So part of the problem that I run into is that it costs so much money to sell these on Amazon, but the brand's website is, is where they make a lot of sales. They like their cost is lower. If Amazon gets wind of it, like they'll just, Like, oh, you can't do, you can't sell this here because we're a monopoly. Speaker 1: Okay. Speaker 3: Yeah. Speaker 1: Yeah. That makes sense. Well, you might have to negotiate your costs, but I suppose you got a good deal. You don't want to upset the Apple card necessarily. Speaker 3: Yeah, exactly. The thing is, is that they, we're only selling a couple, a few of their, of their products. And we have a list of like 50 more that we can do that. We just got permission like, well, a couple of months ago now, but then, Christmas and then the kids got sick and everybody was throwing up on everything in the house and then laundry and all that stuff. But, uh, you know, we've got, we've got the go ahead. Cool. You can sell everything. And so, cool. Yeah. We're going to be putting some time and effort into that. Speaker 1: So then, yeah, it's a, it's a great, uh, way to sell on Amazon brand partnerships. It's the way to do it rather than just doing regular, um, reselling with no connection to the yeah, you can get more control, you can get access to brand registry, you can negotiate price discounts, advertising shares. All that fun stuff. And it just feels more enjoyable because you're working to build up a brand rather than just flipping as many products as you can. Speaker 3: Yeah. The problem, the inherent danger in this model is that if you don't have contracts in place and everything I did was on a handshake. Right. So the problem is, is if you don't have contracts in place, you get cut out when they see those hundreds of thousands of dollars rolling in. One day somebody looks and goes, well, why the hell aren't we making this margin? Thanks very much. We're not selling to you anymore. And that's happened to me about five times now. Speaker 1: Yeah, definitely a risk. Speaker 3: Yeah, it's a risk. And but, you know, I made. Just so much money in the meantime that the risk was well worth the reward, you know, and at a certain point, I just expected it to happen, you know. Speaker 1: Yeah. Yeah, well, I mean, that's with any kind of service business, right? Because that's essentially what we're doing. We're offering a service, and you're going to have churn of some kind. It just depends how many years that churn rate is. I've been pretty blessed with a lot of my good brands. I've been selling them for I don't know, going on seven, eight years now, a lot of them, and I don't see that stopping anytime soon because they're smaller brands that have no desire to try to figure out Amazon for themselves. Speaker 3: Yeah. Speaker 2: Well, I'll just say this. In the agency world, it's not years, it's months. Speaker 1: Oh, sure. Speaker 2: Sometimes it is years, but it's- Do you mean customers? Speaker 3: You mean customers, like you to the Amazon seller, you mean? Like through my Amazon guy, is that what you're referring to? Speaker 1: Yeah. Speaker 2: So like for an agency that, let's say they have a bunch of clients that are Amazon sellers or brands, it's easier for them to switch. Unknown Speaker: Yeah. Speaker 2: I guess the difference is with an agency, the seller is paying the agency, whereas in the model you're talking about, you're paying them. Speaker 3: Yes. Speaker 1: Yes. Speaker 2: So there's at least a little bit of where the money goes, but at the end, margin is coming off of what would have gone for making the sales on Amazon. Somebody does the counting one way or the other and quickly realizes which model is going to benefit them more. Speaker 1: Yeah, for sure. Yeah, yeah. Churn is definitely an issue, but yeah, for an agency, that's going to be a lot. Shorter versus what Dana and I are doing, because yeah, like you said, we're paying them. They're not paying us for anything. So it makes it a little bit easier to not think about it. Speaker 3: Yeah. So there's one thing that you and I haven't discussed, Todd, are you, and I know, I think you do a mixture of this, but I sell all of their products through my seller central account. So I received the deposits and I tell them, charge my credit card this amount. Speaker 1: I usually have net terms of some kind, net 30, 45, 60, sometimes longer than that if I'm lucky, but most of them are net terms. Although I have been switching some of them over to doing an account management service and they're paying me a percent of revenue and I'm selling on their own account. And I did that for several brands where my profit margin wasn't high enough, or to get the profit margin high enough, I had to sell at too high of a price, which didn't leave them competitive in the market. So I switched some over, and that's helped their sales grow. And it's also helped me too, because I have to outflow less cash. And you know, you just see the service coming in. And since I'm running their entire account, The churn rate on that should be a lot lower as well. It's relatively new for me, so we'll see how it goes, but I don't anticipate them. Yeah. Speaker 3: And I think you and I discussed this six or more months ago, sometime last year, where you're basically taking a mixture of your model and a mixture of my model and melding them together. But you ultimately end up still being the authority on the subject. So if they need something, they're going to come to you, right? Speaker 1: Correct. Speaker 3: Because you are the brand manager for Amazon. The only difference for me is that I do not have to pay for my inventory until it sells. I have no terms other than I need you to send in 500 units of this and 500 units of that and I say thank you. My wife sends them the shipping label, they ship it in and then next month we go on the 5th, okay cool, we sold 380. Charge our credit card for this much? We pay off instantaneously. Speaker 1: We get consignment. I mean, that's the biggest issue in e-commerce is cash flow. Speaker 3: Yeah. I won't do it any other way. Speaker 1: Most e-commerce businesses don't fail from not being profitable. They just run out of money. They can't pay their bills anymore, even if they're profitable. Speaker 3: So yeah. And I won't do it. I won't do it any other way. If a brand can't trust me enough to take care of them, Based on my pedigree and experience and all that stuff in the space. Fine. Let's not work together because I'm not going to give you $50,000 in 30 days. What I will give you is guaranteed sweat equity into your brand. Like I will be helping you and you're going to help me by not charging me to help you on the upfront. Speaker 1: Yeah, absolutely. It's a good model. Speaker 3: Yeah. Speaker 1: All right. Go ahead and jump on to the next article here. Trump threatens retaliatory tariffs on countries with unfair trade practices. President Donald Trump announced plans to impose reciprocal tariffs on countries that charge higher duties on U.S. goods, aiming to level the playing field in international trade. The administration has launched an investigation into global trade imbalances with a report expected on April 1st to identify countries that impose restrictive trade barriers against the U.S. For Amazon sellers, this could lead to higher costs if tariffs increase on imported goods, but it could also result in lower prices if other countries lower their tariffs in response. Sellers should closely monitor upcoming trade policy changes as shifting tariffs could impact supply chain costs, pricing strategies, and product competitiveness. So I'm curious on your guys' thoughts on this. Personally, I think this is probably the best way to go about it if you're going to do tariffs. You just match what other countries have and hope that the other countries maybe decrease their tariffs as a result. Speaker 3: So I'll give you two companies that whoever's listening needs to know about. That's Tariff Terminator and Sellerview. And view is V-U-E. So, they both offer a tariff monitoring service and Seller View does a lot of different stuff. Tariff Terminator is just finding the best tariff codes and then they'll monitor those tariff codes for changes. So, right now, today, now more than ever, I think every seller that is importing needs to have a monitoring service. I don't know why I didn't think about this. I do ASIN monitoring. I monitor ASINs for critical issues. I need to integrate Tariff Terminator into my stuff. I got to talk to Alpha Lobby about that. But no joke, this is huge. Right now more than ever, it's huge. And this is not the first time Trump has said this, right? And we did see tariff changes the last time he was in office. And if I remember, my product went to like It wasn't permanently there, but it went to like 40% or 20%. It went really high. It went up a lot. And that made it not worth me ordering anymore. But everybody needs to be monitoring their tariff codes. Speaker 2: Yeah, this is gonna be a big one. I would suggest as much as possible. And I don't know if this is the right way to go or not, but my philosophy is gonna be Ask for more DDP shipping, destination duties paid where it's on the manufacturer. Technically you don't own the goods until it's cleared customs. So I don't know if that's, I'm not a lawyer, so I don't know if that's beneficial for like longterm, if like there's ever an audit. As long as you say to your suppliers, like, hey, please make sure to charge the appropriate amount for the actual value of the goods. Because sometimes I think Chinese suppliers have been known to just like, you know, if it's $100,000 worth of goods, they just say it's a thousand or whatever. And they don't make up a number. Speaker 3: I don't know that. Speaker 2: I've heard that, whispers of that over the years. Speaker 1: Yeah, I've had manufacturers ask me, what price do you want me to put on the, I forget what it's called. Speaker 2: Whatever the appropriate number is. Speaker 1: So yeah, that's definitely a thing for sure. Speaker 3: Todd, I think that next week we should go deep just into this subject and have a couple of experts on. And to talk about what should actually be being done, because this may or may not put some people out of business overnight. And if they don't know about it, they're going to be like, they don't know that something's made a change that's going to put them out of business. And they're still putting their entire net profit into advertising. They're going to have a sorry day when they go to reorder and realize that they have no profit at all. Speaker 1: Yeah. I mean, that's a really good point. You're getting close to ordering as well. You might push up your ordering and do it now in February or March before this April 1st report comes out and the tariffs go into place. Speaker 3: I think it's too late for most. Speaker 1: After that, you're just going to have to really pay attention to what the tariffs currently are. I'm looking at Tariff Terminators page here. Who did you say owns that? Speaker 3: It's off a lobby. Speaker 1: off a lobby. Okay, yeah, maybe if you have him on LinkedIn, maybe you can connect them to me, send me his link. And I'll see if we can get him on the show. We can talk about it a little bit. Speaker 3: I'll also get, I can also get Mark Botha. Speaker 1: Search for your code and make sure your product is classified properly. Speaker 3: Yeah. I'll also get Mark Botha on. He owns Sellerview and Mark Botha goes like super deep into what are your real costs. But Sellerview has just has a monitoring service if you're a client. Whereas Tariff Terminator is just this. Um, but I can get them both on no problem. Speaker 1: Yeah, that would be for sure. Just, uh, yeah, reach out to me and let me know and we'll see. Maybe we can set up a tariff show next Friday. Speaker 3: All right, cool. Let me, uh, let me make a note of it right now. Speaker 1: Make sure people are up to speed on it because it's, it's gonna be huge. I mean, they're, they're obviously coming. As an e-commerce seller, I don't import a lot of stuff myself because I'm selling other brands, but they import a lot. I do sell a fair amount of companies' products that make their products in the US, which is cool. But their prices are going to change when you're importing. If you're a private label seller, importing This is going to affect you. So knowing how to either counteract it a little bit or figure out how to move your factory to a different country with lower tariff rates is going to be super important. You manufacture all your stuff right in your little warehouse there, right? Well, yeah, I guess some of the stuff. Speaker 2: So I think it all comes from China one way or the other. So I have a mix of stuff that I buy directly from suppliers in China. Bring it here, add some sort of value between laser engraving and this like UV direct to film process. Then I also have stuff that I buy from Various suppliers like JDS Industries. I don't mind sharing that one. It's a fairly well-known company. Speaker 1: Yeah. Speaker 2: And so, but like everything, like I'm looking at a box right now, just right across from me, that's from JDS and it says made in China. So like eventually like their prices, like, cause they buy in such big bulk on things, their prices are going to eventually start to go up too. So, There's probably not a lot of way to escape it. So I have a feeling like we're going to see prices go up in general. Again, so much of our stuff is coming in from China. We're going to see an increase. Now, maybe there's other ways in the economy and it's going to equal itself out. But, you know, tariffs, I get the philosophy behind it, but it is a tax on the citizen in the country. So, like, for example, when Canada had retaliatory tariffs against the U.S., well, who's paying that? It's not the US, it's the importer in Canada who's then, you know, giving that over to the people in Canada buying, you know, because their prices were going to go up. So it's kind of a double-edged sword. Speaker 1: My hope is that, you know, these countries, because for most countries, Most countries import more into the United States than from the United States into their country. So if they have a 10% tariff on our products coming into their country, and so we slap a 10% on their product coming into our country, the incentive for them to lower or eliminate the tariff on our products going to their country is going to be very high. And so I'm hoping you're going to see a lot of that where it's just going to be a race to the bottom kind of thing, you know, where all these countries are just going to start lowering their tariffs so that the US tariff lowers as well. Speaker 3: Well, that'd be the day, huh? Speaker 1: It would be pretty cool. I mean, you know, maybe we end up with a world where all tariffs are gone. Speaker 2: Because we agree. We threatened to raise tariffs and everything, so tariffs just went away. Speaker 3: Yeah, exactly. And then we talked about it on this live stream and then the governments of the world went, those guys, what geniuses. Let's do that. Speaker 1: The king of Saudi Arabia is going to be like, I heard Damon say on the Amazon Seller School podcast that we should eliminate our tariffs. Speaker 3: In the meantime, I'm going to put all of my inventory over to Grand Bahama, put that onto a cigarette boat and go up the Mississippi with it and then have it fall off the boat and onto a truck and then into inventory. Speaker 2: I don't, I don't actually do that for, that's a really long trip to go from Grand Bahamas down around the keys and up the now Gulf of America. Speaker 3: No, no. Grand, Grand Bahamas, just 90 miles off the coast of Florida on the opposite side of where the, uh, Oh, yes, that's true. Speaker 2: But did you have to go up the Gulf of America? Speaker 1: No, no. Speaker 3: You can get from one side of Florida to the other on a boat. Speaker 2: Oh yeah, you'd have to go through like the, uh, those locks and stuff. Speaker 3: Yeah, exactly. Speaker 2: Oh yeah. Yeah. That's really efficient for, uh, yes. Speaker 3: It, my, I don't want to pay tariffs. I want to pay boat fuel. Unknown Speaker: Right. Speaker 2: That, that would be your new, uh, tariff. Speaker 3: Yeah, that's it. All right. Speaker 1: All right. Speaker 3: That was a radical kid. Please wait. Speaker 1: Definitely going to have to keep an eye on the tariffs. It's going to be a big part of e-commerce going forward. That's for sure. But just wanted to touch on this last one. We've only got a few minutes here, but Amazon's new FBM order handling limits, helpful or restrictive. So this is from Vanessa. She reports that starting February 24th, Amazon will automatically cap the number of FBM orders sellers can handle daily based on past performance. Updating the limit weekly, while sellers can manually increase their thresholds, a drop in recent sales could result in lower capacity and exceeding limits may push estimated delivery dates out by a day. This update could protect sellers from late shipments and account health risks, but it also means Amazon is taking more control over fulfillment operations. Speaker 3: Here's what I see with this. We're going to limit how much we show your product, therefore limit the number of sales that you can get. But that I believe is going to be based on, uh, Hey, you've not been conforming to what our policies are on shipping times. Therefore we're going to slap you for it. Speaker 1: Yeah. Yeah, it's one of those things I get what they're trying to do, but at the same time, it could be frustrating if the system does something inadvertently and lowers the amount of packages you can handle in a day below what you can actually handle and then, like you said, shuts off your listings or limits your sales. Speaker 3: Yeah, I mean, we saw this with inventory space. Speaker 2: Right. And what's interesting is like I had a, your account is at risk of suspension banner on my thing for a few days because I had a, like I don't do a lot of FBM orders, but I had a custom order of 10. It arrived and it was hard to tell even when it was supposed to arrive. I think what happened is it arrived a day late. Then what Amazon was expecting, but I thought I was on the OTDR, the Guaranteed Delivery Protection, but I guess it was a different level of service. But because it was a shipment of 10, it didn't count as one, it counted as 10 lates. Speaker 3: What? Speaker 1: Oh, yeah. Speaker 2: So it was like one of those like, wait, I don't understand this here. So I'm curious how they're going to calculate all of this. Like, is it units? Is it orders? Is it something? Speaker 3: So if you know, because you have a big order, I think they're going to screw it up first before they figure it out. Speaker 1: Probably. Yeah, well, we know they're trying to push people to use FBA. That's what they want. If they could, they would just, you know, squash the FBM, I think. Speaker 3: Yeah, because they don't make as much money. Speaker 1: Yeah. And they want to control the supply chain as much as possible to make sure that they're delivering things when they want to deliver them and have control of the goods. Speaker 2: Yep. Yeah. Speaker 1: Keep an eye on this. If you do a lot of FBM, a lot of people do most of their FBM during Q4. So we got a while obviously before that happens, but you're going to want to keep an eye on this to make sure that if you are shipping a lot of FBM orders that Amazon's not artificially lowering your order handling limits. Speaker 2: Yeah, because that'll be frustrating when you get to Q4. Are they going to increase it based on your history? Like to see like, oh, okay, you did have a big increase or are they just going to throttle you? Because, you know, November was slower than December will be. Speaker 3: Right. And what I think you'll see is, hey, based on your performance, this is how many units you're able to send out. And so during Christmas time, you're just going to not have your big, you're not going to go into the black, you know. Black Friday will mean nothing to you because you can't sell that many orders because Amazon said no. Speaker 1: Yeah. Speaker 3: Yeah. That's a good point. Speaker 1: Really watch out when those big events come like Black Friday and Cyber Monday and all that stuff. Speaker 3: And Amazon tells us now and then we forget because it's not a problem until it becomes a problem. Speaker 2: True. Speaker 1: Yeah. Yeah. Yeah, it'll be interesting to watch. Just keep an eye on it if you do a lot of FBM orders and make sure that it's not artificially going low on you because you can still manually update it. I imagine they'll probably just bring it back down on you in a day or two if you're not keeping an eye on it. We'll see. Speaker 3: Yep. Speaker 1: We shall see. The joy of the automated AI systems that they're putting in place sometimes. Speaker 3: Amazon. AI Amazon. Speaker 1: A.I. Speaker 3: Amazon. A.I. Amazon, yeah. Nobody? Not a good joke? I thought it was good. Speaker 2: No, it was good. It was good. Speaker 3: Okay, thanks. I got the courtesy smile. Speaker 1: Good job, Dave. Good dad joke. Speaker 3: Thanks, man. Speaker 1: All right, guys. Speaker 2: Well, this has been fun. Speaker 1: I appreciate you coming on the show, and I appreciate everybody out there watching. We'll see you next Friday as well. Speaker 3: Bye, everybody. Speaker 2: Thank you. Speaker 1: Have an awesome one. Unknown Speaker: This has been another episode of the Amazon Seller School podcast. Thanks for listening fellow Amazon seller and always remember success is yours if you take it. Speaker 1: Hey, if you made it this far in the show, I really hope you enjoyed it and I'd like to ask you a favor. Could you head on over to Apple or Spotify or wherever you're listening to this and leave us a review? It would be greatly appreciated and would help us continue to grow the show and offer more episodes for you. Thank you. God bless and have an awesome day.