Selling items that cost less than €100 on Amazon, the world’s biggest online retailer, may be “unfeasible”, said retailers’ union vice-president Marcel Mizzi, as the shipping cost would be too high.
The GRTU vice-president was reacting to the news that business and individuals based in Malta can now sell their products on the retailing giant.
“Although this is an important milestone, there are other barriers that need to be addressed. The most notable of these are postal charges which are high in Malta when compared to other countries,” Mr Mizzi told the Times of Malta.
The Malta Communications Authority an-nounced on Wednesday that the portal – which has over two million active users worldwide – would be available to local sellers.
Mr Mizzi said that as with similar online models, selling items which cost less than €100 could prove to be a difficult task as shipping costs would be “a substantial percentage of the cost of the product”.
When an item is sold, Amazon collects the amount paid by the buyer, including the item price and any shipping, gift wrap or other charges.
It is obviously going to be challenging for traditional brick-and-mortar shops to compete
It then deducts the applicable referral fee percentage or applicable per-item minimum referral fee calculated on the item price and any gift wrap charges, plus a variable closing fee. Sellers who do not pay a monthly subscription fee also pay a fee for each item sold.
“Amazon adopt two models, one based on a subscription fee where a merchant is charged around €30 per month and no per-item fee, and another where the seller does not pay a subscription fee but pays a per-item fee of 60c for each product sold through the website.
Mr Mizzi added that when one takes these fees into consideration, smaller enterprises which follow a traditional business plan may struggle with shifting to the online platform. “It is obviously going to be challenging for traditional brick-and-mortar shops to compete, especially if they choose to retain their current business models,” he said.
For retailers to benefit from the platform, they would need to be willing to sell their products at reduced profit margins, Mr Mizzi said, adding that the business owners would need to treat the venture as a separate one.
“If so, this could very well be a new tool which gives them access to Amazon’s huge audience. Amazon does have several advantages such as customer trust, for instance.
“Customers are far more likely to make purchases from Amazon than from private websites. Amazon is also very well-known and utilises an impressive array of digital marketing tools to advertise its services,” he said.
The union has for years lamented that most retailers fail to appreciate the power of using e-commerce, with many business owners not having enough knowledge on the benefits of shifting online, Mr Mizzi said.
“The GRTU has been promoting the idea that businessman need to be made aware of the vast opportunities that exist online, especially for SMEs, and will continue to do so through its various campaigns.”