Retail

Amazon Lowers Seller Fees In Bid To Improve Grocery Selection

Amazon is lowering the seller fees it charges on non-perishable grocery items, according to news from CNBC. The retailer will charge 8 percent on items priced $15 or less, down from 15 percent.

“To help you list more products and keep prices competitive, we are offering you a limited-time referral fee discount on grocery products,” the email said, according to a copy forwarded to Recode. “This fee promotion starts at 12:00 a.m. October 15, 2017 (PST), and will run through 11:59 p.m. October 14, 2018 (PST).”

The move could be intended to compete with rival retailers, CNBC said. Walmart charges 15 percent for grocery items, while its Jet.com subsidiary charges only 10 percent on non-gourmet packaged foods.

It might also be an acknowledgement on Amazon’s part that it’s difficult for grocers to profit off the online sale of inexpensive retail products. Grocery sellers have previously resorted to selling inexpensive groceries in pricier bulk packs, which buyers might otherwise find at brick-and-mortar wholesalers. Some grocers also sell their products to Amazon at wholesale price. The online retailer then includes the low-priced goods in membership programs like Prime Pantry and AmazonFresh.

Amazon understands that many shoppers will never join those programs, but the retailer still wants to be thought of as a grocery destination. Thus, the decision to lower seller fees. The question now is whether lower fees will solve the problem, CNBC said. David Rekuc, the marketing director for the eCommerce consultancy Ripen eCommerce, is skeptical. He believes some products may become profitable because of the reduction in price, but shipping costs may keep the sale of single grocery items unprofitable for most sellers.

“It’s nice to see, and it may move the needle a little bit,” Rekuc said of the grocery discounts, “but it won’t fundamentally change [Amazon’s] penetration in grocery.”

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