$100 down pillow, but what’s the real digital tax? amazon
Let me decode this industry for you, straight to the point---amazon:
A $100 down pillow requires you to pay $10–$20 in sales tax.
15% Amazon referral fee = $15
15% Amazon FBA fulfillment cost = $15
20% Amazon advertising/PPC cost = $20 (this is for sellers performing very well in the industry)
10% Amazon account and service fees = $10
Before even calculating the product cost, you’ve already paid $60 to Amazon, plus normal state sales tax of $10–$20.
Out of the remaining $40, the seller factors in a 15% profit margin, leaving $25.
In other words, when you buy a $100 down pillow, the actual product cost is $25. Now everyone understands why you feel products are getting worse and worse.
If it’s a $50 down pillow, its cost is under $10. That is an impossible cost structure for us at the factory source, which is why industry secrets exist: e-commerce models (the product of cutting corners).
Almost 80% of the products on Amazon follow this exact logic. There are good products, but they are very rare.
That's why I always recommend avoiding Best Sellers or products plastered with ads everywhere. We spend our money on specs and reliability, not fake quality.
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