As more shoppers flock to Amazon and Costco for convenience, a surprising number of small Canadian businesses are choosing to stay away from these retail giants. Why would they turn down the chance to reach millions of customers? The answer may shock you! From crippling fees to outrageous shipping costs and unfair refund policies, here’s the real cost of selling on Amazon that has small business owners saying “no thanks!”
1. Jaw-Dropping Fees That Eat Into Profits!
You won’t believe how much Amazon charges small businesses! The fees can be a maze of charges that take a massive chunk out of profits. Here’s a breakdown of some of the main fees sellers face when they list their products on Amazon:
- Referral Fees: This is a percentage of each sale that Amazon takes as a commission. Depending on the product category, referral fees can range from 6% to 45%. For many categories, the average is about 15%. For small businesses operating on thin margins, losing even a small percentage can be devastating.
- Fulfillment Fees: If sellers choose to use Amazon’s Fulfillment by Amazon (FBA) service, they’ll incur additional fees for storage and fulfillment. These fees vary depending on the size and weight of the product but can add up quickly, especially for seasonal or slower-moving items. Sellers are charged monthly for storage space, which can further eat into profits.
- Closing Fees: Amazon also imposes a closing fee on media items (like books, DVDs, and music), which is typically around $1.80 per item sold. While it may seem minor, for sellers with high sales volume in this category, it can amount to significant expenses.
- Return Processing Fees: When customers return products, Amazon charges a return processing fee, which can be a major burden for businesses, especially for those selling items that are frequently returned such as high ticketed items- even if there was nothing wrong with the order.
- Advertising Costs: To stand out on Amazon’s crowded marketplace, many sellers invest in advertising. Sponsored Products and other ad placements can become expensive, further reducing overall profitability. Competing for visibility often means a constant need to allocate funds for marketing.
These various fees can quickly add up, eroding profit margins that are often already slim for small businesses. For many entrepreneurs, the hefty percentage Amazon takes on each sale can make it nearly impossible to sustain a viable business model.
2. Shipping Costs That Can Break the Bank!
Imagine selling a heavy item only to watch shipping costs eat away at your profits! That’s the nightmare small business owners face when they sell through Amazon, Walmart Marketplace or Costco. While these platforms offer speedy shipping options, the costs can skyrocket, especially for bulky products.
When a customer orders through Amazon, the responsibility for shipping often falls on the seller. And if a product needs to be returned, the seller incurs those costs as well. This burden can lead to significant losses, especially for small businesses that cannot afford to absorb the expense of returns. Many small business owners prefer to manage their own shipping and logistics to ensure they control costs and maintain quality service.
3. Refund Policies That Could Sink Your Business!
The return policies of platforms like Amazon can leave small businesses feeling trapped. While these policies are meant to protect consumers, they can wreak havoc on sellers. Customers can easily return orders that they simply changed their minds on, leaving small business owners to deal with the headache of refunds and restocking—all while covering shipping costs.
4. Protecting Brand Integrity from the Big Box Machine!
Small businesses are all about quality and craftsmanship, but selling on Amazon or Costco can dilute that message. When your products are lined up next to cheaper alternatives, it can confuse customers about what you stand for. By avoiding these platforms, small businesses can maintain control over their brand image, ensuring they’re recognized for the quality and uniqueness that set them apart from the competition.
5. Building Strong Local Connections!
In a world dominated by online shopping, small Canadian businesses are prioritizing local connections over national exposure. By saying “no” to Amazon, Walmart and Costco, these businesses can focus on forging meaningful relationships with customers in their communities. Shoppers increasingly want to support local entrepreneurs who contribute to the economy. When businesses engage directly with their customers, they build loyalty that lasts!
Conclusion: The Hidden Costs of Selling Big!
While the prospect of selling on Amazon and Costco might seem enticing, the shocking truth is that small Canadian businesses are paying a high price for that convenience. From jaw-dropping fees and crippling shipping costs to refund policies that threaten their bottom line, the risks are just too great. By choosing to sell locally and maintain their brand integrity, these entrepreneurs are not just protecting their businesses—they’re cultivating a vibrant community that values quality and craftsmanship over convenience.
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