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Amazon Raises Commissions for Low-Priced Goods in Some Categories

Amazon is raising minimum commission fees in some categories in what appears to be an attempt to combat under-pricing on its marketplace. Sellers who list in the Beauty and Health and Personal Care categories received an email notification that explained, “We are writing to notify you that Beauty and Health & Personal Care products will have a new minimum referral fee of $1.00 per item. To give you time to plan for this referral fee change, it will not take effect until March 28, 2014.”

The “referral fee,” as Amazon calls its commission fee, is 15% in those two categories. Under the current fee structure, a seller who lists an item in the Beauty category that is priced at $4 would pay a referral fee of 60 cents; under the new fee structure, he or she would pay Amazon $1 (which is in this example a 25% commission rather than a 15% commission).

Amazon had made a similar change in the Jewelry category – effective January 16, 2014, Amazon instituted a minimum referral of $2 in Jewelry, explaining, “This new fee structure is intended to enable sellers to list high quality products at all price points while maintaining competitive prices for Amazon customers.” (Amazon charges a 20% commission in the Jewelry category.)

The Watches category also has a $2 minimum referral fee, and effective November 2013, Amazon instituted a tiered commission structure, which is more favorable to sellers of high-priced items than the former fee structure.

Some sellers welcomed the new minimum referral fees, believing Amazon is trying to rid its marketplace of “junk” – inferior or counterfeit products. And many sellers are sensitive to sellers who lower their prices to the point where it is difficult to compete, called “low balling.”

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.