Amazon released its Q4 2023 earnings on Thursday revealing that sellers are paying more and more to Amazon for FBA fees and advertising fee. The report reveals that in Q4 advertising and seller fees represented 82.4% of Amazon’s total ecommerce revenue.
Overall Highlights
Overall, revenue from online stores was up 9.3% to $70.543billion. Third party seller services (which includes referral and FBA fees) was up 19.8%. Advertising was up 26.8%.
| Source | Q4 2021 Revenue | Q4 2022 Revenue | Q4 2023 Revenue |
|---|---|---|---|
| Online Stores (ecommerce) | $66.075B | $64.531B | $70.543B (Up 9.3%) |
| Third-party seller services (FBA Fees) | $30.320B | $36.339B | $43.559 (Up 19.8%) |
| Advertising Services | $9.716B | $11.557B | $14.654B (up 26.8%) |
| FBA Fees as Percentage of Revenue | 45.9% | 56.3% | 61.7% |
| Advertising as a Percentage of Revenue | 14.7% | 17.9% | 20.7% |
Advertising was 20.7% of Revenue in Q4
Advertising on Amazon made up 20.7% of its ecommerce revenue in Q4. In very broad math strokes, one could equate the average overall TACoS of sellers to 20.7%. Now to be fair, total advertising revenue can consist of other advertising revenue sources for Amazon such as streaming ads on Prime Video. How significant is this? It’s impossible to know as Amazon doesn’t break this out more granularly (and in fact, didn’t even break out advertising as a line item until very recently) but it’s almost certainly a small fraction of what 3P revenue constitutes.
FBA Fees and Other Services was 61.7% of Revenue in Q4
Another highlight of Amazon’s Q4 earnings was how much revenue Amazon received from “seller services” or, in other words, FBA fees (including FBA fees, referral fees, storage, etc).
Seller services (the vast majority of which are almost certainly FBA fees for things like fulfillment, referral fees, etc.) made up 61.7% of Amazon’s ecommerce revenue. Again, Amazon does not granularly separate out service fees in detail but it does describe this line item as “Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.”
Overall, in 2024 “service fees” were 61.7% of Amazon’s overall ecommerce revenue. This is compared to 56.3% in 2022 and 45.9% in 2021.
Amazon Invests in Innovation Center Dedicated to Chinese Sellers
In other news, Amazon also revealed it continues to double down on Chinese sellers. In its Q4 earnings report, Amazon proudly boasted of expanding resources and tools for sellers in China, including a new Innovation Center just for Chinese Sellers.
In its earnings report it stated, “[Amazon] expanded tools and resources for Amazon sellers in China, including announcing an Innovation Center dedicated to sellers, introducing Supply Chain by Amazon for sellers in China, and establishing five regional global selling centers, all with the goal to expand opportunities for sellers to help them grow their businesses.”
Conclusion
The fact that Amazon is taking more and more from sellers in terms of FBA fees and advertising fees should come as little surprise to sellers. However, the fact the total percentage of revenue paid in these fees has jumped over 20 percentage points in just two years is startling.
Do you think it’s still possible to make money on Amazon with their new higher fees? Let us know in the comments below.
