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Thu Mar 1 2018 20:44:26

Amazon Gives Sellers a Wakeup Call on Using FBA

By: Ina Steiner

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Amazon is using fee and policy levers as it seeks to optimize space in its warehouses, and it's a wakeup call to sellers who rely on FBA fulfillment services.

As we reported in Newsflash this afternoon, monthly storage fees are increasing (Amazon recently increased other FBA fees effective Feb. 22nd). 

More dramatically, Amazon is also increasing long-term storage fees (LTS), which are moving from a bi-annual assessment to monthly. Plus, there is a 50-cent per unit per month minimum charge for LTS for products that haven't moved in a year.

The real wildcards are new storage limits and overage fees: Amazon is implementing a policy in which it will impose storage limits on sellers who don't efficiently manage their inventory stored in Amazon fulfillment centers. Amazon will use the "Inventory Performance Index" score, which was introduced last fall, to measure sellers' efficiency.

Amazon will charge sellers Inventory Storage Overage fees for those with "excess inventory" in FBA fulfillment centers.

One seller suggested the move would be especially painful to foreign businesses selling into the US market, since US-based sellers could "drip-feed" products into FBA, while those without their own storage facilities in the country would see their cost of selling on Amazon "go through the roof." 

Some sellers asked if Amazon would hold a "free removal" month soon so sellers could clear out inventory without incurring disposal fees. 

Limitations of warehouse space is a very real challenge for Amazon - and other ecommerce businesses as well. Readers may remember reading in last week's editorial that growth of Walmart's ecommerce business slowed during the fourth quarter in part because it filled its warehouses with seasonal inventory, allowing "more everyday items" to run out of stock.

Amazon made it crystal clear with today's announcement that it doesn't want to be in the inventory-storage business - it wants to get products onto its shelves and then into its smiley products for delivery to customers as quickly and efficiently as possible.



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by: Jester This user has validated their user name.

Fri Mar 2 00:37:33 2018

I think eBay will greatly benefit from Amazon's new policies as many books sellers see this as a slap in the face after all the other fees they have increased lately and the doing away with the single unit exemption. Many see this as a sign Amazon wants to get rid of 3rd party booksellers using FBA.

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by: Chicago48 This user has validated their user name.

Fri Mar 2 03:36:57 2018

@Jester -- agree.  But if that happens and EB steps into the book selling space, it should have a separate subsidiary for that.

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by: Whatever This user has validated their user name.

Fri Mar 2 04:34:12 2018

so what does amazon do with all the merchandise that sellers do not want to pay to have returned to them? Must be one hell of a yard sale in the parking lot. I'd like to attend.

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by: shut1968 This user has validated their user name.

Fri Mar 2 05:48:24 2018

I can remember when they contacted me years ago trying to get us to make the jump to FBA.. I laughed at the guy who called. I simply said.. why in the hell would I want to pay you more money out of my profit? Your fee's are already insane.. and you want me to willingly give you more?  The guy just babbled on about how FBA was gonna be the future of Amazon business.. I just said no thanks.. you already rape sellers enough, don't call me again.  Our sales have never suffered, FBA has been and always will be a joke. If you have half a brain and know how to run an online business you'll make it on your own.

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This user has validated their user name. by: Rexford

Fri Mar 2 06:19:09 2018

Years ago I learned that one must have their inventory at their fingertips. The only middleman that I have is USPS.  Amazon's FBA program must have been more wildly successful than they ever dreamed, as now they don't have the storage capacity.

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by: TomH This user has validated their user name.

Fri Mar 2 07:48:51 2018

@ Jester
''and the doing away with the single unit exemption''

And not just books, but many other categories also.

When Amz started FBA they practically begged for product, hence the enticements, such as above. Well mostly 3rd party sellers built their FBA, which is very successful as all know. Now, Amz through policy changes for about the last 1.5 years is pushing many of us to the curb. I am among those being pushed out to a large degree, but for me - I was successful before Amazon and will continue to be successful. Unfortunately many will not easily survive the purge..  

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This user has validated their user name. by: eXtinctBay

Fri Mar 2 09:21:31 2018

@Whatever

"What does amazon do with all the merchandise that sellers do not want to pay to have returned to them?"

They sell it through their own 3P program called Amazon Warehouse Deals, which has feedback in the MILLIONS.

And their score is just a shade over 80%. You would never see a "normal" 3P seller exist on there with metrics this poor, or even close to it. NEVER.

The sudden purging of a great deal of FBA merchandise could be a boon for the Bay. But many of these sellers likely are eBay refugees, and may not want to have anything to do with them.......

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This user has validated their user name. by: iheartjacksparrow

Fri Mar 2 16:36:23 2018

I hadn't heard of Amazon Warehouse before, so I checked it out. Their advertising catch phrase is "Outsmart, out save and out shop" which made me laugh as it appears to be directed at eBay.

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This user has validated their user name. by: RKTOYS

Fri Mar 2 16:54:44 2018

It would've benefitted eBay...before they embarked on this quest to become Amazon.

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by: mcposty This user has validated their user name.

Fri Mar 2 22:54:43 2018

There are contracts that amazon is SUPPOSED TO destroy the items not gain profit and resell them.

Amazon ignomes these contracts..doesn't destroy the items but sells them.

Be zos BELONGS IN PRISON.

They don't give a rats you know what about space..they have unlimited space. They want rates raised and destroy orders so they can get free products to sell.

It's AMAZING to me companies put up with this.

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by: Randy This user has validated their user name.

Sat Mar 3 17:22:39 2018

@mcposty You are just assuming and have no idea what you are talking about.  

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by: SANT1N1 This user has validated their user name.

Sun Mar 4 18:40:03 2018

Amazon needs space for the burgeoning amount of direct from china merchandise. All those new warehouses they've been opening recently are not going to decelerate their urge to purge, thru fee increases and other restrictions.

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by: mcposty This user has validated their user name.

Mon Mar 5 12:26:11 2018

Randy,

You are assuming I do not know what I am talking about, considering I work in a company who has a contract with Amazon who deals with this everyday.

if you wish to continue to be libelous to me, let us do so in court.

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by: dander This user has validated their user name.

Tue Mar 6 11:46:26 2018

Amazon has scores of warehouses for their products and seller products. They are huge at over 1 million square feet in space which is used in a very efficient method. However they are expensive to build and staff and operate. As Amazon gets bigger the shareholders expect more and more. One way is to use the warehouse space better. Can you blame them? its better to have lots of product that is popular than to have stale stuff.



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