The focus of the story is on the increasing pressure on third-party sellers due to various fee changes implemented by Amazon in 2024, with over 33% of small businesses concerned about the rising shipping costs, advertising fees, storage fees, and low inventory charges.
Amazon generated $140 billion in 2023 from fees charged to sellers for hosting their products and handling storage and shipping—a significant 25% of its total revenue.
Earlier this year, Amazon increased fees for sellers, shifting more operating costs to small businesses. In addition to inflation, these fees are forcing small businesses to raise prices.
68% of all sellers on Amazon are third-party sellers and for many such businesses, raising prices isn’t enough. With cost-conscious shoppers who are resorting to spending less, brands are cutting expenses to maintain their prices.
The new fee structure is too complex, especially for inventory management, and due to higher inbound placement fees, businesses are reducing product listings on Amazon.
“Traditional e-commerce is predatory and controlling, solely benefiting big-tech providers who own all the data and try to own the entire supply chain,” asserts Justin Floyd, CEO of RedCloud Technology. “This centralized model is eradicating small businesses by restricting access to the tools needed to drive growth.”
Moreover, “Project Nessie”, an algorithm deployed by Amazon to control pricing by identifying profitable products and raising their prices, forces other online retailers to do the same and inflates consumer spend.
AI-driven Open Commerce is poised to unseat e-commerce as the best way for online retailers to do business.
- Aggregated Purchasing Power: RedCloud uses AI to aggregate purchasing power, enabling small retailers to access better terms and discounts from manufacturers.
- Data Access and Transparency: Unlike Amazon, RedCloud provides manufacturers with comprehensive data insights, including consumer buying patterns, to optimize production and distribution decisions.
- AI-Powered Pricing and Inventory Management: The platform employs AI to analyze pricing dynamics and inventory quality, detecting anomalies like counterfeit products or pricing discrepancies, and ensuring market integrity.
- Real-Time Market Insights: RedCloud offers immediate visibility into market dynamics, facilitating informed decisions on demand forecasting, pricing trends, and inventory management across the supply chain.
“There are two million third-party sellers on Amazon. Open Commerce grants SMBs more autonomy and freedom to engage with trusted trading partners who provide authentic, top-quality products, leveling the playing field of online trade,” concludes Floyd.
About RedCloud Technology:
RedCloud Technology, founded in 2012, stands as a “Rebel Alliance,” leading a bold, second-generation e-commerce transformation. Rejecting the high fees of tech giants, RedCloud leverages AI-driven supply chain solutions to empower smaller businesses, giving them the tools to compete with major corporations. Their democratized, cloud-based platform provides real-time financial visibility, offering a level playing field that breaks free from the dominance of conventional marketplaces. RedCloud embodies a fairer, more inclusive digital commerce future where Davids can stand tall against Goliaths. For more about RedCloud Technology visit their website at https://redcloudtechnology.com/.
