Amazon announced on Thursday (Dec. 20) that it’s planning to lower some of the fees it charges to third-party sellers, according to a report from Reuters.
The marketplace unit allows third-party sellers, which make up more than 50 percent of all the units Amazon sells, to sell items on Amazon’s site and its app.
Analysts at Baird, an investment and financial services company, said the move will benefit customers. “We expect newly announced marketplace fee changes to slightly lower overall take rates, although with the benefit of greater product selection and volume,” the analysts said, adding that they expect the decision to help Amazon continue to compete with other retail giants like Target and Walmart.
Earlier this month, Amazon announced it was making moves to get rid of items on its site that it calls CRaP, short for “Can’t Realize a Profit.”
The Wall Street Journal reported that CRaP includes items like bottled drinks or snacks that tend to cost $15 or less, are sold directly by Amazon and cost more to ship. Chief Financial Officer Brian Olsavsky said that eliminating CRaP items is “something that we do and work with our vendors on all the time.”
Amazon used to offer a $6.99 pack of Coca-Cola as a default item on its Dash button, but after informing the company it was losing money on the shipments, it changed the default to a 24-pack for $32.70. Also, Coca-Cola ships the products directly to rid Amazon of the expense.
Other companies have also given Amazon concessions: Unilever-owned Seventh Generation altered its selling strategy in recent months after talking with Amazon, CEO Joey Bergstein said. He revealed his company developed new product formats that are more profitable to sell online, including smaller, lighter laundry products. He said that Amazon is “really clear that they have a profitability threshold. We’ve been clear about saying, ‘Let’s make sure what we’re selling is profitable, and we’re not just lining Amazon’s pockets.’”