Too often, we see online sellers unaware of Amazon’s customer referral fee structure in certain categories. One such example is in the Grocery & Gourmet Food category. Amazon’s customer referral fee percentage (Amazon’s fee for referring the customer to you via the Amazon platform) shifts from 8% for items under $15.00 to 15% for items over $15.00.
What this means is that there is a pricing “black hole” in which third party sellers will net less money at a higher sales price in a certain price range. For instance, a top-selling grocery product we carry would net the following under different prices:
$14.99 —> $8.83 net after Amazon fees
$15.49 —> $8.21 net after Amazon fees
$15.99 —> $8.63 net after Amazon fees
$16.49 —> $9.06 net after Amazon fees
The basic takeaway from this fee structure change is that nobody should be pricing grocery items between $15.00 and $16.25 at all on the platform. Yet, we see sellers ignorant of this fact pricing in the black hole all the time.
Other pricing black holes and referral fee percentage shifts exist within other categories such as Beauty and Personal Care and Computers & Electronics.
Partnering with a seller knowledgeable about Amazon’s fee structure will help you gain an edge and determine optimal pricing on Amazon, which doesn’t always coincide with brick & mortar store pricing.