What Warren Buffett Says About Amazon FBA Fees

By Christopher Grant

December 20, 2016

amazon fba fees

“You want to be greedy when others are fearful. You want to be fearful when others are greedy. It's that simple…”   ~ Warren Buffett

Amazon FBA fees are changing, again.  I have seen a lot of people in the Amazon seller community get pretty upset about it.  Some to the point that they are picking up their toys and going home, threatening to leave the platform.

This may sound harsh but that is a dumb decision.  If you think leaving the Amazon platform is going to hurt Amazon you may be suffering from confirmation bias at best and narcissistic delusion at worst.

All of this complaining got me thinking about a few things.  First, it brought to mind Warren Buffett’s quote at the beginning of this post.  When circumstances are in flux, which is a constant in the e-commerce field,  people tend to be scared.  Everyone likes things the way they were.

Gordon Gekko

This fear is a signal to me that it is time to be greedy.  I don’t mean Gordon Gekko greedy.  I just mean that it may be wise to think about growing your business rather than getting out of the business.

Let me drop some knowledge on you.

If you didn’t already know this e-commerce is a pimply faced, voice cracking, getting hair in weird places pubescent teenager.  It seems to have grown an inch overnight but it still has a long way to go before adulthood.

In case you missed the analogy, this is good news!

Online retail sales accounted for 8.1% of the total retail sales landscape in the second quarter of 2016.  Amazon owns a HUGE chunk of this market.  In fact, it is reported that Amazon accounted for 81% of the growth of online sales in the third quarter of 2016.

If you think that trend is going to come to a halt soon or Amazon is going to try and move away from online retail, please, share with me some of what you are smoking.

We, as third party sellers, have the opportunity to ride this wave.  Allowing Amazon to do the heavy lifting of storing, picking, packing, and shipping our inventory.  In addition, they also get to figure out how to stay ahead of Walmart, Jet, and other competitors.  In return, we pay them some FBA fees.

Sounds like the deal is skewed in our favor a bit.

Now, I’m not saying that you should put all your eggs in one basket.  In 2017 I plan to grow my business outside of the Amazon sales channel.  I believe it is wise for our backup plans to have backup plans.  But, for now, Amazon is a cash cow for us as sellers.  It would be unwise to slaughter it.

When I sat down to write this it was meant to be a piece discussing the changes coming down the pike in regards to Amazon FBA fees.  It turned into a bit of an opinion piece.

If you would like to see the breakdown of what is coming in regards to Amazon FBA fees you can do so here.  I, honestly, don’t think it is as bad as what some people are worried about.  In fact, I think if done right, you may be able to see yourself break even compared to your 2016 fees.

Please do me a favor.  Leave me a comment letting me know what you think below and join me over in my Facebook group Clear The Shelf (Amazon FBA) so we can continue this conversation.

Clear The Shelf

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  1. It’s a minor fee for so much work they do for us. I would have to buy a warehouse to store my $30k in inventory and if I had to pick,pack, and ship all that is sold I’d have to hire a few employees. But instead sit on my couch and watch the numbers grow and grow. The market place will either lower their margin and absorb the fees or as everyone else pass them onto the consumer.

  2. Great article as usual bro. And of course you are right. 2017 is going to be a phenomenal year for some who have been and continue to be serious about this business. I have a sneaky suspicion that those of us that fit into that category will get a nice bump in market share once the chaff has been separated from the wheat. 😉

  3. I can’t think of any business that is not experiencing constant change. Any business that doesn’t change is going to die from stagnation. I’m not saying I’m happy about the fees but there are few places where you can average the ROI most of us get on Amazon.

    Yes, I’m going to expand my channels but I can’t see any point in the future where I will abandon Amazon. With close to 50% of their sales being third party I have to think Amazon has considered whether they would benefit by having all third party invnetory and not have to have investment in their own inventory. Likely that won’t happen but with Amazon we never know what they will venture into next.

    Great article!

  4. Since we are all going to have an equal hit, that to me, seems to keep us in pricing equilibrium and the prices should adjust among good business people to maintain the same margins we are accustomed to at this time. Perhaps those with poor math skills or unable, for some other reason, to maintain the new status quo, it will be painful, but since all are treated equally (including Amazon), this tells me that though costs will be higher, prices will adjust accordingly.


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