

Amazon Introduces WebStore - craigbellot
http://webstore.amazon.com/

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johnrob
You can simply multiply your estimated revenue * .07, and see exactly how much
you pay in fees. You'd have to be earning quite a lot before it becomes worth
building the website in house.

Here is something else to consider: If you make a million/year, you pay
70K/year for the whole shopping website. Now, if I were earning that much, I'd
rather spend my time becoming a 2 million/year business than saving 70k.

Perhaps there are equivalent products that take less money, and if the two are
really apples to apples, one might pick the lower commission rate. However, if
amazon were the only one out there, I think the fees could be justified for a
large number of customers.

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joshwa
But what if your markup wasn't all that high to begin with? That's 7 points
off your _gross margin_ , which is nothing to sneeze at.

Assuming a 30% gross margin-- to get that $2m, you'd have to spend $1.54m in
COGS, for a gross profit of $462k. Add the 70k in amazon fees, and that's
starting to seriously affect your balance sheet.

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johnrob
Very good point. The pricing model probably assumes a high (at least 2x) gross
margin. I've heard that specialty goods (i.e. made by small shops) tend to
have high margins.

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pg
Surprisingly expensive. 7% of the merchant's revenues is very high.

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tstegart
Its actually not, if you analyze all the costs. You get a very SEO friendly
store, access to Amazon's recommendation engine, review system, and a few more
pretty good things. You can sell Amazon products, if you need to fill out some
areas of your store, and you don't have to worry about shipping those. You
also don't have any hosting fees or bandwidth fees, no matter how many
visitors you get or how big you grow. The credit card processing fees are
included, and there's no need to get a merchant account either, which for some
people with bad credit is hard. And besides that, it saves a person who might
not have a lot of programming skills a heck of a lot of time, which I think
would also be worth a lot to some people.

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rms
There are a lot of competitors in this area; I don't see what makes Amazon
better than Yahoo stores and the like.

I do wish that there was an online store provider that didn't take a fixed
percentage of revenue.

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hugh
The Amazon version appears to be a lot prettier than the Yahoo version.

That's gotta be worth something, though probably not an extra 5% of gross
revenues.

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rms
<https://app.shopify.com/services/signup> is very Web 2.0 pretty and
reasonably priced

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madmotive
It's hard enough convincing people that the 1% to 2% that Shopify charge is
worth it.

However, it is a slight sweetener that this seems to include all credit card
processing fees.

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tstegart
Wait, why is this news? This has been out for a very long time. Has anything
changed about it?

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edw519
This looks like an excellent way to acquire customers if you already have your
own site. 7% of the _initial_ purchase is actually pretty cheap for a recent
single buyer. If you purchase a list, rent a list, or use SEO, then junk mail
or email blast (for shame), by the time you figure out your conversion rate,
you'd be way ahead with WebStore.

Unless I'm reading the docs wrong, your items appear in the search results for
amazon.com. This is very powerful because these are active buyers at the
world's largest on-line retailer.

The trick is, once you convert a buyer (who is now _your_ buyer), you want to
direct them to your site from now on so you only have to pay the 7% once. You
also want to put your loss leaders on WebStore and keep your high margin items
on your own site. After all, 7% of a lower price is a lower commission.

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aristus
_7%_ commission?

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attack
They take 7% of your profit as a commission or you keep 7%? I'm guessing the
former.

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kirubakaran
"$59.99 per month + 7% commission"

So they keep 7%, not 93%

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attack
Yeah, that's what I said.

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schammy
This story is a perfect example of why this site should have downvotes.

A) It's old B) Therefore it's not news C) Even if it was new, it's so
amazingly un-exciting that it's not news anyways.

