[drzaiusapelord]

Worse, there's no such thing as 'free' money. If they can pay us $20 per item to write reviews, they are over-charging us $20 per item. So whoever doesn't do this is over-paying $20. If you buy 100 items like this a year, you're burning $2,000. That's non-trivial money for most people.

[notafraudster]

It doesn't follow that if they can pay you $20, they can pay everyone $20. They have an expected uptake, and they have a model for how the reviews translate to more sales. I agree that it's likely that at least some of this marketing is priced into the price and there's some inflation, but I suspect the overall uptake of stuff like this is <20% and it generates non-zero additional sales, so I would guess the margin is more like $2-4 or so.

[csnover]

Once you start looking at the actual numbers it becomes pretty clear that most of these arbitrage sellers could give every customer $20 and still make money.

For example, the top search result for “webcam” on Amazon.com right now usually sells for $35[0]. Its wholesale price on Alibaba for 5k units is $3.84[1] + $2.04 shipping per unit. Plug those numbers into Amazon’s FBA profitability calculator[2] and you’ll find that the seller only needs to sell 67 units per month to break even, after giving every buyer $20, because the seller’s net margin at this volume is nearly 60%.

[0] https://camelcamelcamel.com/product/B087NN41JH

[1] https://www.alibaba.com/product-detail/China-Factory-Wholesa...

[2] https://sellercentral.amazon.com/hz/fba/profitabilitycalcula...

[AlexandrB]

Solution: don't shop on Amazon.

[ninju]

Sorta true,

You were still willing to pay the listed price. The fact that you were subsidizing their reward program doesn't diminish the fact that it was cheap enough for you to buy.

Also they maybe doing this promotion as a loss-leader to build marketshare/brand recognition and are willing to work with lower net profit.