EcommerceBytes-NewsFlash, Number 2666 - November 03, 2011     2 of 5

Amazon Raises Fees for FBA Service Impacting Low-priced and Oversized Products

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Amazon is raising fees for sellers who use its fulfillment service, effective February 1, 2012. The company said that in the five years since it launched Fulfillment by Amazon (FBA), it had made few adjustments to its fulfillment fees, "despite rising costs to us and to other fulfillment and transportation providers." One vendor who did not wish to be identified told EcommerceBytes that, at first glance, it seemed the largest impact would be on low-price book sellers and oversize items, where he said the unit fee there was being doubled.

In May, Amazon had raised long-term storage fees for FBA users, causing an outcry from sellers. The company explained the move by stating, "Inventory that is overstocked or stored indefinitely in our fulfillment centers limits our ability to provide you with space for fast-selling products customers want."

This year it also imposed limits on how much inventory FBA merchants could store in its fulfillment center warehouses and began requiring sellers to ship their inventory to warehouses that were farther away, resulting in higher shipping costs. The program will also begin requiring sellers to split inventory between multiple warehouses.

Amazon sellers said they were concerned about the higher fees that take effect early next year, and some said the fees were a deal breaker since they cut too much into profits. Wrote one seller, "what I find troubling is that they pushed and pushed FBA and then when people really started using it, they raise the fees."

A seller who analyzed the fees for booksellers wrote that $1.37 was the lowest FBA fee you could pay for a lightweight book - "add to that the $1.35 fixed fee and your per book fees become $2.72 for any book under 1lb." They went on to explain, "In the old system, a 4 ounce book under $25 would have cost you $0.70 in FBA fees, a total of $2.05 including the $1.35 book fee. The difference is a 67 cent increase for a 4 ounce book. Not the end of the world, unless you have a ton of cheap books and sell volume."

Another seller wrote, "For DVDs, the price increase is about 65 cents per DVD for anything under $25. For my volume, this works out to about $40K in new fees per year. That is a lot of money."

An EcommerceBytes reader said she was okay with the new fees - "I understand Amazon has to make money as well." In fact, she was very happy that Amazon did not increase storage fees, explaining, "that's everyone's fear because we all know that we cant just pull over 3,000+++ items back out to us if they raised storage fees."

She also pointed out that sellers don't pay the fees unless they make a sale, in which case they are making money - "that's key," she said, and said she hoped her competitors raise their prices. "I hate the 0.01 sellers that are just trying to dump inventory losing money, it creates this sense that the merchandise is cheap on Amazon and it's not, that's the problem eBay has, that it's all cheap Chinese junk."

More information about the new fees is available on the Amazon.com website.


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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