Amazon has turned Prime Day into one of the biggest online shopping holidays. But for many sellers, it’s becoming more expensive to participate.
For the second year in a row, Amazon has increased the registration fee to run Prime Day Lightning Deals, which are limited-time promotions exclusively offered to Prime members. It now costs third-party merchants $750 to run each Lightning Deal, up from $500 last year, according to an invitation that was sent to sellers and viewed by CNBC. Amazon first introduced the fee for Prime Day last year, after not charging anything in 2015 and 2016.
The fee hikes for Prime Day, which will be held on July 16 and 17, are another example of how Amazon is squeezing more money out of the sellers who wish to take part in the company's annual shopping extravaganza, now in its fourth year. By charging more in fees, Amazon not only makes additional cash but also filters out sellers who aren't confident that their products will be popular enough to justify the costs.
That’s important because Lightning Deals are a big draw but have often received poor reviews on past Prime Days, said Sean Adams, an analyst at marketing agency Merkle.
“The fee hike is going to make the sellers be more intentional with what products and deals they’re going to choose" on Prime Day, Adams told CNBC.
Lightning Deals, which are offered year-round on Amazon’s “Today’s Deals” page, become more important on Prime Day because of the spike in traffic and exposure. All Lightning Deals become exclusive to Prime members on Prime Day and are highlighted in short intervals throughout the day. Sellers have to meet additional requirements, like a minimum 20 percent discount and a three-star or higher rating on each product they submit. Amazon typically charges $150 per Lightning Deal on normal shopping days.
Amazon now has over 100 million Prime members worldwide, and Prime Day continues to break sales records every year — making Lightning Deals a valuable asset.