Shocking right??? But well, it’s true. Amazon.com will increase the charges for its transaction and monthly fee for webstores on 4th February. Fees are charged to third parties for the freedom of maintaining a webstore that can be accessed with the help of Amazon.com website or for listing products on the website of Amazon; many national and international brands maintain online stores on the website, and innumerable private businesses put up the goods for sale listed on the website under "Selling on Amazon."
Fees of Amazon Webstore before 4 Feb 2014
Currently, Amazon charges a monthly subscription fee of $39.99 for webstores, transaction fees for each item sold and referral fees for Selling on Amazon.
Fees of Amazon Webstore before 4 Feb 2014
But now the monthly subscription fee will rise to $79 from $39.99 for webstore-only and to $79 from $0 for webstore-plus-Selling on Amazon.
The fees for Selling on Amazon are as follows: a variable closing fee for each media item sold; a 99 cents fee per product sold for distinct selling plans and a referral fee for each item sold. In addition to the increase in subscription-fee, the transaction fee for webstore-plus-Selling on Amazon will increase to 2% of sales proceeds from 1%, with webstore-only remaining at 2%. An Amazon webstore benefits vendors by getting visitors or traffic, developing with Check out by Amazon, and facilitating satisfaction by Amazon. Webstores enable quicker and easier sales to large consumer base of Amazon, which includes its "tens of millions" of Amazon Prime members worldwide who agreed to pay $79 per year for fast delivery, among other advantages. This fast delivery, in addition to signing-in using Amazon qualifications, becomes available to the consumer who buys from an Amazon webstore, a key differentiator as online buys from non-Amazon websites can take a week or more for delivery alone. Amazon will also augment many of the fees charged for Fulfillment by Amazon on Feb. 18. The affected fees comprise monthly storage fees, fulfillment fees, apparel-handling service & inventory placement service. On the word of the company, the fees are anticipated to address increasing customer service, satisfaction, and transport and storage costs.
Increasing fees means:
Increase in Profitability We see these fee rises as a sign of increasing confidence of Amazon with respect to leverage over third parties, and accepted that they serve as an indicator of increasing profit. We consider the enhancement will be absorbed because of the satisfaction of retail partner and requirement of the Webstore services of Amazon. The increases depicts us that Amazon is more dedicated to producing profits; we have demonstrated vital earnings growth in 2014, as we estimated to see signs of operating influence.
Increase in Productivity We are maintaining our Amazon estimations as the rate rises are previously factored into our long-term predictions. We have long whispered that Amazon will gradually attempt to discover ways to enlarge viability in coming years as its impact on online and offline shopping raises. These fee increases are signs of a greater emphasis on productivity.
Increase in Ratings We are maintaining our Neutral rating on Amazon and $330 price target. Our price target replicates a cost/incomes multiple of fifty times our theoretical fiscal 2019 earnings-per-share estimation of $8.38, discounted back five years. Our rating is based on our valuation that Amazon is unlikely to provide investors with a plan road map. We are not influenced that the company will share adequate details about spending plans to facilitate us to precisely model profit evolution, and it could be a long time before EPS grows adequately to justify its share price.
