Prime Memberships a SCAM
More Proof of AMAZON SCAMS
Amazon loves to boast of New Prime Members, well if you do the math, Prime is a SCAM and the Achilles Heel of Amazon and Jeff Bezos in my expert opinion based on over 40 years in business.
There are multiple problems with Prime and it is why Amazon does their bullshit accounting reports for the SEC they way they do it to hide huge loses Prime is costing Amazon.
I will give you a simple mathematical PROOF that Prime can do nothing but LOSE MONEY for Amazon.
Also there are now LAWSUITS on Amazon in regards to how they push Prime Products when other products with a seller no warehousing an item as a Prime Seller has a better deal, so if Amazon steered its users to lowest price with shipping, then Prime Products wouldn’t be featured so prominently.
First I deal with Amazon in two ways connect to PRIME Members and Amazon refuses to admit how many Prime Members and Kindle Unlimited members they have.
But so far Amazon has admitted publicly to selling over 1 Million Prime memberships in as little as a WEEKS TIME in press releases and also they have stated Prime Members are now TENS OF MILLIONS of members around the world.
So lets do some simple math and business 101 sense. Assume Prime only has 50 Million members worldwide. That’s 5 Billion in FREE 2 DAY SHIPPING on Prime Products which means a Prime Seller stocks the item in an Amazon warehouse and will ship it priority or 2 days.
Now my cost to use USPS on even a small item is a minimum in a box of almost 7.00 USD and it takes 3.00 USD in labor or so to stuff a box.
Amazon can use all the drones they want in their warehouses but much of their shipping is done by HAND and there’s a ton of Amazon Lawsuits from staff employed at the Amazon sweatshop warehouses. The fact is an item has to be boxed and then Amazon must PAY a minimum 2 day fee to USPS or most likely UPS. So lets say due to bulk Amazon may get a 2 day rate with UPS as low as $5.00 USD. On a $5.00 retail item that can be shipped in 2 Days Amazon makes only 20% to sell the item. So $1.00 commission to Amazon to sell a $5.00 USD product and to ship it 2 days the minimum cost is $5.00 plus labor or even drone cost to put into a box.
IF a Prime member buys even 1 product a month, Amazon needs an average cost of a small item to be $30.00 to $40.00 USD to pay the shipping costs and not lose money from the $8.00 a month they make on memberships. Plus they still have to give that member a Free Select eBook download and then pay an author or publisher some minor money on page reads under KENP and Select royalties to authors and publishers in Select.
Now authors and publishers have a locked in minor money POOL that has been $12 Million USD a month for a while now. If they have lots of KU (Kindle Unlimited Members) then that 12 Million gets funded out of KU memberships and only a tiny amount of the $400 Million or so Amazon has from Prime memberships gets put into the 12 Million pool.
So authors and publishers are being SCREWED by Amazon offering even 1 eBook to a Prime Member. Since 12 Million out of $400 Million a month is NOTHING to be putting into the KU Pool.
Besides having over 100 Titles in Select and getting screwed every month by Amazon as they have now dropped our KENP or Page Read royalties 33% since it started last summer (.0058 royalty is not .0041 royalty in KENP page reads, I’m involved in another project that must charge $9.99 in shipping and handling to sell products priced $9.99 to $24.99 that cost us $7.00 to 2 day ship and $3.00 labor to box.
So that project stocks items in Amazon warehouses so Amazon can pay the expensive 2 Day shipping costs to sell cheap consumer products priced $9.99 to $24.99.
So Amazon makes $2.00 to $5.00 commissions to sell the items we stock with them and ship 2 Days FREE to their tens of millions of Prime Members. I hope we sell millions of products a month, since Amazon will lose MILLIONS on our products alone.
It’s great for us, since we cannot afford to ship product for FREE and absorb a 10 buck COST to us, so for that project Amazon Primes makes perfect sense for us.
In other words knowing how Amazon makes only $2.00 to $5.00 on lost cost products we stock with Amazon exposes how the Prime Membership scam of Amazon is in the long term nothing but a money loser for Amazon. The math PROVES Prime is a scam and that is part of the reason Amazon is a perpetual MONEY LOSING Company.
You cannot pay to ship low cost items in 2 Day for FREE and only generate $8.00 in fees from Prime Members with a minor commission that Amazon makes on warehousing Prime Products.
Sure Amazon has ZERO COSTS to stock the items as far as inventory costs go, sellers give Amazon lots of stock to warehouse but Amazon has to invest in tons of warehouse space which it has.
Lots of stock is collecting dust on Amazon warehouse shelves. Much in the same way lots of eBook files are sitting on Amazon servers never be sold or even download for FREE to KU and Prime members.
So GROWTH is the fuel to hide the house of cards that Amazon and Jeff Bezos has created with FREE 2 Day shipping. You simply cannot ship low cost items via 2 Day services and make money if the item is low priced and many Prime Products are LOW COST items that Amazon makes very little on.
So single unit sales of low priced items Amazon is obligated to ship in 2 Days costing way more than the commission is why Amazon LOSES MONEY over and over most quarters.
Now since Amazon is an unaudited company, no one knows how many KU and Prime members Amazon has. I truly suspect Amazon is using FRAUD in under reporting KENP and even SALES on eBooks since Amazon is no 90% of the eBook marketplace.
I’ve seen a 99% loss in royalties after I publicly accused Amazon of MAJOR FRAUD in many areas. So in my opinion Amazon SKIMS royalties to authors and publishers to get money to offset the huge loses that Prime Memberships cost Amazon.
Business 101 you have to have a business model that MAKES MONEY and the Prime membership model has way too much shipping costs exposure to Amazon in my expert business opinion on running companies for over 40 years now.
Low cost items net Amazon very little in commissions and yet they are exposed to huge shipping costs only offset to some degree by a minor $8.00 Prime income boost.
You add up the Prime income from memberships and add only 20% on low cost items and the numbers do not make business sense.
Prime also has huge costs to content for the unlimited streaming deal they offer Prime members as well.
I can’t audit my eBook files on Amazon and there’s no 3rd Party audits as well so my 100+ eBook Select titles will be reduced greatly as soon as they expire in Select.
It’s easy to audit our products, we manufacture them, so when Amazon says OUT OF STOCK we KNOW THEY SOLD THE ITEMS. They can’t physically sell our products without having them on he shelves in warehouses. So we shipped X units and when products show OUT OF STOCK on product pages WE KNOW THEY SOLD and we are due money.
Prime stock is a great deal for us, since retailers would want 30/60/90 day terms to put products on shelves.
Amazon claims to pay in 14 days but the law in WA state is they must pay a seller like my company within 10 days, so that’s more FRAUD that Amazon is doing not paying sellers when due.
Even if Amazon decides to lock a seller for whatever reason they choose, the seller usually gets paid in 90 days.
Will Amazon try to lock our products?
If they do that’s another lawsuit I will have on Amazon since while I control my product, similar products from other companies not so critical of Amazon are stocked and selling. So any unjustified lock by Amazon is another monopoly action on Amazon interfering with COMPETITION in the industry we are in.
I give product to a retailer they can take a discount and pay C.O.D. or they get normal terms 30/60/90.
As a manufacturer and seller I only give Amazon a minor number of units to stock in Prime.
Great Amazon go deliver them way below the cost it incurs to sell my low priced consumer items to your Prime members. PAY ME in 14 Days compared to a retailer that may take 90 days.
C.O.D. retailers my get 5% below wholesale to PAY FAST. Then each period has another discount to try to get receivables back to my company selling hard items.
3% in 30 days, 2% in 60 days and no discount in 90 days. After 90 days a retailer pays penalties and then if we are forced to sue to collect they pay our attorney fees.
Amazon can warehouse a small amount of stock for FREE to Amazon a great deal for them I guess, but when it sells Amazon you pay way too much to sell my low priced physical goods and deliver in 2 days, that is the bottom line. Amazon loses money on delivery costs every time they sell one of our items.
I’m happy to help Amazon LOSE MONEY since consumers do love FREE 2 DAY SHIPPING. I can’t offer that since I’m in business to not lose money and the Amazon business model is lose money now for over 20 years since Jeff Bezos is the ultimate SCAM ARTIST in business in MY OPINION.
Books by Dr. Sol Adoni