Clients of Amazon Fulfillment services — which allows marketplaces sellers to place their goods for storage and shipment from Amazon’s warehouse system — are facing big price hikes this holiday season (preceded by minor price lowering in October) if they want to stay part of the program during the warehouse’s busiest time of year.
Retailers – at least some – so far are less than fully enthused for the change.
The point of the switch is to get marketplace vendors to sell and ship more strategically; by making October less expensive, the point seems to be to push vendors to push their inventory early and avoid the bigger cost period to the greatest extent possible.
Fulfillment By Amazon will cost merchants 54 cents per cubic foot to store standard-size products and 43 cents per cubic foot for oversize products. Come November 1 through January 1, fees jump to $2.25 per cubic foot for standard-size products and $1.15 per cubic foot for oversize products, up 212.5 percent and 101.8 percent.
Aaron Leon, founder and CEO of printer ink cartridge retailer and manufacturer LD Products Inc, noted to Internet Retailer that he’s not thrilled, but doesn’t have much of a choice.
“Most likely, this makes Amazon a less profitable marketplace for sellers,” but sellers have few options, he said.
An Amazon spokesman told Internet Retailer that Fulfillment by Amazon has seen “tremendous growth.” The fee switchup, he said, aim to reduce friction during the bustling holiday season.
Sellers who don’t invest in doing so will see their fees go up as much as threefold. Scot Wingo, executive chairman of ChannelAdvisor Corp., which facilitates sales on Amazon, eBay Inc. and other online marketplaces for its retailer clients, says could precipitate some big shifts this holiday season.
“Sellers need to get in front of the curve on this and have a deep understanding of which products are most appropriate for FBA; how they tie Amazon to their supply chain to optimize the situation, and how they will manage shipping to non-Amazon channels in this new, more expensive FBA world,” he noted.