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EcommerceBytes-NewsFlash, Number 1525 - April 26, 2007 - ISSN 1539-5065    2 of 4

Amazon Raises Fees, Increases Shipping Allowance

By Ina Steiner
EcommerceBytes.com
April 26, 2007




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Amazon.com told US sellers it would raise variable fees and increase Marketplace shipping credits for Books, Music, Movies, Video Games and Software, on May 14, 2007. The shipping-credit increase ranges from $0.39 to $2.51, depending upon the product category and shipping method, and is in response to the USPS postal rate changes going into effect on May 14. The Books, Video Games and Software standard shipping credit will be increased from $3.49 to $3.99. The Music, DVD and VHS standard shipping credit will increase from $2.59 to $2.98. A full breakdown of shipping credits can be found on the Amazon website.

The variable closing fee will increase from $1.20 to $1.35 for Books, Video Games and Software. The variable closing fee will be increased from $0.70 to $0.80 for Music, DVD and VHS. No reason was given for the increase in fees, which Amazon announced at the same time.

The complexity of the forthcoming postal rate change is made clear from reading seller comments on the discussion board. Sellers are impacted differently depending on what they are selling, what their packages weigh and measure, and where their sales generally come from. For example, the USPS is implementing more expensive "dimensional weight" pricing for Priority Mail packages going to Zones 5-8, and it is eliminating surface mail for overseas shipments.

While a few sellers posted their thanks on Amazon's Seller Soapbox discussion board, many were concerned over what the increased costs to shoppers and to themselves would mean for their businesses. Some sellers expressed concern that sales would fall when shoppers saw increased shipping costs from third-party sellers. Some were dismayed that Amazon increased the variable fee structure.

One seller posting on Amazon's Seller Soapbox board said he believes higher postage costs will move more buyers into using Amazon's free shipping program, but pointed out that third-party sellers on Amazon Marketplace cannot participate in the program. Amazon Prime is a membership program that costs $79 per year and gives members free 2-day shipping on eligible Amazon items. Only third-party sellers who participate in Amazon's Fulfillment by Amazon (FBA) can participate in the program. (FBA is a fulfillment program in which sellers send inventory to Amazon warehouses and pay storage and fulfillment fees to the company.)

The Wall Street Journal reported that Amazon's stock surged 27 percent on Wednesday to $56.81, its biggest percentage gain in more than five years. Amazon had released its financial results on Tuesday, reporting its first-quarter net income more than doubled, and the company boosted its revenue outlook for the entire year (http://www.mercurynews.com/breakingnews/ci_5747002?nclick_check=1).

Seller Discussion:
http://www.amazonsellercommunity.com/forums/thread.jspa?threadID=133797

Amazon Announcement:
http://www.amazonsellercommunity.com/forums/thread.jspa?threadID=133793

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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