Amazon Seller News
Amazon Seller News: Seller Facts, Blackout Dates, New COO Requirements, Banned HTML, and More…
In this Amazon Seller News update, we’ll be covering:
- Amazon Faces Tougher Scrutiny Under EU’s Digital Services Act (DSA)
- UPDATED: Battle for Last-Mile Logistics Heats Up as Amazon Expands Same-Day Delivery Network
- Amazon Taps into $100B Retail Media Market, Invests in New & Cutting-Edge Ad Platforms
- Amazon Delivery Drones Off to a Rocky Start
- Shein Moves Into the US Market, But May Struggle to Recruit 3P Sellers
- A Purge Could Be Coming for Fake Reviews on Amazon
- 25% Growth Rate: Euro B2B Opportunities Expand on Amazon
- UPDATED: Amazon Hopes to Restore Consumer Confidence with $1.2B Anti-Counterfeit Initiative
- Amazon Announces Further Cuts Amid Economic Uncertainty
- Amazon Attempts to Close Loopholes with New Shipping Policy
- Updated: Are You Prepared for the Updated Amazon Returns and Refunds Policy?
- Updated: Amazon UK Workers to Launch Historic Strike in Early 2023
- Amazon Highlights ‘Frequently Returned’ Products You Should Think Twice Before Buying
- Amazon Braces for Slowing eComm Growth in 2023
- Boost Sales with These New Amazon Seller Tools
- Amazon Fees Changes for UK & EU Multi-Channel Fulfillment Orders
- Foreign Amazon Sellers Are Closing the Competitive Gap with ChatGPT
- Updated: Bid for a Higher Inventory Limit with FBA Capacity Manager
- Shopify Looking to Integrate with Amazon Buy With Prime
- Shopify Acquires Deliverr and Takes Aim at Amazon’s Buy with Prime
- Amazon Warehouse Automation Increases Concerns over Job Loss and Product Selection Inaccuracy
- UPS Workers Ready to Repeat 1997 Mass Walkout Over Pay, Work Conditions
- The Latest Update to Amazon’s Automate Pricing Features
- Walmart Launches B2B eCommerce Site to Rival Amazon and Shopify
- Prepare for These 6 Major Changes to 2023 Amazon UK & EU FBA Fees
- Amazon Automatic Aging Inventory Removal Starts April 15
- Amazon Tweaks Logistics Strategy to Streamline Operations
- Amazon Makes Play Toward Offering Prime for Non-Amazon Orders
- Shipping FBA Inventory from China to UK with SEND: What Could Possibly Go Wrong?
- 60-Minute Amazon Drone Delivery is Now a Reality
- Sellers Feel the Squeeze After Amazon Announces US MCF Fee Hike
- Walmart Launches New Ways to Find and Buy Products
- Updates to Amazon Return and Refund Policy
- 4 New Amazon Seller Tools to Accelerate Business Growth
- Amazon Will Pay Customers $2 per Month to Track Their Ad Data
- Updated: EU Advised by NGOs to Refuse Amazon’s Flawed Proposal for Antitrust Settlement
- Amazon Announces Unbranded Packaging for MCF Orders
- Amazon Storage Limit Manager: Would You Pay for Extra Storage Space?
- Updated: Bad Actors Book Multiple Inbound Amazon Delivery Dates to Create Scarcity
- Is Amazon Prepared for the Holiday Rush?
- Amazon Hikes FBA Fees Again: What This Means for Your Business
- TikTok Gears Up for US Market Entry
- Amazon Aggregators: Comments and Concerns
- eComm Players Dial Up Rivalry Ahead of the Holiday Season
- Amazon UK At Risk for Box Shortages During BFCM
- Updated: Amazon Enters the 3PL Space with New Amazon Warehousing & Distribution Program
- What Amazon’s New Merchant Cash Advance Program is Going to Cost You
- Amazon to Shut Down Appario Amid Allegations of Circumventing Indian Law
- UPS Braces for Holiday Delivery Surge in December
- Amazon Faces Backlash for Alleged Abusive Practices
- Should You Be Selling on These New Sales Channels?
- New Ad Strategies for Winning the Holiday Season
- Amazon Unveils New Affordable Shopping Hub Just in Time for Holidays
- Amazon to Hold Prime Early Access Sale on October 11-12
- Non-Amazon Sellers Are Now Stealing Your Ad Space
- Clash of the Titans: Walmart and Amazon Battle for Dominance Intensifies
- Amazon To Increase UK Multi-Channel Fulfillment Fees By November 12th
- Amazon Now Allowing Email Marketing Campaigns to Repeat Customers
- Financial Win for FBA Sellers in PA Court
- Boost Conversions with Amazon’s New A/B Testing Features
- Amazon FBA Deadlines for Sending In Q4 Inventory
- Software Updates For September 2022
- Gloves Off: Shopify Warns Sellers Against Amazon Buy With Prime
- Amazon Brings Back Restock Limits to Prepare for the Holiday Rush
- New Amazon Badges Increase Discoverability and Allow for Values-Based Buying
- Royal Mail Strikes to Disrupt Mail and Deliveries Across UK
- Amazon’s New Holiday Surcharge Takes Another Bite Out of Seller Profits
- Amazon Attribution Update Makes for a More Effective Sales Tool
- Software Updates For August 2022
- Amazon Releases Inventory Ledger to Streamline Inventory Data Reports
- Updated: Amazon Suspension Risk For The Uninsured
- Amazon Plans to Hold 2nd Prime Day in October
- UPS Shipping Limits for Amazon Threaten to Delay Holiday Deliveries
- Shopify Shares Down By 14% After Laying Off 10% of Their Employees
- SoStocked Joins the Carbon6 Family Shortening the Timeline to Future Innovations
- Shopify Introduces YouTube Shopping Integration to Compete in Live Commerce
- Amazon Continues to Dominate B2B While Shopify Plays Catch-Up
- Freight Disruption at Port of Oakland as California Truckers Protest AB5
- Amazon Reduces Their Private Label Catalog Amid Mounting Regulatory Pressure
- Discounts on EU/UK Amazon Partner Carrier Fees
- Amazon Intros New Hack to Find High-Demand, No-Competition B2B Products
- Software Updates For July 2022
- Amazon’s Recent Ban on Mylar Bags and Other Potentially At Risk Products
- Reduce Losses Due to INR Scams with Amazon’s Signature Confirmation
- Amazon Implements Size Normalization to Ensure Consistency Across Detail Pages
- Why Amazon Wants You to Lobby Congress: What Is S.2992?
- New EPR Compliance Obligations for Amazon Germany Begin July 1st
- Software Updates For June 2022
- Amazon Adjusts Fees For Remote Fulfillment With FBA
- Amazon Removal Order Fees Get More Expensive
- Amazon Implements Surcharge on Aged Inventory Starting May 15th
- Software Updates For May 2022
- Amazon Updates Their Age-Restricted Bladed Products List
- New Product Dimension Attributes for 255 Product Types
- New Shipping and Storage Changes Coming to Amazon
- Amazon Hits US & EU Sellers With Fuel And Inflation Surcharge
- Software Updates For April 2022
- Emerging Amazon Marketplaces: UAE and Saudi Arabia
- Free Amazon Master Carton Calculator Tool To Optimize Your Packaging
- Amazon and EIT Climate-KIC Offer Financial Boost to Sustainable Startups
- Qualify for Rebates and Free Liquidations with the Updated FBA New Selection Program
- New Dimensional Weight Fees Placing Further Strain on Profit Margins
- Amazon Closing Shipping Loopholes May Wreak Chaos for Some Sellers
- Amazon Removes “Tons” of Supplement Offers Due to Non-Compliance with New Product Requirements
- Claim Reimbursement for Losses Caused by Amazon CSBA Reps
- UK Launches Export Support Service to Help Businesses Sell Goods Abroad
- Three SoStocked Software Deals For New Years (Now Thru January 7, 2021)
- Important Update To Restock Limits And IPI Threshold
- Use Amazon’s Delivery Promise Tool To Monitor Your FBM Performance
- Amazon Storage Limit Updates
- New And Improved Amazon HTML Editor + HTML Converter Tool
- Send Holiday-Themed Emails To Amazon Followers Through December
- Borrow Up To 100K With The Amazon Community Lending Pilot Program
- Amazon Has Worked To Smooth Out Climate Pledge Certification
- Updated: Amazon Compliance Reference Tool To Ensure Products Meet Requirements
- Distribute Your Inventory Across Multiple FCs At No Extra Cost
- Beta Amazon Upstream Storage Program Eliminates Restock Limits
- Amazon Hikes Referral And FBA Fees For 2022
- Amazon Updates Program Policies
- Amazon Increases FBA Capacity and Restock Limits
- Amazon Launches New Dashboard for Returns Performance
- The End Of Rebates, Two-Steps URLs, & Other Search Rank Manipulation
- New Carrier Tracking Requirements & Improving OOS Listing Discoverability
- Amazon Releases Free Product Research Tool Named ‘Product Opportunity Explorer’
- New Documentation for Supplements Required to Avoid Listing Removal
- Amazon Inventory Deadlines For Q4
- Delivery Time Accuracy With New Amazon Shipping Settings Automation Tool
- China’s Widespread Power Cuts Further Strain Global Supply Chain
- New Changes To Removal Of Aged Inventory
- Amazon Egypt Now Open For Business
- Why Have Amazon Sellers Suffered a Significant Drop in Restock Limits?
- SoStocked Prices Increasing After Friday, September 17th, 2021
- Amazon Search Shadowban For Products That Violate Title Guidelines
- Your Amazon Posts Can Now Appear On Your Product Detail Pages
- Amazon Grade And Resell Program Rolled Out To Reduce FBA Waste
- Amazon Overhauls Its A-to-z Guarantee Policies To Streamline Damages Claims
- Now Factor Restock Limits Into Forecasts
- Streamline Shipments With “Send To Amazon”
- Changes To Amazon Professional Selling Plan Fees
- Automated Amazon Stranded Inventory Removal
- Typhoon Wreaks Supply Chain Havoc On China’s Eastern Coast
- Country Of Origin Now Required For Amazon Products
- Prevent Customer Complaints By Putting Seals On Consumables
- New Amazon Brand Referral Bonus Program For Amazon Sellers
- Four New Certifications Could Qualify You For Climate Pledge Friendly Badge
- Amazon IPI (Inventory Performance Index) Update
- Potentially Lower Fulfillment Fees Spells Good News For Amazon Sellers
- Big News: Sellers Can (Again) Contact Customers About Bad Reviews
- Amazon’s APRL Scheme Leaves Sour Taste In Sellers’ Mouths
- Blackout Dates: China’s Dragon Boat Festival
- Amazon Global Program: Sell Worldwide With No Added Fees
- Set a Faster Default Handling Time
- Amazon Product Description HTML
- Amazon Prime Day 2021 Check-In Dates
- Amazon 2021 MCF Fees and Features
- 2021 Amazon Restock Limits Update
- CBP Announces New Customs Requirements For Low-Value Shipments
- Five Seller Facts from Bezos’ Final Shareholder Letter as Amazon CEO
- All ASINs Now Require Melting Temperature Attribute
- RIP Early Review Program
- VAT Services Even When Outside EU
- Unsuitable Inventory Policy
- Amazon’s New Automated Pricing Tool
- A/B Testing Product Images Available
- New Shipping Data Requirements
- Amazon “Review Commenting” Updates
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Amazon Faces Tougher Scrutiny Under EU’s Digital Services Act (DSA)
A cohort of corporate giants, including Amazon, Apple, and an additional 17 industry leaders, have been identified and classified by the European Union (EU) as “very large” online platforms or search engines.
Consequently, these companies are subject to enhanced scrutiny and more stringent regulatory measures, accompanied by the possibility of substantial fines should they veer from the newly established Digital Services Act (DSA) within the region.
Obligations Under the DSA
In late 2020, the European Commission, the executive body of the EU, laid out a fresh set of services-related regulations aimed at intensifying oversight of tech behemoths.
These regulations, known as the Digital Services Act (DSA), have been in effect for approximately four months now, granting regulators the authority to actively monitor online content, curbing the spread of harmful comments, and establishing guidelines for the utilization of AI.
This significant step highlights EU’s commitment to fostering a safer online environment and ensuring responsible practices by big tech operating within its jurisdiction. These platforms are defined as entities that reach a significant number of users (more than 45 million active users) and that have a significant impact on the EU market.
The DSA intends to impose various obligations on these major platforms, such as:
More user empowerment and protection
DSA aims to empower users and protect their rights online. Users will have clearer information about recommended content and the ability to opt-out of profiling-based recommendation systems.
Platforms must diligently process reports of illegal content from users. Advertisements based on sensitive user data are prohibited, and platforms must label ads and disclose the promoters. Tech giants are also required to provide easily understandable summaries of their terms and conditions in the languages of the Member States where they operate.
Overall, the DSA prioritizes user empowerment, combating illegal content, protecting privacy, enhancing advertising transparency, and improving communication online.
Platforms will be required to provide clear information about their terms and conditions, content moderation policies, and advertising practices. They may also need to undergo third-party audits to assess their compliance with the DSA’s requirements.
Strong protection of minors
Platforms will be required to undertake significant system redesigns to prioritize the privacy, security, and safety of minors. Specifically, platforms must implement measures that safeguard children from targeted advertising based on profiling techniques, ensuring their online experiences are free from such practices.
To assess the potential risks to minors’ mental health and well-being, platforms will need to conduct special risk assessments. These assessments must be provided to the Commission within four months of designation and, at the latest, be made publicly available within a year.
By doing so, platforms will contribute to a better understanding of the potential negative effects on mental health associated with their services.
Content moderation and removal
Platforms will be expected to implement effective measures to combat illegal content, hate speech, and disinformation. They will also be required to provide mechanisms for users to appeal content removal decisions.
The companies falling under the scope of the DSA regulations are given a grace period of four months to facilitate a smooth transition, enabling them to adapt the new antitrust policies and procedures within a reasonable timeframe.
Non-compliance with these provisions may result in significant consequences, including potential fines amounting to 6% of the company’s global turnover.
In more severe cases of persistent non-compliance, platforms could face temporary bans from operating within the EU. These stringent measures underscore the importance of adhering to the DSA guidelines and reinforce the commitment to ensuring a responsible and accountable digital environment.
Impact of EU’s Digital Acts on American Online Service Providers
In this report dated November 2022, economist Kati Suominen estimates that the EU’s DSA and Digital Markets Act (DMA) would cost leading US digital service providers like Amazon between $22B and $50B in additional compliance and operational costs. 🧐
As a result, this might force them to either pass the added costs to their customers or let go of crucial business opportunities in the region.
Suominen also believes that “if US digital services increased their costs on American companies by just 5% due to EU regulation, US companies could incur over $97B in new costs, with $45B carried by SMEs.”
Sellers currently selling in or planning to expand to the EU should watch closely how Amazon will respond to its DSA obligations. More importantly, sellers should brace for any potential cost increases once Amazon starts implementing new compliance requirements related to these digital acts.
Related: EU Advised by NGOs to Refuse Amazon’s Flawed Proposal for Antitrust Settlement, Amazon Faces Backlash for Alleged Abusive Practices, Why Amazon Wants You to Lobby Congress
UPDATED: Battle for Last-Mile Logistics Heats Up as Amazon Expands Same-Day Delivery Network
05/20/2023 (Originally posted 3/3/2023)
UPDATE 05/20/2023: In a bid to compete with Amazon, John Mulligan, Target Executive Vice President and COO, unveiled an innovative strategy to optimize their delivery operations.
With a focus on enhancing capacity and streamlining routes, Target is embarking on a significant expansion of larger delivery vehicles in locations where their sortation centers operate.
According to Mulligan, when it comes to routes that were previously covered by smaller vehicles, the utilization of SUVs and minivans allows for the delivery of more than twice the number of packages.
However, the real game-changer lies in Target’s “high-capacity vans,” which have the ability to cater to almost five times the amount of packages (vs. sedans). The effectiveness of these larger vehicles has been put to the test by the company, who has been experimenting with high-capacity van routes at their Dallas and Minneapolis sortation centers.
“Over the past year, across all of our markets served by our sortation centers, we have shifted more routes to larger passenger vehicles and early results have been positive,” Mulligan told analysts.
These high-capacity vans accounted for 65% of Target’s last-mile deliveries in Q1 2023 compared to zero during the same quarter in 2022.
“This resulted in meaningful cost savings for our last mile delivery program overall,” Mulligan said.
Other Initiatives to Handle Greater Parcel Volume
In 2022, Target delivered a staggering 26 million packages through their sortation centers. As they stride forward into this new year, their goals soar even higher as they set their sights on nearly doubling this monumental figure.
To make that happen, the retailer is working on a standardized and expedited approach to load its vans, which “enables package containerization and easy identification of the correct packages at delivery.”
By streamlining the loading process, Target not only simplifies the daily tasks of its drivers but also empowers them to move a greater number of packages in and out of the sortation centers without compromising safety.
As a result, this significantly enhances the company’s last-mile delivery capacity.
Expanding Next-Day Delivery Coverage with More Sortation Centers
In February, Target announced it’s constructing six additional sorting centers across strategic locations to expand its next-day delivery capabilities.
Currently, the company has nine sortation hubs in Texas, Chicago, Minnesota, and Pennsylvania. These hubs collect packages from local stores and prepare them for delivery to customers by Shipt drivers or third-party couriers.
To optimize the delivery capabilities of its existing sortation centers, Target is adding extension facilities to its logistics network. It recently opened one in Smyrna, Georgia in an attempt to serve its other sortation center in Atlanta.
This way, eComm orders that end up outside of the Atlanta sortation hub can be moved to the Smyrna extension facility. Couriers can then pick up those packages in Smyrna and deliver them to neighborhoods in the area.
With these high-capacity vans and new sortation hubs, Target can now reach and provide new markets with a delivery service that could, it hopes, eventually begin to challenge Amazon.
UPDATE 04/14/2023: In a shareholder letter published April 13th, CEO Andy Jassy confirms Amazon has recently completed a shift from a national fulfillment service model to a regionalized model to lower costs and provide lightning-fast deliveries.
“Last year, we started rearchitecting our inventory placement strategy and leveraging our larger fulfillment center footprint to move from a national fulfillment network to a regionalized network model,” Jassy explained.
“We made significant internal changes (e.g. placement and logistics software, processes, physical operations) to create eight interconnected regions in smaller geographic areas. Each of these regions has broad, relevant selection to operate in a largely self-sufficient way, while still being able to ship nationally when necessary.”
As you may already know, under its previous national distribution model, Amazon would sometimes have to ship an ordered product from far-off locations if a local fulfillment center didn’t have it in stock. Not only did this increase costs for the company, but it also resulted in longer delivery times for customers.
Now, with its regionalized fulfillment model in place (combined with automated warehouse systems), Amazon is all set to take its next-day and same-day delivery services to new heights.
“Shorter travel distances mean lower cost to serve, less impact on the environment, and customers getting their orders faster,” Jassy said.
Presently, the retail giant is capable of handling 600,000 same-day deliveries in 90 metropolitan areas. The company also aims to bring its ultrafast delivery service to places beyond larger cities by investing in more rural areas, such as Omaha and Sioux Falls.
Amazon may yet again redefine last-mile expectations as it aims to expand its same-day delivery footprint from 45 to 150 facilities over the next few years. New sites have reportedly opened in Los Angeles, San Francisco, and Phoenix, which can prep and handle hundreds of thousands of popular items for immediate delivery.
The company also announced it will allocate $200 million to driver safety across its logistics network in 2023, showing its continued commitment to getting last-mile right.
With expanded last-mile capabilities across the US, more customers will have the option to get their orders delivered within hours instead of days – a direct shot at the express delivery services of retail rivals Target and Walmart and delivery firms UPS and FedEx. This could also mean improved delivery times during the holiday season.
Per Wall Street Journal, Kansas City-based customer Kristin Whitehair first saw the ultrafast delivery option in February when browsing through electric toothbrush heads, which she needed urgently. She placed an order in the morning and received it in the evening, an experience similar to in-store shopping where customers can pick, pay and bring an item home within the same day.
Customers may no longer need to look at other retailers for faster delivery. However, this also means the pressure is on Amazon to consistently meet ever-evolving customer expectations, especially once its drone delivery service, which could potentially cut down delivery times from several hours to just under 60 minutes, is deployed at scale.
Although last-mile service is considered as the most expensive part of the logistics process, Amazon said they are not increasing prices for this fast-shipping service delivery. Though rates will, they claim, remain the same as when first introduced a few years ago, the Same-Day service is not always free and can range from free to 2.99 per order for Prime members and up to 9.99 per order non-Prime.
The cost of providing services such as this may, in part, be offset by the company’s recent Prime membership fee increase. In 2022, Amazon raised the cost of an annual Prime subscription from $119 to $139, an increase large enough for some members to call it quits. Therefore, if they were to announce another fee hike in 2023, it might give members who have stuck it out a more solid reason to finally jump ship and turn to Walmart or Target, which Amazon is desperately trying to avoid after suffering a huge decline in eCommerce sales for the fourth time in the last five quarters.
Amazon has already implemented a series of cost-cutting measures, such as shutting down old logistics centers, subleasing unused warehouse and jet cargo space, and laying off 18,000 employees. The company also launched fulfillment-as-a-service programs such as Buy with Prime and Amazon Warehousing and Distribution (AWD) to boost growth and increased warehouse automation to reduce inefficiencies.
Trends that Drive the Need for Ultrafast Delivery
Amid all the cost-cutting efforts and a looming recession, why is Amazon still pouring money into its logistics and transportation network?
- Preference for speed and convenience. Based on a McKinsey survey, 28% of respondents cited speed and price as two of the most important delivery features, while alternative delivery locations (parcel lockers or in-store pickup) and flexibility of delivery time come in second and third respectively. When people talk about speed and price, they mean free one to two-day shipping, which has generally become the norm. But that is slowly changing with the advent of same-day delivery, thanks to the pandemic forcing home-bound customers to shop for urgently-needed essentials online. Additionally, a 2021 Digital Commerce 360 report shows 68% of consumers consider fast shipping as a deciding factor when shopping online, while 36% have checked out of a store and selected same-day delivery as an option, indicating a growing demand for faster delivery.
- Customers’ willingness to pay a premium for same-day, within-hours delivery service. As mentioned earlier, last-mile delivery is not cheap. 53% of overall transportation spend goes to last-mile, so understandably, eComm companies offer this service at a premium. Fortunately, 88% of consumers are willing to pay extra dollars for same-day delivery.
- Same-day delivery could be a lucrative source of revenue. The US market for this delivery option is expected to triple in size by 2024. In 2019, same-day delivery market was worth $5.87 billion and is expected to grow to $15.6 billion by next year.
- Increasing competition. Target recently announced it will invest $100 million to add more sortation facilities into its supply chain to speed up and reduce the cost of delivering online orders. Meanwhile, Shopify launched its own fulfillment-as-a-service program, Shop Promise, which offers next-day and two-day, taking on Amazon Buy with Prime. Lastly, Walmart revealed plans to expand its Private Fleet Development Program, which launched last year, to improve delivery capabilities for sellers.
With retail giants all vying for the top spot – as the go-to same-day delivery service provider – Amazon needs to consistently invest in its last-mile service to ensure truckers can deliver orders faster than Target, Shopify, and Walmart to have an edge on its rivals.
While building 150 same-day sites sounds like a good start, Amazon may need more to be able to fully deploy the program across the entire country.
“They need volume to make it work,” said Marc Wulfraat, President of MWPVL, a supply chain consulting firm.
More volume also means higher labor and warehouse costs that could drive up Prime membership fees in the future.
Wulfraat predicts retailers will start teaming up with pickup and delivery companies such as DoorDash and Instacart to alleviate the cost of building out their own in-house last-mile network.
Amazon Taps into $100B Retail Media Market, Invests in New & Cutting-Edge Ad Platforms
Not too long ago, retail media, aka marketplace advertising, caught the attention of advertisers as a rising digital channel, yet only a few big retailers like Amazon, Walmart, and Target dared to explore its potential.
Back in 2012, Amazon’s ad revenue amounted to just $609 million, and during that period, retail media was merely synonymous with advertising on Amazon itself.
Retail media networks like Amazon leverage their first-party customer data to serve customers relevant ads across search, display, or product pages. These ads can come in many forms, such as exclusive offers, coupons, and sponsored ads that appear during a shopper’s active browsing session on Amazon or other ad channels like Google Search and Facebook.
Related: Amazon Attribution Update Makes for a more Effective Sales Tool
Fast forward to 2022, retail media has experienced a phenomenal surge, primarily driven by the eCommerce boom. Advertisers allocated more than $40 billion toward retail media initiatives, with Amazon capturing an impressive 37% share of the total investment. Meanwhile, retail rivals Walmart and Target collectively accounted for a 36% share.
In a statement to Marketing Dive, Todd Krizelman, MediaRadar CEO, chalked it up to Amazon having such a “tight grip on the digital space that they really sit in a category of their own.”
“Other players are growing quickly, but it will be difficult for legacy brick and mortar retailers to beat Amazon on its own terrain.”
Overall, these major players dominated the retail media landscape, commanding 73% of total ad investment in 2022. And over the next few years, the $40B market could potentially more than double.
Future is Bright for Retail Media
Touted as the “new frontier” of advertising, retail media is the world’s third-largest digital channel behind social ads (2nd) and paid search (1st).
Consulting firm McKinsey & Co estimates that the expansion of retail advertising networks in the US has the potential to surge up to $100 billion in ad spending by 2026. Moreover, these advertising investments prove to be immensely lucrative, yielding operating profit margins ranging from 50% to 70%.
Media investment company, WPP & GroupM, also predicts that retail media will increase by 60% by 2027.
Such projections highlight the tremendous growth and profitability that retail media is poised to achieve in the coming years, with Amazon leading the way.
Leaning on the $100B retail media sector may catapult Amazon into the second spot of the overall US digital ad market, just behind Meta.
Peaking at the Right Time
Insights from Insider Intelligence suggest that while Google and Facebook continue to see growth in their advertising businesses, their pace is comparatively slower than other areas of the US online ad market.
In the midst of this landscape, Amazon has been steadily gaining market share.
Per Insider Intelligence, Amazon accounted for 11.8% of US digital ad spending in 2022. This figure is projected to increase to 12.9% in 2023 and further to 14% in 2024.
By 2025, the total online ad market share gap between Amazon and Meta will be down to just 3.2% points. This goes to show that Amazon’s ad business has become one of its key strengths. And sellers are well-positioned to take advantage of this growth area with Amazon’s advertising tools.
Amazon’s Working to Expand its Ad Business to Accelerate Growth
With momentum on its side, the retail giant wasted no time in beefing up its advertising division. The company recently:
- Launched Amazon Anywhere, a groundbreaking program which allows customers to seamlessly browse and purchase tangible products from Amazon in virtual environments, such as video games, augmented reality (AR) experiences, and third-party mobile applications. With Amazon Anywhere, the boundaries between virtual and physical shopping blend, creating a truly immersive and convenient retail experience.
- Assembled a team to build an AI-powered tool that will generate images and videos for advertisers.
- Overhauled the Amazon Demand-Side Platform (DSP) to introduce more advanced machine learning and predictive algorithms to “enhance bidding and pacing decisions” and help advertisers reach “previously unaddressable audiences.” With these upgrades, users reportedly saw a 12.6% increase in click-through rate, 24.7% reduction in cost per impression, and 34.1% increase in return on ad spend.
- Hired Kelly MacLean, a seasoned monetization product engineer at Meta, as VP of Amazon’s DSP business. According to Business Insider, she will play an important role in demonstrating DSP’s new offerings to agencies and non-Amazon advertisers.
For sellers, these advancements could provide a new and better way to diversify their ad investments, optimize ads for performance, or reach untapped markets and thus, drive sales. For customers, improved search relevancy enhances the shopping experience by allowing sellers to offer them a more targeted product selection in real-time.
With this in mind, consider adopting a retail media strategy and seamlessly integrate it into your comprehensive marketing plans, if you haven’t done so already. This approach allows you to maximize the potential of Amazon’s available resources and leverage emerging opportunities in response to evolving customer behavior.
Related: Walmart Launches New Ways to Find and Buy Products, Amazon Will Pay Users $2/Month to Track Their Data, Amazon Now Allowing Email Marketing Campaigns to Repeat Customers, How to Optimize Amazon Attribution
Amazon Delivery Drones Off to a Rocky Start
05/18/2023 (Originally posted 02/08/2023)
Update 05/18/2023: Since launching in December 2022, Amazon Prime Air has just completed 100 deliveries in Lockeford, CA and College Station, TX. This figure only represents 1% of the company’s target delivery goal of 10,000 by the end of 2023.
The once-promising projection now teeters on the brink of uncertainty. In Lockeford, a small town housing roughly 4,000 residents, reports from Prime Air staff reveal that Amazon’s drones are currently catering to a mere two households, both located within a mile’s distance from the company’s local delivery hub.
Considering College Station, a significantly larger town with 120,000 residents, one might assume greater prospects for Amazon’s drone operations. However, the company has yet to seize the potential of this market as well.
In a statement to CNBC, Amazon spokesperson Av Zammit cited FAA flight restrictions as the reason why the program is still experiencing slow progress in the two service areas.
As we’ve previously reported, Amazon has been diligently working to enhance its drone technology in order to satisfy the stringent requirements set by the FAA and gain greater operational flexibility. However, despite its efforts, the company has been unable to persuade the FAA to remove the substantial restrictions imposed on its drone operations.
Per FAA’s 2023 revised Exemption No. 18601B, Amazon can conduct drone deliveries in sparsely populated towns like Lockeford and College Station, but the drones are not allowed to fly over roadways, schools, or people without case-by-case permission, essentially limiting Amazon’s drone operations.
With a lot of regulatory hurdles to overcome, Prime Air’s wider rollout in the US might take longer than expected. But as they say, slow progress is better than no progress at all. Zammit told The Verge that the company will continue to cooperate with the FAA to ensure they meet all restrictions to be able to expand drone deliveries to more areas over time.
Federal Aviation Administration (FAA) restrictions and massive job cuts have reportedly stalled widespread use of Prime Air, Amazon’s drone delivery service, in Lockeford, California and College Station, Texas.
As a result, Amazon completed less than 10 deliveries in its first 30 days. That is a far cry from the company’s aim to deliver 500 million packages annually by drones by the end of the decade and the number of deliveries truck drivers do each day, which are about 170 to 350 packages per shift.
Does this mean Prime Air is a failure? Will we ever see a wider rollout of the program in the near future?
It all depends on the FAA’s operating restrictions for Amazon and how they are going to comply.
FAA Flight Restrictions Impacting Prime Air’s Ability to Operate
In August 2020, the FAA issued an approval certificate to Amazon which allowed the company to utilize drones in a commercial setting. However, the aviation authority also included several conditions and limitations (see below) that the tech giant reportedly tried to downplay, which turned out to be a costly move.
Amazon argued that its latest drone model, MK27-2, is safer and more autonomous than its predecessors. It is also equipped with an enhanced perception system that can detect obstacles or people below it during delivery or landing.
That means it doesn’t need as many personnel, including visual observers (people who assist remote pilots in completing delivery drone flight operations). While Amazon’s drones can fly autonomously, it doesn’t mean they can cross public areas or no-fly zones without FAA’s permission, a rule that the company presumably violated.
One of FAA’s existing regulatory barriers for autonomous delivery drones include not allowing unmanned aircraft (UA) to fly over “non-participants” unless otherwise approved by the Administrator. In Prime Air’s case, “non-participants” would be people who are not part of the drone flight operations.
So, when Amazon’s drones tried to fly over people or public roads without case-by-case permission, the FAA intervened for the safety of the residents and temporarily blocked Amazon from continuing its drone operations, The Information reported.
The suspension has significantly reduced the number of drone deliveries in California and Texas. As of mid-January 2023, Prime Air made as few as three deliveries in Lockeford, CA, and five in College Station, TX.
In an email to Gizmodo, Amazon rep Av Zammit confirmed that they’re “making a limited number of deliveries” in the two towns. Despite FAA restrictions, the tech giant still plans to continue to expand over time.
“Just last week we received the FAA’s approval to start delivering to more customers in these locations.”
However, FAA restrictions are just one of the many obstacles that Prime Air needs to overcome in its early stages. Public outcry and labor issues may further delay its national rollout.
Amazon Drone Safety Issues
In the US, drone malfunction (resulting in crashes) is the top concern for most people.
Insider recently reported that town residents expressed safety concerns after finding out Amazon’s delivery drones would be flying over their yards, and rightly so given the program’s erratic record with the FAA.
Amina Alikhan, a College Station resident, worried about the possibility of a 90-pound drone “falling from the sky onto our home, onto our car, onto our children.”
MK27-2s weigh roughly 80 lbs when empty, and can carry a maximum payload of 5 lbs. By contrast, Amazon’s drones are 10 to 40 lbs heavier than Alphabet’s Wing and Walmart’s Flytrex and Zipline.
During one of Amazon’s test flights in Oregon, one drone crashed into a field, causing a 25-acre bushfire.
Disastrous consequences such as this one is why the FAA has more stringent rules for heavier drones than it does for small Unmanned Aerial (UA) drones weighing less than 55 lbs.
In 2019, the FAA modified Part 107 to allow “routine operations of small unmanned aircraft over people, moving vehicles, and at night under certain conditions” potentially without a waiver depending on the level of risk small UA present to people.
That said, Amazon may need to roll out a more lightweight drone, implement advanced autonomous systems, and invest in skilled pilots and observers to change the public’s perception of drones as killing devices to vehicles that benefit shoppers with same-day delivery of products.
Widespread Layoffs Immobilizing the Drone Flight Safety Division
Another factor that could delay Prime Air’s wider rollout this year is the impact of mass layoffs on its drone safety team.
According to CNBC, around half of the drone delivery department – that includes designers, maintenance staff, systems engineers, flight testers and flight operations specialists – have been laid off.
The employees said that the layoffs, along with increased pressure to meet delivery goals, “have created new concerns about the potential dangers Prime Air poses” and made them question the company’s commitment to safety, Insider reports.
“I think it says what their priorities are,” one current employee told Insider.
If the company prioritized drone safety “as much as they like to tell the media, that team wouldn’t have gotten laid off.”
Amazon spokesperson Maria Boschetti quickly squashed claims of widespread drone job cuts telling Insider in an email that they are “misinformed or inaccurate,” although she did not specify how many employees from the safety teams had been let go.
Boschetti reiterated that safety is the company’s top priority, and “implying that we no longer have a robust safety team in place is completely inaccurate.”
Prime Air got off to a rocky start, but the good news is it still has “a dedicated safety officer in each location, plus dozens of other employees who are responsible for safety as part of their job.”
The teams are also currently working on a new drone model, MK30, which is lighter, smaller, and quieter than MK27-2s, indicating their continued commitment to meeting FAA’s rigorous standards.
Related: 60-Minute Amazon Drone Delivery Now a Reality, Amazon Warehouse Automation Increases Concerns Over Job Loss and Product Selection Inaccuracy, Amazon Tweaks Logistics Strategy to Streamline Operations
Shein Moves Into the US Market, But May Struggle to Recruit 3P Sellers
After testing the waters in Brazil, Chinese fast-fashion giant and the world’s most downloaded shopping app, Shein, now appears to be finally moving into the US market and is adding new sales categories, such as Home and Beauty, to further compete with similar eComm retailers.
Marketplace Pulse CEO, Juozas Kaziukėnas, recently came across multiple job openings posted by Shein on LinkedIn for positions in California. One of the newly posted positions is for a Senior Business Developer for the company’s US marketplace, whose primary responsibility will be to identify and pursue new business opportunities.
In addition, Shein is also seeking to fill the role of AML Compliance Officer – Global Operations Center, USA to “lead, oversee and ensure effective execution” of compliance and anti-money laundering initiatives in the Americas. Other available positions include a Supplier Management specialist and an Inventory Clerk.
This move comes after Shein revealed its plans to build 3 large distribution centers in the US to keep up with soaring demand and to shorten shipping times by 3 to 4 days. The retailer directly ships orders from China to over 150 countries and the standard shipping time for US customers usually takes 1 to 2 weeks, which has left many feeling frustrated.
By contrast, Amazon only takes about 1 to 4 days to get orders delivered across the mainland US, all made possible by its vast fulfillment network, including pickup locations at Kohl’s, Whole Foods, and Amazon Fresh.
According to Shein, they have been using both air and ocean freight for global shipping, but they are now exploring ways to identify more products that can be moved cost-effectively by sea. They’re also looking to source goods from locations closer to customers.
Last month, the etailer said it will invest almost $150 million in Brazil to build out its own network of manufacturers in the region. The money will be used to “provide tools and training for factories to upgrade their traditional production models” and “enable local producers to better manage orders, reduce waste at the source and lower excess inventory.”
Meanwhile, over the US, Shein is making strides to enhance its first distribution hub’s capacity by 50%. The company is also gearing up to launch a second center in California in 2023, with plans to introduce a third one in the Northeast with a yet-to-be-revealed timeline, the Journal reports.
Aside from significantly cutting shipping times, Shein also hopes to attract more local third-party sellers with its US expansion, which other Chinese eComm marketplaces like Alibaba and TikTok have reportedly struggled with.
Shein needs American sellers to introduce more variety to its mostly Chinese-based product selection. However, retail experts interviewed by Modern Retail believe that the company might also suffer the same fate as its Chinese contemporaries.
According to Ryan Craver, Founder of Commerce Canal, Shein’s pricing strategy “works well” for Chinese merchants that have the same fast-fashion mindset.
“But it’s very difficult for US sellers and operators because the price point is so critically low,” which not only reduces the perceived value of a product, but also forces local brands to drop their prices in order to win the price war versus Chinese merchants.
Therefore, selling on Shein might feel like a race to the bottom for US sellers, especially those in the mid and upper-range markets.
Shein might have an answer to that, though. In 2021, the retailer launched a premium clothing brand called MOTF. Prices range from $5 to over $100 depending on the type of product and material.
The Journal reports that Shein aims to sell more high-end products with greater profit margins, but they may struggle to attract customers with a week-long lead time, hence why the company is doubling down on its fulfillment expansion plans.
So, perhaps until Shein has successfully gained a deeper foothold in the country with multiple distribution centers and a more favorable pricing strategy, only then will US sellers find the marketplace a viable contender to Amazon and other sales channels.
Related: Should You Be Selling on These New Sales Channels?, TikTok Gears Up for US Market Entry
A Purge Could Be Coming for Fake Reviews on Amazon
🚨 Amazon has quietly removed hundreds of thousands of customer reviews from some of its own Amazon Basics listings, indicating a new round of reviews purges may be soon at hand.
In April, a few Amazon Basics products saw a huge decrease in review count following Amazon’s heightened efforts to combat fake review brokers and counterfeiters on its platform.
As shown above, the review count for Amazon’s Pack of 50 Slim, Velvet, Non-Slip Hangers went down by 75% on average and around 98% for the Pack of 30 variant.
Given the company’s ongoing war on fake reviews, it is likely that most, if not all, of the reviews that have been taken down came from fraudulent sources.
However, it is unclear whether or not the listings had bogus positive reviews and if they did, were they also included in the removal process? 🤔
If the purge did include misleading positive reviews, it somehow implicates Amazon in the very fake review schemes they’ve been trying to eradicate for years (2016, 2018, 2020, 2021, 2022, 2023).
Now, that doesn’t necessarily mean Amazon is the culprit behind the dubious positive reviews. For instance, a nefarious seller may have hijacked the Pack of 30 Hanger listing to attach a completely different product to it, allowing the two items to share the same reviews. To bolster product visibility and trick more customers into buying, the hijacker could have also added more glowing feedback to the hijacked listing.
An alternative, though unproven, theory is that Amazon themselves may have gamed the system to artificially inflate their product’s overall rating and drum up sales with false positive reviews. An analysis by the eComm consulting firm, Pattern, shows that improving one’s review rating by just one star can lead to a sales boost of up to 26%.
Even if Amazon’s hands are clean as far as positive reviews, that doesn’t discount the possibility of removing some authentic low-star reviews which would achieve the same results.
This abusive behavior likely wouldn’t surprise sellers who have already seen how the retail giant can allegedly break its own rules to stay ahead.
How do bad actors abuse Amazon’s review system?
There are several ways that bad actors can cheat Amazon’s review system. These include:
- Astroturfing. Bad actors or bots can create fake accounts or pay others to create fake accounts to leave positive reviews for their products. While this can increase a product’s rating and sales, this can also mislead customers into purchasing a product that may not meet their expectations.
- Review stacking. Some sellers will add reviews from other (often dead or abandoned) products to their own listings to increase their review count. This may also help boost the listing’s total star rating from 3.4 to 4 stars, for instance.
- Review manipulation. This involves offering incentives or discounts to customers in exchange for leaving positive reviews. This can lead to biased or fake reviews.
- Product swapping. Some sellers will send customers a different product than what was advertised, and then ask for a positive review in exchange for a refund. This can lead to deceptive top reviews for a product that is not the one being advertised.
What could be the reason behind Amazon’s review purge?
Amazon possibly deleting false positive reviews may be an attempt to remove traces of anti-competitive behavior that could potentially not bode lightly for its own antitrust probes and the financial penalties for its sellers.
Just last month, the Federal Trade Commission (FTC) levied a $600,000 fine against supplements maker, The Bountiful Company, for review hijacking on Amazon.com.
Aside from potentially trying to get antitrust watchdogs off its back, Amazon is also well within its rights to remove fake negative reviews from its own and others’ listings. For instance, competitors can buy an Amazon Basics product and then fraudulently leave a bad review or report the product as defective or counterfeit. This can hurt Amazon’s reputation and sales, even if the product is legitimate.
The Fight Doesn’t End Here
Whatever the reason behind the purge, Amazon cleaning up its own backyard is still a step in the right direction. But with more than 2 billion listings to monitor, the fight is far from over.
In fact, our data just further proves that Amazon’s fake review problem continues to run rampant in the marketplace despite their years-long effort to eliminate it. This ruins not only Amazon’s own credibility but also third-party sellers’ selling on the platform, which ultimately impacts sales.
With a lot at stake, it’s crucial to take an active role in keeping bad actors from hijacking or sinking your product rating with fake negative reviews. Be sure to follow Amazon’s Product Review Policy and report any potential review violation.
It’s also best to check your competitors’ listings for fake positive reviews every once in a while. Some reviews are clearly written for other products entirely, such as a posture corrector with reviews on books and dog leashes.
Also, pay attention to the text (a few reviews may have similar wording or photos) and the number of good reviews that happened within a few days of each other.
For example, if a listing received more than 6 verified or unverified reviews in a day, that could mean fraudsters made a push for those to occur on a certain timeline. As a result, Amazon may indefinitely block the listing from receiving additional reviews, but you can’t always rely on that happening, so keep an eye out. 👀
Related: Amazon Highlights ‘Frequently Returned’ Products You Should Think Twice Before Buying
25% Growth Rate: Euro B2B Opportunities Expand on Amazon
Amazon B2B continues to grow, with no signs of slowing down. 🚀
As the pandemic accelerated the shift towards online shopping, Amazon experienced a surge in office supply sales in Europe.
The tech giant is now looking to capitalize on this trend by expanding its Amazon Business to more countries.
In an interview with Reuters, Amazon Business VP Alexandre Gagnon stated that the division recorded a 25% compound annual growth rate in Europe during the two-year pandemic.
The business initially launched in Germany in 2016, then expanded to the UK, France, Spain, and Italy. However, Amazon refused to reveal which countries it would expand to.
Gagnon also mentioned that Amazon is investing in logistics to simplify the process for EU companies to procure bulk office, IT and healthcare equipment, and school supplies. By doing so, Amazon aims to secure contracts to procure these items for their clients.
Putting More Focus on Profitable Businesses
According to Reuters, Amazon’s B2B has higher margins than its B2C arm since it is cheaper to make bulk deliveries than individual small parcels.
“Because businesses buy in larger quantities, the fulfillment economics are more advantageous,” Gagnon said.
As we’ve reported, Amazon is currently facing slowing consumer demand and rising costs. In fact, the B2B expansion plan comes as Amazon announced it will be closing all 68 Amazon Books locations, pop-up chains, and 4-star stores in the UK and US. Workforce reduction impacting 27,000 employees globally is also underway in an effort to lower operating costs.
Therefore, Amazon may be trying to focus more on B2B to stimulate growth.
The 2022 European Retail eCommerce Consumer Forecast found that the total value of goods sold online in Europe is expected to reach $1.8 trillion by 2025, a consistent increase in online sales for B2B businesses operating in the region.
The report explains that the surge in B2B online consumption in the EU can be attributed to the heightened market demand for a wide range of products and services, such as spare machine parts, business and digital services, as well as packaged and bulk products.
If you’re planning on joining Amazon Business, now’s the time to do it while demand is projected to increase at 11.9% through 2025.
To grow your catalog with high-demand, no-competition B2B products, use Amazon’s ASINs Recommendations tool. It provides a list of items that many companies are looking for, but are presently unavailable on Amazon.
The tool also offers tailored suggestions based on the product category of your store so that you can incorporate new items that align with your brand or introduce new variations of existing products.
It’s important to note, however, that since ASINs Recommendations is primarily designed for B2B applications, not all categories may be included. You may also need to overcome certain restrictions imposed by Amazon before selling, including brand approval for gated products and compliance requirements.
Related: Walmart Launches B2B eComm Site to Rival Amazon and Shopify, Amazon Continues to Dominate B2B While Shopify Plays Catch-Up
UPDATED: Amazon Hopes to Restore Consumer Confidence with $1.2B Anti-Counterfeit Initiative
04/21/2023 (Originally posted 04/14/2023)
Update 04/21/2023: 📢 In an effort to tackle organized crime on its platform, Amazon has rolled out its Anti-Counterfeiting Exchange (ACX) program. The initiative aims to assist brands in identifying and tracking counterfeit goods sold on Amazon.com.
Online marketplaces, including Amazon, have long struggled to keep counterfeiters at bay and prevent fake products from infiltrating their supply chain.
ACX is modeled after data exchange initiatives used by credit card companies to detect fraudsters and their methods. Under this program, participating stores can:
- Report bad actors to Amazon anonymously
- Use the ACX database to find stores or individuals that have been identified by other stores as counterfeiters
The strength of ACX lies in the ability of participating stores to share account information about detected counterfeiters.
Once the information is shared, all other stores involved in the program can be made aware of the counterfeiter and take action to stop them from selling on the platform. However, each participant retains autonomy to make independent decisions regarding the use of the information shared through ACX.
Since the program’s initial rollout in 2021, hundreds of matching accounts, in which the same counterfeiter attempted to create selling accounts on Amazon and at least one other store, have already been identified.
In addition to ACX, Amazon is collaborating with the US Customs and Border Protection on a new program that will help identify and target low-value cargo that may contain counterfeit products or breach other regulations.
Amazon recently released its latest Brand Protection Report, which outlines its efforts to curb the sale of counterfeit goods to consumers worldwide.
The report highlights specific actions taken by the eCommerce titan to prevent the listing of knock-offs for sale. However, there are still lingering doubts about whether Amazon is truly committed to eradicating counterfeits and bad actors that it has historically neglected which caused big brands like Nike and Birkenstock to leave the platform a few years ago.
Billion-Dollar Anti-Counterfeiting Initiative in 2022
To prevent a potential mass exodus of sellers (and consumers) over growing piracy on Amazon, the tech giant had increased its efforts to protect brands by investing in cutting-edge technology and skilled personnel.
In 2021, Amazon invested $900 million into anti-counterfeiting efforts that saw the disposal of 3 million fake products, 170 counterfeiters sued in US courts, and 600 individuals sued or referred for investigation in several countries.
In 2022, the company poured $300 million more into its anti-counterfeiting program, showing its continued commitment to fighting fraudulent activities on the platform.
With an investment exceeding $1.2 billion, Amazon has employed more than 15,000 professionals dedicated to safeguarding customers, brands, selling partners, and the store from counterfeits, abuse, and fraud.
This crusade against bad actors has led to:
- The seizure of more than 6 million counterfeit products that were being offered for sale on Amazon, doubling the number of the previous year.
- A 1.7 million decrease in the number of bad actor attempts to create new seller accounts, from 2.5 million attempts in 2021 down to just 800,000 in 2022.
- Significantly fewer notices of infringement submitted by brands, which could be, in part, attributed to Amazon’s efforts to address sellers that have purportedly issued fake takedown requests on competitors.
- Over 1,300 criminals sued or referred for investigation in the US, UK, EU, and China.
At a time when the fight against counterfeiters has shifted largely to online and social media platforms, Amazon’s reported wins are quite significant. TikTok, in particular, has become a growing source of counterfeit products.
According to the US Chamber of Commerce, the global counterfeit trade is estimated to be worth over $500 billion annually. Some estimates also show that up to 10% of branded goods, especially luxury products, sold in the market may be fake. It is also believed that 80% of consumers have unknowingly handled falsified goods.
Since its inception in 2020, Amazon’s Counterfeit Crimes Unit (CCU) has been working directly with authorities to identify and seize dupes found in Amazon and factories where they’re being manufactured.
For instance, CCU partnered with several Public Security Bureaus in China to carry out factory raids that led to the confiscation of more than 240,000 fake products. The report also mentioned additional joint efforts with law enforcement in Germany and London.
While these programs are a step in the right direction, for many victims of counterfeiting and abusive practices on the platform, the damage has been done and Amazon may be a little too late in trying to win their trust back.
For years, brand owners have struggled with counterfeit products and have tried various methods to address the issue.
- Chanel and Christian Louboutin sued Amazon and counterfeiters over knock-offs being sold on the retail site. In contrast, Cartier opted to collaborate with the tech giant in its effort to bring counterfeiters to justice.
- Birkenstock and Nike cut ties with Amazon over the same unresolved counterfeiting issue.
- Small businesses opting to enroll in Amazon Brand Registry for brand protection. Others also hire third-party service providers to help them comb through product listings and identify unauthorized sellers.
Yet despite these efforts from both Amazon and sellers, counterfeits still run rampant on the platform. Why?
In an interview with Fast Company, Robert Handfield, a North Carolina State University professor who has conducted research on Amazon’s counterfeiting problem, says:
“Amazon does not do audits of distributors that claim to be selling original products. It has relied on companies and consumers to report counterfeit products to shut down the [unauthorized] seller. But then it’ll just pop up somewhere else.”
Amazon’s behemoth size may have contributed to its poor ability to police itself, which then gave rise to its huge counterfeiting problem today.
Despite having a safety team in place, for example, lots of fakes or banned items did still slip through, as reported by Wall Street Journal in 2019. Similarly, in late 2021, Senate investigations also show that Amazon has not been quick to help small businesses take down fake listings.
So perhaps, until Amazon becomes more effective in verifying new sellers, checking the authenticity of goods that come and go, and defending sellers’ Intellectual Property (IP) rights, expect a large volume of counterfeiting activities to continue. Here’s to hoping that their investments in recent years will continue to show improvements in this arena.
Increased regulatory pressure from antitrust authorities will also be crucial in keeping Amazon themselves from creating knockoffs of successful products. Riding that distinction between counterfeit and knockoff may be legal, but is it ethical?
As reported, the tech giant opposes a lot of antitrust bills seeking to end self-preferencing in digital markets such as S.2992, sparking doubts as to whether Amazon is really serious about its road to zero counterfeit program and whether knockoffs are included in protections that should be awarded to brands on Amazon.
That said, brand protection could, additionally, be a move by Amazon to slow down counterfeiting activity on the site to minimize Senate scrutiny, and that completely cleaning up the marketplace is a lofty, and possibly, insincere target.
The good news is that, whatever the motives behind the action, improvements are being made. However, we can’t expect change overnight or full eradication.
Counterfeiters are not going to go away anytime soon. It would be wise to maintain a proactive approach to protecting your brand, whether it’s by registering your IP, enrolling in Brand Registry, or working with service providers to identify unauthorized retailers and fake reviews.
Marketplace sellers will continue to play whack-o-mole. There just may be fewer moles to whack. Let’s hope the trend continues.
Amazon Announces Further Cuts Amid Economic Uncertainty
As Amazon CEO Andy Jassy warns of an ‘uncertainty that exists in the near future,’ existing employees face reduced pay and job loss. The expected job cuts in particular will impact a number of roles across the company’s AMZ Web Services (AWS), Twitch streaming, human resources, online book store, and advertising businesses.
Fresh Round of Layoffs
Amazon has recently concluded the second stage of its yearly budgeting procedure, known internally as “OP2.”
In a memo dated March 20th, Jassy announced the company’s plans to let go 9,000 more employees in the coming months after cutting 18,000 jobs in January.
“The overriding tenet of our annual planning this year was to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole,” Jassy said.
Amazon’s workforce is being downsized as the company adjusts its hiring practices following a surge in employment during the pandemic. Its global headcount exceeded 1.6 million by the end of 2021, up from 798,000 in the fourth quarter of 2019.
As part of an extensive review of expenses, Jassy is implementing measures to address the economic downturn and slowing growth in the core retail business. Hiring in the corporate workforce has been frozen, certain experimental projects have been terminated, and warehouse expansion has been slowed down.
Despite these changes, Jassy remains optimistic about Amazon’s key business segments, including retail and AWS, as well as new divisions that continue to receive investment.
Reduced Employee Stock Awards
Aside from job cuts, Amazon announced it will also reduce employee Restricted Stock Units (RSU) awards by “a small amount” in 2025.
According to an initial report by Business Insider, Amazon is considering making changes to its employee pay structure, with plans to reevaluate compensation in Q1 of the following year to account for potential stock fluctuations.
The company is said to be exploring options for a more balanced compensation model, taking into consideration the current economic uncertainty and its compensation budget, as stated by an Amazon spokesperson.
Attempting to Make a Remarkable Recovery in 2023
After experiencing a sharp decline of nearly 50% in 2022, Amazon’s shares have made an outstanding recovery, surging 19% this year – thanks primarily to the 27,000 job cuts that helped to stimulate business performance.
By eliminating inefficiencies, for instance, the quality of work may improve and more cash will be available to the company, which could then result in increased profits and higher payouts for shareholders.
“While some may view these job cuts as a sign of a gloomier macro outlook, especially as it relates to cloud computing and digital advertising, we believe investors will appreciate Amazon’s heightened focus on cost savings and free cash flow,” Arun Sundaram, senior equity analyst at CFRA, said in a note to his clients.
Shares may be up 19%, but the company’s Q4 2022 financial results missed analysts’ expectations by a significant margin, with earnings falling well short. Additionally, the growth in AWS was slower than anticipated, resulting in a subdued forecast for the current quarter.
If revenue continues to decelerate through the end of Q2, we may still see Amazon announce additional cuts in the coming months to achieve a healthier level of profitability.
Amazon will release its latest quarterly earnings report on April 27, 2023 at 2:30pm PT with its virtual Q1 2023 Earnings Call.
Related: Amazon Warehouse Automation Increases Concerns Over Job Loss and Product Selection Accuracy, Amazon Delivery Drones Off to a Rocky Start
Amazon Attempts to Close Loopholes with New Shipping Policy
📢 Amazon has announced yet another change to their shipping policy, which could be perceived as an attempt to address and eliminate any potential loopholes.
As of March 31, 2023, shipping discounts will only be applied to compliant inbound FBA units in the Multi Destinations program. It may be news to you that this program even exists! Sellers enrolled in this program will save $0.05 per unit on fulfillment fees for Small Standard products and $0.09 for Large Standard. No small savings for sellers feeling the squeeze of recent 2023 fee increases.
While this program is invitation only to FBA sellers, accounts are auto-enrolled so sellers may be participating in this program without realizing it.
This policy change seems to specifically resolve issues around sellers who try to cheat the system and at the same time see discounts applied to their units – a double whammy.
For instance, some sellers create and cancel their shipments, but still send them in anyway knowing that FBA associates may still accept them. This dirty tactic essentially allows the bad actors to get around their capacity limits.
There are also others who, after approving a multi-destination shipping plan, will try to send the shipment along a different route (most likely to a single warehouse or somewhere closest) to reduce cost. That’s probably because despite getting discounts on their inbound units, they may still end up paying higher shipping fees if they’re shipping inventory to multiple warehouses across long distances.
⚠️ With the updated shipping policy, non-compliant sellers enrolled in the Multi Destination Shipping Program will not only be ineligible to receive discounts on the violating units, their shipments may also get rejected, or worse, they may lose their ability to ship more units.
Amazon requires sellers found in violation of its Shipment Policy to send a plan of action stating that future shipping plans will be compliant.
If you need to update any information or remove an item from your approved shipping plan, be sure to follow these steps and act in accordance to Amazon’s change shipment policy to do it properly.
In addition, read “Amazon Closing Shipping Loopholes May Wreak Chaos for Some Sellers” to learn more about the retail giant’s inbound shipping policies.
Related: Pros and Cons of Amazon Inventory Placement Service
Updated: Are You Prepared for the Updated Amazon Returns and Refunds Policy?
04/06/2023 (Originally posted 6/28/2022)
Update 04/06/2023: Amazon now offers sellers who use FBA Donations access to donation certificates.
Generated by Amazon yearly, this special document can be accessed conveniently on the Donations page within Seller Central. It includes details regarding the quantity and description of the inventory you generously donated through the program over the last 12 months. This means you can use the certificate to identify charitable contributions that are potentially tax deductible, which could help lower your taxes.
Be sure to seek advice from your trusted accountant to learn more about the specific tax incentives you might be eligible for. You’d be surprised to find out how sometimes it may be more beneficial to simply donate your unsold inventory rather than destroying or liquidating it.
For example, depending on your unsold inventory’s fair market value on the day it was donated, the tax deductible amount may be greater than its net recovery value if liquidated through FBA. Amazon’s Liquidations program currently pays up to 10% of your product’s average selling price and this results in additional revenue, which means you pay more in taxes. If you do the math, you might find that the tax deductions you get back from your donation might mean more money in your pocket in the long run that liquidation would bring you.
If you have donated goods through FBA Donations in 2022, you may now claim your donation certificate in Seller Central. If you want to learn more about the program, visit this FAQ page.
Seller-Fulfilled Orders Must Now Conform to Amazon’s Returns and Refunds Policy.
We all know that returns for seller-fulfilled orders work quite differently from those sold and shipped by Amazon.
So, to streamline and make the returns experience consistent for all customers, Amazon is updating their Returns and Refunds Policy for third-party sellers who manage their own shipments.
Starting August 1, 2022, seller-fulfilled orders (shipped from and sold by seller), including those not eligible for Prime, will be subject to the same returns policies as Amazon.com.
That means Amazon will automatically approve return requests and issue refunds that fall within their policy. ⚖️ On the one hand, it takes some of the autonomy away from sellers. On the other though, it reduces the work required to process their returns and helps to keep Return Dissatisfaction Rate (RDR) low.
What Has Changed?
Prior to this update, seller-fulfilled merchants could create and implement their own returns policies as long as they are in line with Amazon’s current guidelines:
- Must accept returns within the 30-day return window.
- Seller-fulfilled returns must be returned to the address listed in the merchant’s seller account, not to an Amazon warehouse. That also means merchants might have to shoulder the cost of sending an item back to their address, unless they offer “Returnless Refunds,” which allows them to refund a customer without getting the product back if it costs more to ship than its actual worth, e.g., low-cost items. See Refund Options for more information.
- Must refund the customer within two days of receiving the returned item or offer a replacement.
Having your own returns policy also gives you the opportunity to communicate with the customer to try to fix the issue before resorting to the last step – a refund. However, the Amazon returns and refunds policy update will take that away from you in exchange for what the retail giant believes would be a more streamlined customer-centric buying and returns experience. 🤔
Studies have shown that excellent returns policies can influence new sales, increase customer retention, build brand loyalty, and help retailers gain competitive advantage.
It’s not uncommon for some online shoppers to make multiple purchases to ensure they get the item they want in the correct size–for example, buying 2-3 different sizes of the same t-shirt to ensure proper fit of one while returning the other items that didn’t fit.
Therefore, for these customers, it makes more sense to buy from a retailer like Amazon that can make it easier for them to return items that didn’t work out and receive refunds (partial or full) at no extra cost.
Unfortunately, some third-party sellers with return and refund policies are more restrictive than Amazon, which could be why the eComm giant thought the update was needed. However, rather than Amazon enforcing their policies only on those who violated them, they opted to hit all sellers with this blanket change.
What Happens If You Don’t Conform?
Any returns policies that don’t adhere to Amazon’s will be removed from your Returns Information & Policies page.
You need to be ready to behave accordingly – for example, using good packaging to ensure products don’t arrive in damaged condition, leading to a return request. Otherwise, you may receive penalties that can affect your performance metrics in many different ways.
If you keep getting return, refund, or replacement requests, it increases your risk for A-to-Z guarantee claims and negative feedback, which could impact your Order Defect Rate (ODR). A high ODR (more than 1%) may result in a restriction of your selling privileges, including suspension of seller-fulfilled offers. ☠️
To stay in Amazon’s good graces, you may need to look at your current processes and systems and make sure your staff, including 3PLs and returns service providers, are up to date in preparation for this change, because August 1st is right around the corner. 💪
Related: 6 Causes of Amazon Unfulfillable Inventory and How To Fix Them
Updated: Amazon UK Workers to Launch Historic Strike in Early 2023
03/31/2023 (Originally posted 12/16/2022)
Update 03/31/2023: Unionized Amazon workers in Coventry, England continue to fight for better pay with 6 more protest dates, bringing the total days at the UK site to 14:
- April 16th to 18th
- April 21st to 23rd
Union representative, GMB, also reveals it has started ballots for industrial action at five different fulfillment centers in the Midlands.
- Mansfield in Nottinghamshire
- Coalville in Leicestershire
- Kegworth in Leicestershire
- Rugeley in Staffordshire
- Rugby in Warwickshire
Members are asked to vote whether to go on strike over Amazon’s meager 50 pence pay increase.
As previously reported, the labor group is pushing for a £10.5 to £15/hour pay hike to ensure workers have a living wage amid rising prices.
Amazon has so far refused to give in to the union’s demand, but the additional 6 protest dates, ballots at five FCs, and over £2 million revenue loss from these multi-day strikes may force the company to “get serious and talk pay with GMB now,” said GMB Senior Organizer, Amanda Gearing.
Update 02/17/2023: 🚨 More than 350 unionized workers at an Amazon warehouse in Coventry have announced they will go on strike for seven more days.
- February 28th
- March 2nd
- March 13th to 17th
Represented by GMB Union, the workers are fighting for a pay increase from £10.50 to £15 per hour to help them keep up with the rising cost of living.
The protest continues as Amazon refused to have any negotiations with GMB, arguing that they had already raised worker pay by 29% and benefits since 2018.
An Amazon rep said the unionized workers represented less than 1% of the company’s workforce in the UK, a tiny fraction that is less likely to cause any significant service disruption.
Normal operations will also continue at Coventry and across the UK, the Amazon rep added.
Update 01/04/2023: 📢 Amazon associates in a Coventry warehouse are set to strike on January 25, the GMB union revealed on Wednesday. The union also said that further dates will be announced “in the coming weeks.”
Read on to learn how to prepare your business for potential delays in delivery across Central England.
🇬🇧 A first in Amazon UK, hundreds of workers at a facility in Coventry, England have voted to strike over the eComm giant’s 50 pence an hour pay offer, the General, Municipal, Boilermakers, and Allied Trade (GMB) union said on December 16th.
The mass walkout is expected to happen in January 2023. 🪧
“Amazon workers in Coventry have made history – they will be the first ever in the UK to take part in a formal strike,” GMB Senior Organiser Amanda Gearing said in a statement.
“They should be applauded for their grit and determination – fighting for what’s right in the face of an appallingly hostile environment. The fact that they are being forced to go on strike to win a decent rate of pay from one of the world’s most valuable companies should be a badge of shame for Amazon,” Gearing added.
When asked to comment on the issue, an Amazon spokesperson said that the company:
“We appreciate the great work our teams do throughout the year, and we’re proud to offer competitive pay which starts at a minimum of between £10.50 and £11.45 per hour, depending on location. This represents a 29% increase in the minimum hourly wage paid to Amazon employees since 2018.”
⚠️ However, inflation in the UK is at an all-time high as food and energy prices soar. This means inflation is eating into pay increases, forcing workers to demand more money.
The planned industrial action is the latest in a series of union protests happening in the UK since Q2. In August, 115,000 Royal Mail workers went on a strike in a dispute over pay, disrupting deliveries and collections across the country.
Just last month, some warehouse workers joined the “Make Amazon Pay” campaign, a coordinated protest led by an international assembly of trade unions who demand higher pay, better working conditions, and lower carbon footprint.
Major rail and transport strikes in December have also brought UK’s transport services to a standstill, causing reduced foot traffic in retail stores.
Make Contingency Plans to Mitigate Delays
Seeing that these labor actions will likely hit supply chain and logistics sectors, it would be best to create contingency plans to reduce shipping delays that they may cause and to avoid stockouts.
For instance, recent strikes at Felixstowe, UK’s largest container port, reportedly threatened to put $4.7 billion in trade on hold. Many shippers had diverted their goods from Felixstowe to other ports to make sure they hit the store shelves in time for the holidays. As a result, the unrest had not caused “any real significant impact” on supply chains, according to Paul Davey, Head of Corporate Affairs at Hutchison Ports (UK).
While there is no current port strike danger in UK, there is in the US, so it’s still important to be prepared.
Since May 2022, negotiations have been ongoing between The International Longshore & Warehouse Union (a group that represents over 22,000 West Coast port workers) and Pacific Maritime Association (port terminals and ocean carriers). If unsuccessful, serious disruptions to port operations in the West Coast may occur, prompting some shippers to reroute their US-bound containers from the west to the east.
So, if you’re shipping goods to the US, your best move would be to work with your 3PLs and freight forwarders to figure out alternative arrangements that can be made for any container that may get stuck at sea due to industrial action.
A good logistics company should be able to provide you with excellent supply chain visibility to see where all your inventory is located and keep you informed on any potential disruption danger, so you can quickly respond to any supply chain blockages. From that vantage point, decide whether to reroute some shipments through other ports or to use alternative transport (e.g., send buffer stock from your supplier or other warehouses into Amazon by air or express shipping).
Until these UK labor groups get the pay that they deserve, expect to see more protests in 2023. Luckily, you can reduce the impact of disruptions by making contingency plans with your logistics partners.
Related: How to Ship to Amazon FBA (And Speed Up Check-In Times), Amazon Inventory Risks + 5 Tips to Mitigate Them, Bad Actors Book Multiple Inbound Amazon Delivery Dates to Create Scarcity
Amazon Highlights ‘Frequently Returned’ Products You Should Think Twice Before Buying
Amazon has released a new badge that highlights frequently returned items in its marketplace.
It appears right below the bullet point section of the product detail page and encourages potential buyers to read more about the featured item before purchasing. This feature has not been rolled out across the platform and seems to be in beta as some items that other publications previously reported to be showing this badge, no longer are.
The badge also doesn’t explicitly tell why a particular listing has been flagged, so that’s for customers to find out.
Checking out reviews, for instance, may provide valuable insights into the product’s quality, thereby allowing people to make a more informed buying decision. Likely, this could help minimize customer dissatisfaction, unnecessary returns, and waste.
As useful as it sounds, some sellers in the comment section of The Verge’s post don’t see how the new badge will help solve other pressing problems, such as fake reviews, return scams, and listing thefts (hijackers).
Perhaps, the biggest disaster in this new development: this new badge may also pave the way for a whole new problem for sellers. ⚠️ Similar to fake reviews, this feature may lead to a wave of fake returns campaigns led by black hat sellers attempting to flag products with frequent returns badges.
If Amazon really wanted to help customers make smarter decisions, their search algorithm should account for listings with frequent returns and move them down the rankings to make them less easily searchable.
Measures should also continue to be developed by Amazon to better safeguard against fake reviews, hijackings, and return scams.
Instead, honest customers are burdened with more responsibility, requiring them to painstakingly sift through hundreds of reviews on and off Amazon just to avoid disappointing themselves with bad orders because they couldn’t tell genuine and fake ratings or listings apart.
For sellers, they may have to update their product pages with more accurate information. They may also have to trademark their original products and regularly check their listings for signs of hijacking to avoid counterfeit issues that could then lead to frequent returns.
If selling premium items, it would be wise to establish new or improve existing oversight mechanisms like offering signature confirmation to minimize return scams.
If using Fulfilled by Merchant (FBM), investing in high-quality packaging materials and boxing up orders properly would be crucial to ensure they arrive in good condition.
Even with the “frequently returned item” feature, protecting your brand and keeping your customers happy will still require a lot of work. It’s a band-aid solution that may stop the bleeding, but it won’t solve some of these underlying problems.
But, to get to the heart of why this is likely happening, with less returns, Amazon will be able to cut return costs by helping customers to avoid purchasing sub par products.
Related: Amazon Braces for Slowing eCommerce Growth in 2023
In an email to The Information, Amazon spokesperson Betsy Harden said they’re applying the same methodology they use to calculate return rates to identify which listings to flag and whether they’re sold by a third-party seller or an Amazon brand.
Makes you wonder, then, whether this returns badge will be dedicated to third-party sellers only or if sold by Amazon products will take the same heat.
The badge is currently seen on some select products sold in the US, but expect a broader rollout in the coming months.
Related: Claim Reimbursement for Losses Caused by Amazon CSBA Reps, Amazon Overhauls its A-to-Z Guarantee Policies to Streamline Damages Claims, Updates to AMZ Return and Refund Policy
Amazon Braces for Slowing eComm Growth in 2023
03/10/2023 (Originaly posted 01/06/2023)
Update 03/10/2023: 🪓 Cost cutting remains high on Amazon’s priority list after suffering a $2.7 billion net loss in 2022. Growth in certain areas such as the company’s cloud computing business is also expected to continue to decline in 2023, according to Amazon Chief Financial Officer Brian Olsavsky.
To curtail expenses as profit weakens, Amazon is:
- Permanently closing 8 of its 29 self-checkout Amazon Go stores in Seattle, New York, and San Francisco.
- Delaying the expansion of Amazon Fresh to focus on “experimenting with selection, checkout formats, assortment, and price points” before doubling down on physical stores.
- Pausing construction of its second corporate headquarters in Virginia, also known as Amazon HQ2. The move coincides with the company’s recent job cuts impacting 18,000 employees.
In addition, Amazon also reportedly continues to close warehouses this year.
According to MWPVL, Amazon has so far shut down a total of 99 logistics sites in 30 US states, up 29 from last year’s report.
Many of these facilities were old buildings that cost a fortune to maintain and were located outside of bigger cities, per CNBC. With Amazon expanding its same-day delivery network, the site closures may be an attempt to reallocate resources to those new same-day sites while reducing outbound transportation costs.
🚨 As US consumers spend less on products due to inflation, Amazon is left to deal with lots of unused warehouse space, which contributed to the company’s $3.8 billion profit loss in Q1 and another $2 billion in Q2 2022.
New data from MWPVL International suggests that it may take the online retail giant three (3) years to recover from overbuilding its fulfillment network during the pandemic. However, Amazon rep, Lisa Levandowski, reportedly called MWPVL’s estimations “pure fiction.”
Amazon CEO Andy Jassy himself did mention – albeit did not exactly say how long – in his Q1 2022 earnings call that “improving productivity and cost efficiencies” throughout the logistics side of things “may take some time” as the company tries to “work through ongoing inflationary and supply chain pressures.”
As a highlight to the concern, within the first 72 hours of the new year, Tech Crunch reported that Amazon had secured an $8B loan to help weather some of the uncertainty.
In 2022, the eComm giant has taken a few steps geared towards financial recovery amid a slowing online growth and a looming recession, including raising their FBA fees for 2023.
Recent moves that Amazon has been making to improve profitability include:
Subleasing or shutting down several old warehouses across the US.
After nearly doubling its fulfillment network during the pandemic, Amazon had to majorly pullback last year to lower operational costs and capital expenditures. As of September 2022, the company has shut down or subleased more than 20 logistics centers and postponed or canceled the openings of 50 more sites. And in doing so, Amazon saved approximately $4 billion in 2022, according to MWPVL Founder & President, Marc Wulfraat.
Increasing warehouse automation with robots to improve productivity and efficiency.
Amazon has recently deployed multiple robotic arm systems, Robin, Cardinal and Sparrow, in some of its facilities to streamline its fulfillment process – a sign that the company could also be ramping up warehouse automation to reduce its workforce amid increasing unionization activity, which could drive up annual operating expenses by hundreds of millions of dollars.
Rolling out Prime Air, Amazon’s drone delivery service
Rolling out Prime Air, Amazon’s drone delivery service, which could be “faster, cheaper, and greener” than traditional shipping modes, i.e., manned, gasoline vehicles versus unmanned, fully electric cargo aircrafts. Moreover, according to UVL Robotics, drones can efficiently take hundreds of quick trips per day (within a 6-mile radius) and transfer packages from days to hours. Amazon’s drone service in particular is expected to cut down last-mile shipping times from 2 days to under an hour. With increased delivery efficiency, it could potentially reduce Amazon’s outbound transportation expense, and perhaps that would also translate to lower fulfillment fees in the future. 🤞🏼
Introducing Buy with Prime (BWP) to non-Amazon sellers to possibly increase fulfillment revenue.
What better way to fill up unused warehouse space than to offer it to hundreds of thousands of non-Amazon merchants? Instead of building out their own logistics infrastructure in an attempt to offer free 1- to 2-day shipping and returns, DTC businesses can now pay to use Amazon’s fulfillment without having to sell on the platform directly.
Market intel firm, PipeCandy, estimates that there are around 120,000 Direct-to-Consumer (DTC) brands in the US. The growing DTC market represents an important growth area for Amazon, which if they’re able to capture, could help them to stay ahead of Shopify, Walmart, and other rivals.
Presently, 17% of 21,000 US DTC merchants that PipeCandy have surveyed are using Amazon Pay (which is conditional to BWP) as a payment channel alternative. Majority of these stores are in the $5-$50 million gross merchandise volume range, which only represents 8% of the overall B2C goods aggregate sold in the US.
Therefore, it’s still too early to say whether or not BWP is going to make a significant dent in Shopify’s checkout processing revenue, which is still currently the preferred checkout provider of DTC stores.
Rising MCF fees is another factor that could stop merchants from using BWP, which makes increased warehouse and logistics efficiency through automation all the more important for Amazon to remain competitive.
Related: Storage Limit Manager: Would You Pay for Extra Storage Space?, Amazon Enters the 3PL Space with Amazon Warehousing & Distribution
Selling excess cargo jet space
Selling excess cargo jet space is yet another attempt by Amazon to offset the cost of overexpansion they have accumulated throughout the pandemic. In a Bloomberg post, Amazon is reportedly looking to hire execs with experience in selling excess air freighter space.
This year, global demand for air cargo is expected to fall by 25% or $150 billion, so Amazon might be looking to increase profits during this softening period by offering their surplus cargo space to third-party shippers. Amazon might venture into importing perishable and seasonal goods into the US on return flights, according to the sources familiar with the matter. For example, shippers could use Amazon’s cargo space to transport flowers from South America for Valentine’s Day and seafood from Canada and New Zealand to the US.
All of these profit recovery and growth initiatives point to Amazon adjusting from accelerated pandemic-era expansion to declining online sales. But whether or not these efforts could lead to a slowing down of fee increases in the coming months is still up for debate, given the fact that current inflation numbers remain above 8%, with no signs of letting up.
Therefore, it’s possible Amazon might still introduce new fees this year to account for any significant increase in prices. And unless the tech giant speeds up the wider rollout of their robots and drones, among other cost-efficient logistics systems, FBA fees will likely remain high, or become even higher, in the coming years.
Boost Sales with These New Amazon Seller Tools
With FBA getting more expensive, finding new ways to increase sales is even more crucial to your success on Amazon.
💰 That’s why we have put together this list of new Amazon tools and features that you can use to generate more revenue for your business.
Case Pack Recommendations
Use this tool to identify which products to bundle as case packs or add offers on your existing case packs.
A case pack contains multiple single units of the same product for individual sale, allowing you to quickly move your inventory. It also simplifies bulk purchases and offers customers savings with case discounts and consolidated delivery.
This packing configuration is ideal for high-volume sellers. Amazon offers two types of recommendations based on your product catalog and sales:
- Create new case packs. This section features items you currently sell as single units and are not yet listed in Amazon as case packs by you or other sellers. Amazon looks at the number of multi-unit orders of your single products to see if there is demand for any of these items to be sold as a case pack. If a product is eligible, you will then be provided with a suggested size for a case pack based on the number of units that customers have frequently bought from you.
When adding a new case pack, Amazon recommends creating a consolidated listing that shows both your product as a single unit and as a case pack. This makes it easier for customers to compare and buy goods in different quantities and packing configurations.
- Add offers on existing case packs. This section shows case packs that are already listed in Amazon by other brand-registered sellers. Products in case packs are ranked based on sales in the last 12 months. Amazon provides a suggested price for each case pack on this list. If you wish to match Amazon’s suggested price for an existing case pack, you may add an offer on that listing by clicking the “Add an Offer” button and entering your price and quantity details into the Offer Page.
To get started, go to Case Pack Recommendations.
Product authenticity is important to customers. When people find out they purchased a fake product from a brand, most would not trust and buy from that brand again according to DigitMarc.
In a marketplace flooded with knockoffs, demonstrating product authenticity through Transparency Badge are be critical to protecting your business from fake sellers, especially if you have a trademark on your product or selling items highly susceptible to counterfeiting like electronic gadgets.
You must be registered with Amazon Brand Registry and enrolled in Transparency to be able to receive a badge for your eligible products.
Participating FBA products are given a unique “Transparency” code that cannot be duplicated by counterfeiters. However, that means you will have to take extra steps to carry out this process. Before sending your inventory into FBA, you will have to apply the individual Transparency labels to every unit yourself or hire someone else to do it.
A listing with a Transparency Badge indicates that the featured product has been verified authentic by Amazon and customers themselves.
Customers who have purchased the product can use an app to scan the code to verify its authenticity. This offers another benefit to the Transparency program: the ability to shareproduct information, videos and promotions that your customers can view upon scanning the code.
If customers face any authenticity issues with a product, they can reach out to Amazon’s Transparency team to file a counterfeit complaint.
Visit the Transparency page to get started.
New Seller Incentives
This program entices new brands to sell on Amazon or existing brands to expand to other country sites by offering them:
- 5% new brand bonus on their first £800,000 in branded sales
- £160 off fulfilment fees using Amazon Global Logistics for out-of-country sellers
- 120 days free storage plus 180 days free removals for 100 units with FBA
- £40 credit for Sponsored Products CPC ads
- £160 in Vine credits for free access to trusted reviewers
According to Amazon, you can enjoy more than £40,000 in potential benefits, which you can use to promote your products and scale your business. However, these benefits are only valid for 90 days, reduced from one full year, so you’ll have to act quickly.
Go to New Seller Incentives to check your eligibility.
Related: Attack of the Fee Stack White Paper, Prepare for these 6 Major Changes to 2023 Amazon UK and EU FBA Fees, 4 New Amazon Seller Tools to Accelerate Business Growth
Amazon Fees Changes for UK & EU Multi-Channel Fulfillment Orders
Amazon’s price hike spree continues, thanks to rising operating costs! 😫
Starting April 7, 2023, Amazon will introduce major fee updates to multi-channel fulfillment (MCF) orders.
Depending on shipping destination (local or cross border), delivery option (standard or expedited) and size tier, you may see a slight decrease or significant increase in your MCF fees. In some cases, you may see no fee change at all.
For instance, if you review the policy you’ll see that Amazon dropped the rate for shipping an envelop package within the UK by an average of £0.04, while some fees remain unchanged. Other parcel size tiers experience an increase.
⚠️ However, things can get substantially expensive for you if fulfilling cross-border shipments due to a massive fee hike that will take effect on April 7th.
Take standard shipping for example. From smallest to largest, the expected fee increase ranges between £0.77 (80g small envelope) and £7.32 (31.5kg large oversize) per single unit order.
Standard Shipping: Cross-Border Shipments (1 Unit Per Order)
|Size Tier||Fees Before April 7, 2023||Fees On and After April 7, 2023|
|Small envelope to 80g||£4.96||£5.73|
|Standard envelope to 210g||£5.12||£5.91|
|Large envelope to 960g||£5.51||£6.34|
|Standard parcel to 1.4kg||£8.37||£10.43|
|Standard parcel to 6.9kg||£13.07||£17.32|
|Standard parcel to 11.9kg||£15.41||£21.24|
|Small oversize to 1.26kg||£12.17||£14.68|
|Standard oversize to 2.7kg||£14.93||£18.40|
|Standard oversize to 29.76kg||£21.09||£26.65|
|Large oversize to 31.5kg||£30.95||£38.27|
Moreover, fulfilling expedited cross-border shipments this year will leave you with even slimmer profit margins.
On average, Amazon has raised the MCF fees for envelopes to a little over £1, standard parcels between £1 to £5, and standard oversize £6 to £9, and roughly £10 for large oversize.
Expedited Shipping: Cross-Border Shipments (1 Unit Per Order)
|Size Tier||Fees Before April 7, 2023||Fees On and After April 7, 2023|
|Small envelope to 80g||£6.06||£7.42|
|Standard envelope to 210g||£6.22||£7.71|
|Large envelope to 960g||£6.61||£8.11|
|Standard parcel to 1.4kg||£9.47||£10.73|
|Standard parcel to 6.9kg||£13.77||£17.37|
|Standard parcel to 11.9kg||£15.47||£21.29|
|Small oversize to 1.26kg||£15.48||£21.29|
|Standard oversize to 2.7kg||£18.23||£25.00|
|Standard oversize to 29.76kg||£24.40||£33.26|
|Large oversize to 31.5kg||£34.26||£44.59|
Note: These fees already include the 4.3% fuel and inflation surcharge.
Reduce MCF Fees with Multi-Unit Discounts
Given how steep the fee increases are, be sure to take advantage of Amazon’s multi-unit discounts to get lower fulfillment rates.
Check out the table of fees below to see the difference between local shipping fees for one-unit and multi-unit orders.
With multi-unit discounts, you could save up to 40% on fees! Try to increase your multi-unit sales by:
- Offering coupons for minimum purchase amounts. For example, get 15% off with a min purchase of 3 items or buy 2 get the third one at 25% off.
- Creating add-ons to your products, e.g., if selling women’s swimwear, provide customers with an option to add sun hats, flip-flops, aqua shoes, and more.
It is not clear to us at this time whether a virtual bundle will be counted as a multi-unit order but, given what is known about how Amazon counts SKUs in those orders, this seems likely. If that is the case, promoting virtual bundles could be a good way to capitalize on these reduced shipping rates. Testing this theory by reviewing the shipping charges tied to these orders would be smart.
Related: Master Carton Calculator to Optimize Packaging and Reduce Shipping Costs
Aside from multi-unit discounts, Amazon also made significant improvements on the following areas to help you grow your business.
- If you’re selling on the UK marketplace, you may now opt to ship your MCF orders in blank packaging at no extra cost. This is helpful when you are sending items from other sales channels such as your own website, and don’t want Amazon’s logo featured on your deliveries.
- Providing you with ISO-certified IT security systems so you can safely and securely conduct business on Amazon. This means Amazon’s systems meet a global standard approved by the International Organization for Standardization.
- Maintaining their 98% on-time delivery rate to consistently meet Amazon customer delivery expectations.
Go to 2023 UK MCF Fee Updates for more information.
Related: Attack of the Fee Stack White Paper, Prepare for these 6 Major Changes to 2023 Amazon UK and EU FBA Fees, How to Increase Profit Margins for Amazon Sellers
Foreign Amazon Sellers Are Closing the Competitive Gap with ChatGPT
For cross-border sellers, overcoming language barriers can be a challenge. Inaccurate translations, for example, may prevent them from being able to clearly get their messaging across or can create consumer distrust, leading to lost opportunities that impact conversion and sales.
However, with the recent arrival of modern communication technologies like chatbots and other AI tools, that could all be changing. One such AI application, which has been making the headlines recently, is ChatGPT or Chat Generative Pre-Trained Transformer. 🤖
What is ChatGPT?
ChatGPT is an AI-driven chatbot that uses Natural Language Processing (NLP) to recognize patterns in datasets harvested from the internet and use that information to generate meaningful human-like responses. And because it has the ability to comprehend human language, it can also provide users with coherent and grammatically correct content.
It has reportedly aided people in various tasks, such as composing poems, writing blog posts, crafting love letters, and even something as bizarre as coming up with instructions for removing a peanut butter sandwich from a VCR, King James Bible style.
How ChatGPT Can Influence Competition on Amazon
Amazon sellers are using ChatGPT to create titles, bullet points, and product descriptions for their listings. Foreign language sellers expanding into the US market in particular may find this tool useful for improving the quality and efficiency of their content marketing efforts.
With fewer barriers to entry, however, it is going to make competition much more intense on Amazon. Cross-border sellers will start publishing better listing copy, and customers will not be able to distinguish as easily that they are not from the US.
For example, some buyers can easily tell when a seller is ESL (English as a Second Language). But ChatGPT changes all of that. Chinese sellers, for instance, are going to fare much better against competition with this strategy.
They can simply go to ChatGPT and type in a set of instructions (in English or their native language) for the tool to generate a description or sales copy for a particular product. It could be something as simple as “Please write 5 bullet points for an Amazon listing selling an air purifier.”
Here’s what ChatGPT came up with:
As you can see, the generated response is decent enough to describe what the product does. It offers a good start, but it doesn’t really make you stand out with those generic details.
To reel in customers, it may be necessary to tweak the prompt in a way that will allow the tool to write a more detailed product description. Consider plugging in relevant keywords or technical specifications, for example. Even then, you may still need to add a touch of artistic flair to your copy.
This may sound like a lot of work, but ChatGPT is only supposed to make getting started with writing English copy easier, not to replace human creativity.
It’s also crucial to do some fact-checking to avoid disappointing buyers with misleading or inaccurate descriptions. Unfortunately, AI tools like ChatGPT can’t detect malicious intent or accurately distinguish falsehoods from facts so they don’t always provide truthful answers.
This is where US sellers can have some advantage as they are more familiar with the nuances of the English language and know the local market better.
Subtleties like colloquialisms and tones of voice unique to local customers typically get lost in translation. Therefore, foreign sellers may not be completely aware of them or at least know how to properly incorporate them into the text. If you’re a local seller, leverage those cultural insights to create a more compelling copy.
Related: FBA Sellers Can Use ChatGPT to Write Amazon Listings – But It Might Be Unethical, According to ChatGPT
ChatGPT could be useful at overcoming language barriers in cross-border selling. Foreign sellers can utilize it to quickly source ideas, get started with writing copy, or proofread and improve their existing Amazon listings to effectively communicate with US consumers.
However, the AI tool also has a few drawbacks. It may not accurately depict your product’s unique selling points, unless you spend a lot of time tinkering with the AI so that it can meet your specific requirements. Those who don’t bother modifying the generated responses even a little are less likely to stand out and thrive in a saturated market.
Suppose all air purifier brands start using the same prompt to generate bullet points for Amazon, they may end up having the same copy for those listings. After all, ChatGPT uses existing words and phrases from the internet to generate responses to user input.
So, there is a likelihood of having a competitor publish a listing quite similar to yours. The message is clear: you may have well-written product titles, bullet points, and descriptions, but don’t rest on your laurels.
With its ability to write and proofread English copy like a human, ChatGPT is rapidly leveling the playing field for foreign sellers. You need to step up your Amazon game right now to stay ahead of the curve.
Take advantage of Amazon’s Listing Quality Dashboard to find areas in your listings that need improvement. Keep your copy relevant and discoverable with updated keywords and genuine customer reviews. Adding a little pizzazz (e.g., humor or visually compelling images) to the whole thing can do wonders, too! 😉
Related: 5 Easy Ways Amazon Sellers Can Use ChatGPT to Increase Profits, Marketing on Amazon
Updated: Bid for a Higher Inventory Limit with FBA Capacity Manager
Update 03/01/2023: 📢 FBA Capacity Manager is now live!
Amazon has replaced weekly restock limits with a single, monthly storage cap. Sellers who could use some extra space may go to Capacity Manager to place a bid. ⚠️ However, bidding for a higher inventory limit comes with risks that you should be aware of so you can avoid them.
Lucky for you we’ve updated our “Attack of the Fee Stack” white paper to include an in-depth explanation and examples of Amazon’s storage bidding process, as well as a breakdown of the other 2023 fees and how they work, their impacts, and tips to reduce or eliminate them. 💪
Amazon might have just found another way to monetize its excess warehouse space – sell it to the highest bidder!
Dubbed FBA Capacity Manager, this new capacity management system allows sellers dealing with storage volume constraints and restock limits to bid for additional space.
We went from Amazon implementing inventory limits to ease warehouse congestion during the pandemic to auctioning off storage space to improve FBA revenue amid a looming recession. 🤔 Not only are sellers still getting saddled with capacity limits, they’re also now being pit against each other via storage wars.
This auction-based system is set to take effect March 1st, 2023.
The idea isn’t a new one. Amazon released something called the Storage Limit Manager (SLM) program in February 2022 to help sellers with IPI storage volume restraints. The program was structured in much the same way this FBA Capacity Manager is now laid out.
Convincing Sellers to Adopt Capacity Manager
Amazon recently made a few inventory changes to be able to simplify capacity management for sellers, and at the same time, to increase early and rapid adoption of Capacity Manager.
Under the new system, Amazon will:
- Replace weekly restock limits and quarterly storage volume limits with a single monthly capacity limit for each storage type, making capacity monitoring easier. This monthly limit will be set based on several factors, such as IPI score, sales performance, forecasts for your ASINs, shipment lead time, FBA capacity, and marketing plans (e.g., lightning deals). Updates are announced every third week of the month and can be viewed via the Capacity Monitor Dashboard inside Seller Central.
- Provide you with estimated capacity limits for the next 2-3 months so you can plan in advance, giving you greater predictability and control over your inventory.
- Provide capacity limits in volume (cubic feet) versus units to give a more accurate representation of your Amazon warehouse usage. This means that you will now have to monitor your capacity in cubic feet rather than units.
- Let you request for a higher capacity limit. If you need extra storage for the next selling period, you can go to Capacity Manager to place a bid, aka reservation fee, for your desired capacity limit increase (up to 20% of your initial limit or 2,000 cubic feet, whichever is greater). While this will cost you money, you can offset some or 100% of your reservation fee with performance credits. You will earn $0.15 per dollar of sales generated using the additional inventory and use that to lower your fees.
Here’s how performance credit works according to Amazon:
Why Bidding for a Higher Capacity May Not be a Good Idea
Using Capacity Manager may not be for you if:
- You already have a lot of unsold products sitting in FBA. Amazon will most likely grant capacity increases to sellers whose goal is to make more room for their top sellers than slow sellers, which makes sense because that’s how sellers will be able to generate more sales for Amazon. In fact, Dharmesh Mehta, Vice President, Amazon Worldwide Selling Partner Services, said it himself: “Our goal is to provide sellers with more control over how much space they can have while limiting unproductive use.”
- You have long lead times. Capacity limits may change monthly so it may not be wise to ship your additional inventory directly from China to Amazon as that process will take a few weeks, depending on your shipping method. By the time it arrives, the extra storage might no longer be available. Either use express air shipping or store buffer stock in a 3PL so that you can immediately transfer additional units from there to FBA whenever necessary.
- You don’t have sufficient funds to bid for extra capacity. Amazon grants requests starting with the highest reservation fee. If you urgently need that additional storage space, you may need to allocate a substantial amount of money and place higher bids to increase your chances of getting approved from weeks to within a few days. Note that Amazon evaluates its FBA capacity every 3 to 4 days and approves pending requests when space is available.
- You don’t have the capability to sell through your additional inventory ASAP. Not only will you end up paying the remaining balance of your reservation fee, you might also exceed your capacity limit for the following month with those unsold products and therefore, also pay overage fees.
If utilized productively, the additional storage may help you to increase sales, which in turn, may also improve your IPI score. Sales performance and IPI score are two of the most crucial metrics that Amazon uses to determine your inventory limits. If increased significantly, you may not need to bid again next month for additional capacity.
That’s the best-case scenario.
⚠️ The worst-case?
You could lose a lot of money to fees and receive a lower IPI score if you’re unable to use the additional storage efficiently. You may also be charged overage fees if your on-hand FBA inventory ends up exceeding your capacity limit for a specific period.
💡 Before using Capacity Manager, consider reviewing the difference between the cost to bid for a storage increase and the cost of shipping smaller orders more frequently. Splitting your FTL/LTL shipments into smaller orders may help you to avoid maxing out your inventory limit quickly so you won’t have to pay for more warehouse space at FBA.
Unless Amazon slashes your limits without prior warning or there’s a sudden surge in demand for your product, you might not need additional capacity regularly, especially during off-peak. So, don’t count out other fulfillment options just yet.
To cover all your bases, set aside some extra inventory in your warehouse or third party fulfillment center to provide a buffer for your business in case of unforeseen challenges.
Shopify Looking to Integrate with Amazon Buy With Prime
On Shopify’s Q4 2022 earnings call, President Harley Finkelstein revealed the company is currently in talks with Amazon about adding Buy With Prime (BWP) in Shopify-powered stores.
“We think any company that’s going to make their infrastructure available to merchants to sell more a great thing,” Finkelstein said during the earnings call.
“We’re going to talk to the Amazon now to make that work, but it has to be done in a way that we think is important for merchants to have a relationship with their end consumer,” Finkelstein added.
That’s great news for merchants and aggregators interested in using both Shopify and BWP, but not for those who don’t want to give up their customer data to Amazon. 🤔
BWP is a Fulfillment-as-a-Service (FaaS) program that allows merchants to offer 1 to 2-day shipping, free delivery, and free returns on their own websites outside of Amazon.com.
However, checkout is done via Amazon Pay, which requires a customer to create or log in to their Prime account to be able to complete a transaction. This process could allow Amazon to take a peek into the customer’s name, address, and possibly even contact details (for shipping purposes) that they could then use to launch remarketing and retargeting campaigns to that customer.
In September 2022, Shopify itself issued a warning to merchants about the potential security issues they could face when installing BWP. Moreover, taking the checkout process outside of Shopify is currently a violation of the platform’s Terms of Service.
But given Shopify’s recent complete turnaround on the issue, the warning may primarily have beenn due to its plans to launch its own FaaS program, Shopify Fulfillment Network (SFN). The service was first introduced in 2019, but has reportedly made little progress since.
Turning to Amazon to Overcome Challenges Ahead
The broader rollout of SFN unfortunately happened at a time when the company’s Q4 2022 shares fell nearly 7% and revenue growth slowed amid escalating Amazon rivalry, indicating a rough time ahead.
That might explain why Shopify is looking for a partnership with Amazon instead of competition, a business strategy called “Co-Opetition.” 🤔
Welcoming its rival into the fold might help the company reduce competitive intensity levels while expanding its customer reach with Prime, which currently has over 200 million members worldwide.
Same goes for Amazon, a collaboration presents an opportunity to tap into the rival’s customer base while keeping them at an arm’s length, as well as maintain its lead over Walmart.
The risk, however, is potentially greater for Shopify as it stands to loosen their grip on their merchants’ customer data. Additionally, BWP could eat into its profits. The Canadian eComm giant mostly generates revenue from transaction fees.
For that reason, analysts recommend not allowing Amazon to take over checkout. But it seems unlikely to happen given that Amazon Pay has always been conditional to BWP, unless both parties come up with a fair revenue sharing arrangement.
If no deal is taken, Shopify might have to find other companies that can take Amazon’s place in solving this challenge for them.
Shopify Tries to Stay in the Fight
Recent moves suggest that Shopify is not backing down in its fight for market share. It has teamed up with Flexport to expand its fulfillment capabilities globally and compete with Amazon Global Logistics.
The company also released new tools and features that will help merchants sell across channels, boost conversion, and run their stores more efficiently.
Meanwhile, Amazon continues to beef up Buy with Prime by making it available to US merchants that use BigCommerce. The Texas-based shopping site builder launched an app that allows sellers to easily enable BWP features on their stores with no coding required.
In sum, while integrating with BWP could temporarily hurt Shopify, the company also stands to gain some wins, such as the ability to offer faster delivery without doubling its fulfillment network, i.e., cut costs.
It all probably just comes down to how the two eComm giants will split the revenue from BWP transactions on Shopify stores. It will be interesting to see how it all shakes out.
Shopify Acquires Deliverr and Takes Aim at Amazon’s Buy with Prime
Update 02/10/2023: Shopify continues to battle Amazon for dominance as it expands its logistics and fulfillment network. 🚀
The Canadian eComm company recently:
- Teamed up with Flexport to offer end-to-end import solutions to sellers, from requesting shipping estimates (for ocean and domestic freight) to booking shipments to tracking inventory orders (from supplier to fulfillment center). Smaller sellers can also use the company’s growing fulfillment network to import “as little as one pallet or 30 units of inventory,” according to Shopify Logistics CEO Aaron Brown.
- Rolled out Shop Promise badge that allows sellers to communicate custom expected delivery dates to customers. Sellers can use the badge to feature the standard next-day and two-day delivery options or their own shipping dates as long as they deliver in five calendar days or less.
- Launched Shopify Magic, a new tool equipped with AI to help sellers generate product descriptions.
These latest moves are also likely done in response to Amazon announcing a nationwide roll out of Buy with Prime in January, which means increased competition for businesses that use Shopify.
Introducing these new logistics features will help Shopify merchants directly compete with Buy with Prime sellers.
“If we can level the playing field and give any merchant in the world before they’ve had their first sale all the benefits of a large retailer, we think that’s just giving pure magic to merchants,” Brown told Wall Street Journal.
As we know, Shopify and Amazon have been sparring in the ring for some time, but with Shopify’s recent acquisition of Deliverr, now the gloves are off. 🥊
Deliverr Acquisition Heats Up Competition Between Shopify and Amazon
Amazon has been going after Shopify’s customers and customer data for some time with their Multi-Channel Fulfillment (MCF) program. They even incentivized sellers last year into the program by handing out restock limit increases.
In case you missed it, we reported back in July 2021 that while Amazon was slashing restock limits for sellers due to capacity constraints, they were at the same time doubling restock limits for sellers who fulfilled their non-Amazon sales through Amazon.
You would think that they would implement more restrictions to further limit the influx of inventory into their already-strained warehouses, but they didn’t. 🤔
What could be the reason behind this?
Amazon counts your MCF sales toward your sales velocity, which has a direct impact on your restock limits, something that was hugely important to leverage last year. The added benefit to Amazon is that each time you fulfill orders from Shopify and other channels through MCF, they gain access to velocity and customer data from other platforms, which allows them to size up their competition and to remarket to their customer base. Amazon could also acquire more valuable insights into what products are trending on other marketplaces and use them as additional sources to develop and improve their own private label brands.
Boost fulfillment revenue
Amazon most likely took a profit hit and more importantly, lost access to significant amounts of competitor data when sellers opted out of their fulfillment network due to inventory restrictions. Perhaps, they tried to soften the blow by incentivizing MCF sellers with higher restock limits so that they would keep using Amazon to fulfill and thus increase storage and fulfillment revenue.
Fast forward to April 2022, Amazon announced that they were making moves to go after even non-Amazon sellers, offering to fulfill for Direct-to-Consumer (DTC) merchants via Buy with Prime.
Shots fired. And now, Shopify is shooting back. 🔥
Shopify’s acquisition of Deliverr and plans toward 1- and 2-day delivery hit at the heart of Amazon’s Buy with Prime program.
With Deliverr, “Shopify Fulfillment Network (SFN) will allow all merchants to better align the supply of their inventory with buyer demand as we remove complexity for merchants in one of the most challenging areas they face today: logistics. And soon, we will roll out another powerful feature of SFN called Shop Promise, which will offer reliable two- and next-day delivery options across the US,” said Shopify Logistics Group CEO, Aaron Brown, in a press statement.
💯 Smart move toward Shopify working at offering alternative fast and easy fulfillment for sellers and protecting their data!
I wouldn’t be surprised if they eventually went the way of Walmart and stopped allowing Amazon to fulfill Shopify orders, or, at the very least, pulled API connections to such services.
But will these be enough to loosen Amazon’s grip on the eComm industry? 🤔
As of October 2021, Amazon leads US eCommerce with 41% market share, followed by Shopify at 10.3%, Walmart at 6.6%, and eBay at 4.2%.
Looks like it’s going to be a steep climb for Shopify! But with the addition of Deliverr into their fulfillment network, hopefully it will be enough to spark a change and even the playing field a bit.
Amazon Warehouse Automation Increases Concerns over Job Loss and Product Selection Inaccuracy
Update 02/03/2023: Amazon is looking at ways to get rid of barcodes!
This might sound like science fiction, but according to Amazon, the Robotics team has developed a new camera system that can identify and match items against the ones listed in the inventory system without scanning barcodes. And it apparently does its job with 99% accuracy! 😲
In a Science blog post, the eComm giant explains that robotic arms are not good at locating and scanning barcodes, especially those that are attached to oddly-shaped items or hard-to-reach areas. Such challenges typically result in mispicks (customers receiving the wrong item) or shipping delays.
To increase warehouse efficiency, Amazon aims to automate identification of items in its fulfillment centers using Multimodal Identification (MMID). This process uses two or more “modalities of information” like text, sizes and shapes instead of barcodes.
For example, when a camera monitors an item moving along the conveyor, it takes the item’s dimensions and appearance to see if they match the reference images stored in Amazon’s database. Once identified correctly, a robotic arm will then pick it up to be put in the correct bin to continue with the next step.
Initially, the match rates ranged between 75% and 80%. The system faced challenges when it couldn’t distinguish the difference between two different colors of Echo Dot – blue or gray.
But after extensive experiments, the system can now put confidence scores to its ratings and flag potential mismatches. Currently, the match rates are at 99%, thanks in part to “Amazon’s inventory systems that know where each product is at each step of the fulfillment process,” thereby reducing the need for barcodes.
According to AI researchers, “the algorithm does not need to match an item against Amazon’s entire catalog of hundreds of millions of products — currently an impossible task. Each item comes from a particular tote, and each tote contains a few dozen products. So, the algorithm only has to match an item against the contents of a single tote.”
Fortunately, this process happens in the early stages of the fulfillment process so any mismatch or mispick can be easily corrected by “recycling the incorrect item back into the system to its correct location” without causing any disruption, says Robotics AI specialist, Doug Morrison.
🤖 Over the past few months, Amazon has been introducing a series of innovative robotic systems to streamline its fulfillment process and make work safer (and faster) for employees.
During the first half of 2022, the tech giant rolled out two stationary robotic arm systems, Robin and Cardinal, to automate roughly half of its fulfillment process, such as grabbing a boxed-up item from the conveyor and scanning the label so that it can be sorted and transported (via mobile robots) to the correct loading dock.
The other half? Retrieving products from shelves and putting them in boxes, a repetitive task typically performed by pickers, which now Amazon aims to automate with the launch of its newest robotic system, Sparrow. 🤔
Potential Impact of Sparrow on Workers
Introduced on November 10th, Sparrow is reportedly capable of recognizing and handling 65% of all pre-packaged goods sold on Amazon.com. That’s around 230 million out of 353 million products that the entire marketplace is supposedly carrying.
If the current iteration of Sparrow can already handle that much inventory, it’s only a matter of time before it can finally do the work of more than one million workers that Amazon employs to pick, stow, and pack 5 billion packages it delivers annually.
💯 Therefore, Amazon workers are right to be worried about:
The eComm giant describes Sparrow as a major technological advancement to support its workers.
However, employees fear that while it could help them meet their productivity quotas, it could also oust them from their job, especially at a time when Amazon is facing multiple issues in its warehouses.
- Excess capacity amid slowing ecommerce growth. After nearly doubling its warehouse footprint in the last two years, Amazon is scaling back its logistics operations by delaying, shutting down, or subleasing more than 60 logistics centers to cut costs.
- Increasing unionization activity. In a report posted by Yahoo in April 2022, Morgan Stanley analyst Brian Nowak speculated that Amazon might double down on its automation program in response to unionization activity. The analysis came after Amazon workers at a logistics facility in Staten Island voted to unionize, which could drive up labor costs (as opposed to robots that can’t demand higher wages or stage protests). The Wall Street analyst estimated that for every 1% of Amazon’s workforce that’s unionized, the company’s annual operating expenses would climb by $150 million.
“If unionization efforts did begin to spread rapidly, it may cause Amazon to increase the pace at which it invests and integrates robotics and labor alternatives into its warehousing efforts,” Nowak said.
- Dwindling pool of workers. Vox’s tech news arm, Recode, reported in June that Amazon is facing a looming labor crisis. Leaked internal documents from mid-2021 show the company could run out of workers in two years if it doesn’t do “a series of sweeping changes” in its “hiring practices, productivity quotas, attendance policies and unequal enforcement of rules,” some of the biggest factors that contribute to Amazon’s high turnover.
According to The Guardian, the eComm giant was losing 150% of its workers annually before the pandemic. By comparison, the retail sector’s annual average turnover in 2021 was 64.6% and in transportation, warehousing and utility, the turnover was only 49%. Amazon is reportedly looking at increasing wages and warehouse automation to delay the impending labor shortage by a few years.
Or, the company could continue business as usual and rely more on robotics to fulfill orders instead of hiring more employees, ultimately wiping out a significant number of their workforce.
“You can’t compete with the robots. They want you to compete with the robots. They want all the employees to compete with them. But who can win against a robot?” a former Amazon warehouse worker, Mohamed Mire Mohamed, told Business Insider.
In a patent filed by the retail giant in 2020, Amazon said that Sparrow’s suction-grip “hand” is designed to replace workers who “pick items from inventory, place items in totes, remove items from totes, place items into bins, remove items from bins, and place items into boxes for shipping.”
But Amazon has denied speculations that its new robotic arm will replace human workers, saying that it’s designed to work alongside its fulfillment line, not against them. 🤔
“Working with our employees, Sparrow will take on repetitive tasks, enabling our employees to focus their time and energy on other things, while also advancing safety. At the same time, Sparrow will help us drive efficiency by automating a critical part of our fulfillment process so we can continue to deliver for customers,” an Amazon spokesperson said in a press release.
Higher Productivity Quotas
A robot identifying and selecting 65% of Amazon inventory for packing is without doubt extremely efficient. However, this could also lead to managers raising performance quotas significantly, requiring employees to do repetitive tasks over long shifts.
For instance, pickers at one warehouse said they had seen their quota grow from 100 to 400 items per hour, increasing their risk for burnout and injury.
While robots can’t get sick like their human counterparts, that doesn’t mean they don’t have flaws.
Impact of Production Inaccuracy on Sellers
Sparrow may help speed up Amazon’s pick and pack process, but issues around production accuracy (e.g., mispicks) should also be addressed, as they could impact sellers and customers in terms of receiving the right order on time.
For example, Amazon’s existing robotic arm system is built with scanners to be able to read labels on products and sort them by ZIP code. If it fails to scan your product correctly, however, it could be placed into a cart where it doesn’t belong, and potentially get lost.
Or, if your product is buried under a pile of objects of varying sizes and shapes, the robot may also fail to detect and pick it up.
⚠️ Amazon themselves are not oblivious to these problems, even admitting to the fact that robots will make mistakes in production as seen during their experiments with Robin.
In this Amazon Science blog post, Bhavana Chandrashekhar, a software development manager at Amazon Robotics & AI, reveals “sometimes, the differences between one package and another are hard to see, even for humans. You might have a white envelope on another white envelope, and both are crinkled so you can’t tell where one begins and the other ends,”
To increase Robin’s success rate, Chandrashekhar’s team “gathered thousands of images, drew lines around features like boxes, yellow, brown and white mailers, and labels, and added descriptions.” This way, when Robin picks up and scans an object, it can quickly compare what it sees with thousands of sample data to find the closest match and stow it away in the right bin.
They also took note of errors, added them back to the training deck, and retrained Robin to improve its accuracy.
The robotics team developed and equipped the robot with a quality assurance system to oversee how it handles packages.
Charles Swan, a senior manager of software development at Amazon Robotics & AI, explains that if Robin detects a problem like dropping a package or placing two parcels (instead of one) onto a sortation robot, it will try to fix it on its own or call for human support if it cannot.
“If Robin finds and corrects a mistake, it might lose some time. However, if that error wasn’t addressed at all, we might lose a day or two getting that product to the customer.”
With Sparrow expected to handle the early stages of the fulfillment process, it’s not hard to imagine Amazon using a more refined training model to perfect its newest robotic arm system before deploying it at scale. One misstep could quickly trigger some sort of domino effect in its fulfillment process.
For instance, to minimize mishandling issues, Amazon is planning to equip its robotic arms with more advanced perception features like the ability to detect deformable products (plastic bottles in mailers) to avoid crushing them with so much pressure from the suction cups and getting them delivered to customers in damaged condition.
Amazon is currently testing Sparrow in a warehouse in Texas.
The company expects a broader rollout in 2023. And when that happens, its fulfillment centers are going to become a lot less labor intensive. Conversely, it could also reduce the need for warehouse workers.
All of the above are the best-laid plans of Amazon and its robotics team. But as for the true test, that comes out in the wild when Amazon releases Sparrow more broadly into warehouses across the country.
And while humans can also make mistakes, 65% accuracy in identification is not nearly as close as what human workers might be able to achieve, at least at this stage. This is to say nothing of any potential damage by robot arms the products may sustain on their way to your customers’ doorstep.
However, this could solve a lot of problems for Amazon and for sellers in terms of faster delivery and, thus, greater sell-through for Amazon. Amazon warehouses working more efficiently could mean another moratorium on restock limits as warehouse space is utilized more efficiently.
Sellers should follow along as this develops and brace themselves for when it launches more broadly. Even as confident as Amazon sounds and as hopeful as they may be, the jury is out on whether this will improve things or become another challenge for sellers to overcome.
UPS Workers Ready to Repeat 1997 Mass Walkout Over Pay, Work Conditions
🪧 In August 1997, around 185,000 UPS employees staged a 16-day long protest over pay and job security, causing a nationwide service disruption that cost America’s largest courier $780 million in losses.
The aftermath of the strike also left a lasting concern among customers that it could occur again, a warning that may soon proved prophetic if UPS fails to reach a deal with its unionized workers by July 31, 2023.
Teamsters Prepare for Contract Talks with UPS
The existing five-year contract between UPS and Teamsters, a labor union representing 350,000 UPS workers, is set to expire by the end of July. Negotiations over the new work terms and conditions will start in April.
Currently, the union’s UPS National Screening Committee is reviewing thousands of proposals for contract terms they should include in the Master Agreement.
Key issues that Teamsters aim to address include:
- Pay gap between regular drivers and second-tier delivery drivers, known as 22.4 drivers after contract Article 22.4. In 2017, UPS rolled out Saturday Delivery to keep up with Amazon, FedEx, USPS, and gig workers that make weekend deliveries. To offer this service, the company hired second-class drivers whose rate ranges between $20.50/hour and $30.64/hour, whereas regular drivers’ can reach up to $40/hour. That’s a huge pay gap issue that Teamsters General President Sean O’Brien and some senior drivers aim to close by removing 22.4 employee classification or UPS’s two-tier wage system and expanding the number of full-time offers.
- Part-time salary increase. O’Brien will push for a $20 starting rate (from $15.50) for part-timers (drivers and warehouse workers) and urge UPS to reward those who have been holding a long-term part-time position. Part-timers should also be given an opportunity to convert to full time.
- Excessive overtime. A report from More Perfect Union reveals UPS forcing some of its drivers to take 12-hour shifts and constant overtime on the weekend, thereby ruining several marriages and families.
In an interview with Insider, O’Brien said that the union is “open to finding a solution to the seven-day week delivery.”
For instance, FedEx has been offering weekend deliveries for a couple of years, but has recently reduced Sundays in an effort to cut costs amid slowing eCommerce demand.
UPS may follow suit but that could also mean laying off numerous employees or hiring more seasonal workers.
The stakes are higher at UPS, however, as the job cuts could impact 350,000 unionized workers responsible for handling and shipping the courier’s 21.1 million US daily package volume, which Teamsters could use as leverage. A mass walkout might force UPS to stop its operations until an agreement is reached.
- Personal Vehicle Drivers (PVDs) or subcontractors. PVDs are temporary drivers hired to help full-timers deliver items while using their own vehicles.
Based on the existing contract, UPS can outsource jobs to seasonal drivers as long as the company gives priority to union workers. That means independent contractors may not be entitled to some benefits or incentives.
Teamsters aim to eliminate “outsourcing” to ensure every UPS worker is “classified, treated, and paid as an actual employee, protected by a Teamster contract,” a spokesperson told Insider.
Related: California Truckers Protest AB5
- Surveillance cameras. UPS has reportedly installed front-facing and driver-facing cameras inside their trucks that act as motion detectors to alert drivers when they don’t fasten their seatbelts or they’re using mobile devices while driving.
However, for O’Brien, the inward-facing cameras are an “invasion of privacy,” and therefore, must be removed.
“That’s just another tool to increase productivity and hold our members hostage,” he added.
- Heat protection. 24-year-old UPS trucker, Esteban Chavez, Jr., died from heatstroke after finishing his last delivery in July 2022. This incident has prompted union members to demand UPS to put in place better heat-related safety initiatives like getting a fan installed in their vans or not giving them 12- to 15-hour routes during the hotter months.
If no agreement is reached on time, hundreds of thousands of UPS workers may hit the pavement in August to demand higher pay and better working conditions.
In a statement to CNN in 2022, O’Brien said that the union will make use of its $350 million protest fund to get every advantage they need to win the contracts they want. The contract negotiations will also serve as an example for other workforces that have yet to unionize.
“Striking is a last resort, but if a company is not negotiating in good faith, we’re going to get what our members deserve.”
In other words, if Teamsters end up launching a protest this summer, it’s UPS’s fault. And given the fact that UPS handles more than 6% of the country’s gross domestic product (the only company to do so), the strike could create a massive void that the other courier service providers may not be able to fill, putting thousands of small businesses in a vulnerable position.
Consumers will most likely also have to endure delivery delays. 😫
UPS CEO Addresses Labor Issues
During the company’s Q4 2022 earnings call, UPS CEO Carol Tome assured analysts that a “win-win-win” agreement would be reached by July 31st.
“I would submit that a win, win, win is very achievable because we are not far apart on the issues. And let me make this real for you by giving you a few examples. First, both Teamsters and UPS agree that a healthy and growing UPS is good, good for Teamsters, good for our people, and good for our customers. In fact, we’ve added more than 70,000 Teamster jobs since 2018. So, we’re aligned that a growing and healthy UPS is good. To be growing and healthy, we need to be competitive and make sure that our offerings meet the needs of our customers.”
Tome also thinks that resolving these labor issues will only require “just a few tweaks” to the company’s existing contract with Teamsters. 🤔
These tweaks might include:
- Implementing “new technology and hydration measures” to keep drivers and warehouse staff safe in sweltering heat.
- Drivers, specifically 22.4 drivers, may opt not to work 6 days a week to reduce pressure on the workforce with weekend operations.
The company remains vague about raising pay rates, though. Moreover, Teamsters’s O’Brien also refused to disclose what the bottom line is for launching a strike.
The 1997 protest was won by getting UPS to agree to:
- Increase pensions by up to 50%
- Give hourly rate increases: $3.10 for full-time workers and $4.10 for part-timers over the next five years, the biggest salary increases at the time
- Offer full-time positions to the company’s 110,000 part-timers
If union members go on strike this year, UPS reportedly has contingencies in place to reduce the event’s impact on its network.
According to sources interviewed by Freight Waves, UPS has requested its managers “not to schedule any paid time off during July and August in case parcels are required to be moved,” indicating the company’s desire to stay operational if Teamsters push through with its plans to walkout en-masse.
Other Things You Can Do
💪 Consider the following actionable tips when building your own contingencies in preparation for the potential Teamsters protest in August.
- Discuss logistics strategies with your 3PL partner so you can stay flexible during disruptive protests.
- If not working with a 3PL, consider splitting your shipments between UPS and other carriers like FedEx.
- If using FBA, book delivery appointments ahead of time.
- Make sure you have enough inventory stored in Amazon, 3PL, and/or supplier’s warehouse to avoid stocking out due to inbound delivery delays caused by the mass walkout.
Related: Amazon UK Workers to Launch Historic Strike in Early 2023, How to Ship to Amazon FBA (And Speed Up Check-In Times), Amazon Inventory Risks + 5 Tips to Mitigate Them, Bad Actors Book Multiple Inbound Amazon Delivery Dates to Create Scarcity
The Latest Update to Amazon’s Automate Pricing Features
Update 01/24/2023: Amazon has added a new Automate Pricing feature that will help you to match or beat prices from competitors outside of Amazon.com. 💪
Here’s how the new feature works:
- Enroll your product in Competitive Featured rule or Competitive Lowest Price rule on the Automated Pricing page.
- Set your off-Amazon pricing rules (higher or lower than competing sellers)
- Once set, Automate Pricing may automatically increase or decrease your price when offers from competitors outside of Amazon change.
At best, the automatic price increase may help you make money at higher prices. At worst, however, your competitors may purposely lower or keep their offers low to attract more customers, and at the same time, drive your prices to the bottom.
To protect your margins, consider tracking and updating your offers manually or setting your rules modestly.
Go to Automate Pricing or continue reading to learn more about this tool.
Automate Pricing tool finally has a bulk upload option! 🎉
Yes, that’s right. Some sellers may say, it’s about time.
Instead of adding each product and setting its minimum and maximum price one by one, which is a pain in the neck, Amazon now allows you to apply the following pricing rules to multiple listings at once. 🚀
- Select a single listing or a number of listings
- Set the minimum and maximum prices for your listings
- For sales-based pricing rules, assign a specific number of units you want to sell during a given period to test the right price for your new product or to simply manage your inventory levels. If sales are less than 10 units, you can set to reduce the price by 10%, for example.
Once applied, Automate Pricing will automatically update your prices in accordance to your preset rules.
You can set the min/max offer for your product around the Buy Box price or your competitors’ so that when it changes, the tool will match, exceed, or beat that price by a certain amount or percentage – yours could be automatically set 5 cents or 3% lower than the prevailing offer to stay competitive, for instance.
⚠️ However, there’s a negative aspect to this competitive lowest-price rule.
On the one hand, if you suddenly become the only seller, your (low) price may stay the same. This could prevent you from making sales at higher prices unless you were to manually track and update this.
That is one of the cons of using Automate Pricing tool because many repricers will update your offer to the max price automatically if all your competitors ran out of stock, leaving you as the only seller.
And because you’re selling at a more affordable price, you could sell out more quickly than anticipated, which is probably fine if you’re trying to eliminate slow sellers or products with a limited shelf life.
On the other though, offering the lowest price out there increases your chances of becoming the Featured Offer. And when you do get featured, it boosts your visibility on Amazon, which could then help drive more traffic and sales. 💰
For a smarter repricing strategy, Amazon also lets you review your pricing history for any SKU enrolled in Automate Pricing to track price changes and use business reports to measure success.
In addition, if you’re selling globally, you can adjust the prices of your exports for currency conversion, price increases, and discounts.
Overall, Amazon’s Automate Pricing can be an excellent alternative to paid repricer apps. It’s free for Amazon sellers, and with its new bulk pricing feature, it reduces the time it takes to enroll multiple SKUs to the system and implement pricing rules, making it as efficient as third-party repricer tools.
However, constantly keeping your prices lower than the Buy Box can hurt your profit per unit and increase your stockout risk due to higher demand. Therefore, you may still have to disable pricing rules to manually adjust your prices from time to time.
👆 So don’t cancel your current repricers just yet. Try Amazon’s tool on for size to see if it will actually work well for you. And consider testing Automate Pricing with 5 to 10 listings first to see if it’s for you before applying pricing rules to the rest of your inventory.
Go to Automate Pricing to get started.
Walmart Launches B2B eCommerce Site to Rival Amazon and Shopify
Amazon, Walmart, and Shopify are taking their rivalry to a new arena: the fast-growing Business-to-Business (B2B) eCommerce industry.
The Rise of B2B eCommerce
As US consumer spending weakens, B2B is growing at a rapid pace, prompting eComm companies to put more focus on B2B.
According to DigitalCommerce360, US B2B online sales grew from $1.39 trillion in 2020 to $1.63 trillion in 2021. B2B eComm is also estimated to reach a compound annual growth rate of 20.49% from 2022 through 2028, representing a huge growth opportunity for eComm players to tap into. Capturing this untapped market may provide some revenue boost that could help them offset Business-to-Consumer (B2C) sales slowdown.
Buyers going digital during the pandemic is one of the contributing factors to the rapid growth of online B2B.
In response to COVID-19 lockdowns in 2020, many businesses moved their B2B transactions from offline to online, and never looked back. Approximately 80% of B2B executives now prefer online self-service or remote human interactions over in-person sales primarily due to safety concerns, ease of scheduling, and savings on travel expenses, McKinsey reports.
Among US B2B eComm companies, Amazon appears to be the most dominant player, having operated its own B2B arm, Amazon Business, since 2015 versus top competitors that have only been in the market for several months – Shopify since June 2022 and Walmart since January 2023.
Sales-wise, Amazon Business represented 1.4% of all B2B sales on eComm sites in the US in 2021. Moreover, by 2025, the company’s market share is estimated to grow by 2.4%. For context, Insider Intelligence forecasts B2B sales on eComm platforms to reach $2.3 trillion within the next two years.
In an attempt to carve out a good proportion of this trillion-dollar market size for themselves, Walmart recently launched their own B2B eCommerce site. 🚀
Walmart Business for Small and Medium-Sized Enterprises (SMEs)
Announced on January 20, 2023, Walmart Business is an online procurement hub for SMEs and non-profit organizations looking to:
- Simplify B2B purchases. Walmart removes the complexities of procurement by offering SMEs a curated list of over 100,000 products. They can easily shop for office supplies, furniture, bathroom items, food and beverage, electronics, or classroom and faculty needs all in one place. Buyers can then group their purchases by category to streamline their restocking process. Depending on a company’s organizational needs, one may select categories including administrative support (printing, stationary, or mailing items) or information technology (hardware or software).
- Lower costs. Reduce travel expenses by eliminating face-to-face interactions with suppliers and opting for digital self-service orders or remote human engagement instead.
- Leverage Walmart’s fulfillment network. Receive orders fast with the retail chain’s scheduling system, convenient store pickup locations, and 2-day delivery program.
- Track and share spending information with multiple users. Add up to 5 users to a single account and track spending trends by sharing purchase history across members. Qualified buyers can also register in Walmart Tax-Exemption Program to enable automatic removal of eligible taxes during checkout.
SMEs can also upgrade to a Walmart Business+ account for $98 per year to enjoy the following additional benefits:
- No minimum order required to qualify for free shipping
- Free pickup and delivery from Walmart stores with a $35 minimum order
- 2% rewards on orders $250 and above
- 5% savings on eligible products set to subscription
Why Go After SMEs?
Like B2B eCommerce, the US small business market is a growth area with 33.2 million SMEs. This accounts for 99.9% of all American businesses, and is expected to grow by 36,000 by 2025.
Of the 33.2 million, 27 million do not hire any staff, while 5.4 million have under 20 team members and only 650,000 have fewer than 500 employees, according to Oberlo.
Therefore, tailoring Walmart Business to the needs of SMEs may help the retail giant win more sales while keeping existing customers from switching over to Amazon or Shopify, ultimately allowing them to grab a big piece of the B2B pie.
For sellers trying to lessen their reliance on Amazon, this could be an opportunity to branch out into Walmart. 🤔
It’s too early to say whether or not Walmart Business will make a dent in Amazon’s B2B sales, but it will surely bring new challenges to Amazon. 💪 Expect the eComm giant to try to forestall Walmart’s attempt to encroach on its market with new B2B tools and features in the near future.
Related: Walmart and Amazon Battle for Dominance Intensifies, Shopify Acquires Deliverr and Takes Aim at Amazon’s Buy with Prime, Amazon Makes Play Toward Offering Prime for Non-Amazon Orders
Prepare for These 6 Major Changes to 2023 Amazon UK & EU FBA Fees
Like US sellers, UK and European marketplaces will welcome the new year with updated Aamzon FBA fees, the eComm giant announced on January 19th.
Amazon cited the current macroeconomic factors affecting the company’s operations as the primary reason for the upcoming changes. These include significant updates to the cost of fulfillment, storage, and return and disposal services starting March 1st, 2023.
The tech giant also announced it will introduce new fee promotions and reductions this year and improved benefits for products in the FBA New Selection Program, in what may be an attempt to keep sellers from opting out of FBA due to fee increases.
Read on to learn how these updates will impact your business in 2023 and what you can do to get ahead of mounting Amazon fees.
6 Major FBA Fee Updates for 2023
FBA Fulfillment Fee Changes
This year’s FBA fulfillment fee changes include:
- Applying dimensional (DIM) weight calculations to all standard and oversize products. Previously, DIM weight pricing was only applied to oversize units. But that will change on March 1st, when Amazon starts using the greater of the unit weight and dimensional weight as the billable weight for standard parcels (and oversize items), which could potentially increase your per unit shipping cost. Amazon subtly slips into the announcement that DIM will also be applied to customer returns processing fees.
DIM Weight Sample calculation
|Item unit weight||Item dimension (cm)||Item DIM weight||Greater of unit weight or DIM weight||Size and weight tier before March 1, 2023||Size and weight tier on and after March 1, 2023|
|900g||35 x 25 x 12||(35 x 25 x 12)/5,000 = 2.1 kg||DIM weight is 2.1 kg||Standard parcel ≤ 900g||Standard parcel ≤ 3.90 kg|
Assuming you’re shipping within the UK, here’s how much it would cost you to fulfill a standard parcel across the country from March 1st:
|Standard Parcel||2023 Fulfillment Rates|
|Standard parcel ≤ 150g||£2.81|
|Standard parcel ≤ 400g||£2.92|
|Standard parcel ≤ 900g||£3.15|
|Standard parcel ≤ 1.40 kg||£3.36|
|Standard parcel ≤ 1.90 kg||£3.68|
|Standard parcel ≤ 2.90 kg||£5.38|
|Standard parcel ≤ 3.90 kg||£5.68|
Based on DIM weight pricing, you may find yourself falling into a much higher weight tier than what your actual unit weight suggests and receive a massive per unit fulfillment fee increase for your large but lightweight products!
Pro tip: Parcels can get bulky due to excess air inside the packaging or using an excessive amount of bubble wrap or foam fillers. To reduce shipping fees, try to keep your products compact by implementing packaging optimization practices like using lightweight or condensed packaging materials or removing excess air or water from your primary packaging. Additionally, use our Master Carton Calculator to determine your optimal carton and pallet load capacity per shipment for additional savings to offset Amazon’s fees.
- Making Fuel & Inflation Surcharge permanent. Amazon introduced this surcharge in 2022 to temporarily account for rising price levels during that period. However, “as economic conditions have progressed, these cost increases appear to be more permanent,” requiring the retail giant to adjust this year’s FBA fees to include these additional costs permanently. These fee changes are reflected in the rates published here.
In general, this year’s fees are significantly higher with at least £0.17 per unit increases in many cases for the UK and €0.11 for EU.
- Introducing new weight tiers in FBA fulfilment rates for Special Oversize items. Starting March 1st, Amazon will add 30 kg and 50 kg weight tiers to Special Oversize category to “better align fees” with its current fulfillment costs.
FBA Monthly Storage Fee Updates
Expect to pay:
- Higher monthly storage fees for all Standard-Size units. Effective March 1, 2023, monthly storage fees for your standard-size inventory will increase by around £0.04-£0.10 per cubic foot depending on product category and storage month. Fees for storing dangerous goods and oversize products in FBA will remain unchanged.
- Storage utilisation surcharge starting May 1st, if you meet the criteria. This additional fee (stacked on top of your monthly storage fee) will be based on the ratio of your average daily inventory volume (in cubic ft) and average daily shipped volume (cubic ft) over the trailing 13 weeks.
Rates will vary depending on your utilisation ratio, season, and product size tier level.
(Daily inventory volume over trailing 13 weeks / Daily shipped volume over trailing 13 weeks) / (7 days in a week) = Storage Utilisation Ratio (in weeks)
Or for example:
30,000 cubic feet / 140 cubic feet) / 7 = 30.61 weeks
Base monthly storage fee (off-peak standard size rate): £0.78 per cubic foot
Storage utilisation surcharge: £0.50 per cubic foot
Total storage fees: £0.78 per cubic foot + £0.50 per cubic foot = £1.28 per cubic foot
To reduce your utilisation ratio, consider deleting unused shipping plans, eliminating excess inventory, fixing stranded inventory, and improving your Amazon reserved inventory levels. Doing these things may also help increase your FBA capacity limits as storage utilisation is tied to your IPI score, which is one of the metrics that Amazon uses to calculate your inventory limits.
In addition, Amazon will charge a single storage utilisation fee for inventory kept in an Amazon fulfillment center in Spain, France, Italy, and Germany and a separate surcharge for your UK inventory. This means that your catalog sell-through will be analyzed separately for these marketplaces. If you sell both in Spain and UK, for instance, you could be charged two different storage utilisation fees.
- Higher aged inventory surcharges. Effective May 15, 2023, all product categories will be subject to the following aged inventory fees.
Aged inventory fees replace the fee structure that was previously referred to as long-term storage fees and significantly shortens the amount of time inventory can be held before these surcharges kick in.
As you can see from the above chart, items aged between 331 and 365 days will increase from £0.90 to £1.11/cubic foot per month.
Amazon will also add new tiers to begin the aged inventory surcharge for products that remain unsold between 271 and 300 days, excluding Clothing, Shoes, Bags, Luggage, Jewelry and Watches. At the 9th month, you could be charged an additional £1.11/cubic foot on top of your standard monthly storage fee.
Related: Amazon Automatic Aging Inventory Removal Starts April 15, Attack of the Fee Stack: How Sellers Can Maximize Profitability Despite Amazon’s 2023 FBA Fee Increases
FBA Return and Disposal Fee Changes
Return and disposal order fees will get more expensive for sellers starting March 1, 2023, while liquidation order fees will remain the same. Either way, this means carrying overstock inventory and getting rid of it will result in additional costs that could shrink your margins, so make sure to follow the best inventory management practices to avoid ending up with a lot of unsold products.
FBA Small and Light Changes
Amazon’s making some good changes to its FBA Small and Light (SnL) program in Europe this year.
Beginning March 1st, sellers will see an increase in price eligibility threshold of SnL items in:
- UK (from £9 to £10)
- France (from €11 to €12)
- Germany (from €10 to €11)
Amazon will also introduce new size and weight tiers (460g in standard enveloped and 960g max weight limit for L and XL envelopes) to make SnL more affordable than its standard FBA fulfillment service, potentially making it a good alternative for those products that qualify.
However, be aware that the company will also start applying DIM weight pricing to SnL items effective March 1st. Additionally, you must be enrolled in the Small and Light program or the discounted rates will not apply even if you meet the weight and price thresholds.
Selling Fee Reductions and Promotions
Various fee decreases and promotions may help offset the cost increases that will be dropping throughout Q1 2023. These include:
- Offering a 17.5% discount on EU fulfillment network fees (from EU to the UK and vice versa) starting from April 1, 2023. Click here to view the applicable promo fees.
- Reducing the referral fee, from 15.3% to 7.14%, for products that fall under Clothing and Accessories. Eligibility requirements apply.
- Extending the referral fee promo in Amazon Poland from March 31, 2023 to March 1, 2024.
FBA New Selection Program Changes
To help you save a little bit of money, Amazon will implement the following updates for standard-size products eligible for FBA New Selection Program:
- Increased free storage, removal, and rebate benefits on up to 100 units per parent ASIN (clothing and shoes not included).
- Extending free storage and rebate offer from 90 days to up to 120 days per parent ASIN (clothing and shoes not included).
- Increasing rebates from 5% to up to 10%.
These changes are set to take effect in March 2023.
How to Prepare
With a little over 5 weeks to prepare, it would be best to start taking action now.
Fortunately, most of the upcoming additional FBA fees can be offset or avoided altogether (e.g., storage-related surcharges) with good inventory management.
Good inventory management practices include:
- Finding out whether or not FBA is still a feasible fulfillment method for your business. Consider running some profit calculations now so that you can make the necessary adjustments to your inventory plans and fulfillment strategy ASAP.
- Making accurate inventory forecasts to avoid over-ordering and under-ordering.
- Keeping a firm eye on your inventory levels to know when and how much inventory to reorder.
- Adopting inventory-minded marketing to ensure coordinated execution of your inventory and marketing plans.
- Moving excess inventory through flash sales or by bundling them with your best sellers to avoid incurring storage utilization and aged inventory surcharges.
- Ensuring timely delivery of your inventory by negotiating a better lead time with your supplier, freight forwarder, and/or 3PL so that you won’t miss out on your target sales events and therefore, sell through your inventory quickly.
- Calculating your optimal carton and pallet load capacity to reduce shipping, storage, and handling costs.
These are just some of the best inventory management practices that you can implement in your business to protect your margins.
👌 For a more in-depth guide, download our Attack of the Fee Stack White Paper or join our upcoming live Q&A webinar, where industry experts and white paper authors Vanessa Hung and our very own Chelsea Cohen will answer questions about Amazon’s relentless fee hikes and how to ease their pressure on your profits.
Related: Amazon Hikes US FBA Fees Again, Protecting Your Profitability Webinar, How to Increase Profits for Amazon Sellers
Amazon Automatic Aging Inventory Removal Starts April 15
Update 01/13/2023: 📢 ICYMI, Amazon recently announced they will implement aged inventory fee increases starting April 15, 2023, which coincidentally is also the company’s aged inventory removal start date.
The longer your FBA stock remains unsold, the more expensive it’s going to get for you. New rates start at $0.50/cubic foot for inventory stored between 181-210 days to as high as $6.90/cubic foot for units aged 365 days or more.
To help you save on surcharges, Amazon has enabled automatic removal of your aged inventory. Depending on your product’s condition, you may opt to have it sent back to your return address for a fee, liquidated through FBA liquidations, or disposed of. More on that below.
Removal fees are increasing again this year in a big way on top of utilizing dimensional weight to calculate shipping weight, so the costs could really start stacking up if you’re not careful.
🚨 If you want to disable automatic aged inventory removals, do so now and be sure to get your FBA inventory checked for any:
- Extremely slow-moving items – for example, underperforming products that are less likely to get sold within 3 to 6 months. To boost sales, consider launching flash sales or bundling them with your top sellers.
- Excess inventory that has been in Amazon warehouses for 6 months or more.
- Obsolete, damaged, or expired goods, i.e., unfulfillable products.
Get rid of aging or unsellable items by April 15 to avoid tying up your capital in holding costs like aged and long-term storage fees.
Read on to learn more about automatic aged inventory removals and how to recover profits from your unsold inventory.
To make room for Prime Day, Amazon has enabled automatic removal of the following inventory starting April 15th:
- Inventory that has been in Amazon fulfillment centers (FCs) for over 12 months and is subject to long-term storage fees.
- Inventory that has remained unsold for six consecutive months and has been in FCs for over half a year.
You can, of course, disable automatic removals for your inventory on the Settings menu of your Seller Account. However, carrying a lot of slow sellers is not ideal.
A high excess inventory percentage and a low sell-through rate can negatively impact your Inventory Performance Index (IPI) score. As of this writing, scoring below 400 could mean Amazon placing limits on your FBA storage capacity. Plus, letting inventory sit for more than six months can also lead to additional storage fees.
Pro tip: Regularly check your Manage Inventory Health report to identify and get rid of slow sellers before they start impacting your IPI score and incurring holding costs.
Recover Value from Your Aging Inventory
Once you’ve enabled automatic removal for your old inventory, you can select any of the following value-recovery options:
Arrange a flash sale
As the April 15th deadline approaches, review your excess inventory that falls into this category and try to move as much of your inventory before this date by having a flash sale. Promote the sale via your email list or social media, drop prices or provide a deep coupon discount. Flash sales may make more sense than a straight return or disposal of inventory which can lead to financial losses.
Include a Return Address to have your inventory sent back to your warehouse
Make sure to provide a valid return address to avoid getting your units disposed of automatically at FBA. If you need to change your return address, do so now to ensure all changes are saved before the disposal start date.
Liquidate to have your inventory liquidated
This option will help you to recover 5% to 10% of your product’s selling price.
Go to Automated Fulfillable Inventory Removal for more information.
Amazon Tweaks Logistics Strategy to Streamline Operations
Update 01/10/2023: Amazon site closures continue! On Tuesday, the tech giant announced it is shutting down three (3) warehouses in the UK, putting 1,200 workers at risk.
All affected employees will be given the opportunity to move to a different facility.
However, Steve Garelick of the GMB union argues that workers can’t be expected to suddenly relocate to other fulfillment centers that could be several miles away.
The facilities facing closure are located at Gourock, Hemel Hempstead, and Doncaster. The move came after Amazon’s thorough evaluation of its fulfillment network.
Warehouse evaluations are done “to make sure it [fulfillment network] fits our business needs and to improve the experience of our employees and customers,” an Amazon rep told CNBC.
“As part of that effort, we may close older sites, enhance existing facilities, or open new sites,”
The tech giant plans to open two new UK facilities over the next three years, one in Peddimore and another in Stockton-on-Tees, creating 2,500 jobs.
Out with the old, in with the new! 🎉
Amazon is reportedly shutting down some of its older warehouses and retiring a few Boeing 767s in its air fleet as part of a larger effort to lower costs while improving each stage of the company’s fulfillment process.
As previously reported, Amazon nearly doubled its fulfillment network to meet the heightened customer demand during the pandemic. The company spent 30% of its $60-billion capital investment on distribution and 25% on transportation, accounting for more than half of its total capital investments.
However, by early 2022, eCommerce demand began to decline as consumers cut back on online spending and returned to in-store shopping. This has resulted in excess capacity that contributed to Amazon’s $3.8B profit loss in Q1 and another $2B in Q2.
Amazon CEO Andy Jassy remains confident about the future of the retail giant’s logistics arm stating:
“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network,”
“This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020,” Jassy added.
Amazon Attempts to Rightsize its Fulfillment Empire
To reduce operational costs and capital expenditures, Amazon is trimming down its warehouse footprint across the US.
A report from MWPL International shows that, as of September 2022, Amazon has closed over 20 logistics centers and canceled or postponed the openings of 50 more sites. Most of these sites were delivery stations, where associates sorted orders by ZIP code and then dispatched them to customers via couriers.
Sites that are shutting down are either being subleased or having their operations consolidated into a nearby facility to lower outbound transportation expense.
Facility closures might have also led to fewer third-party delivery partners this year. In 2021, Amazon added 670 delivery service partners in the US, but now it plans on curbing the network’s growth by 33%, just adding 451 partners in 2022.
With fewer recruits, however, the company will be able to focus on improving the quality of service that their partners provide, which could mean faster delivery times.
Aside from Amazon’s shrinking warehouse network, the growth of its air cargo fleet has also slowed in recent months.
Research from DePaul University shows that Amazon Air’s total flight activity only increased by 3.8% from August 2021 to March 2022, 10.5% lower than the daily flights recorded during the previous six months. This move makes sense from a financial and operational perspective, given that there are now fewer facilities to supply inventory to and fewer packages to move through its delivery network as demand declines.
“The natural business reaction to that is to pause, because your margin for error in an environment of complexity and increasing costs shrinks, and the cost of a mistake rises,”Jason Tolliver of Cushman & Wakefield said.
However, more streamlined operations don’t always result in greater customer satisfaction, especially for people who have come to expect same-day or two-day delivery.
For example, consolidating last-mile delivery stations into other facilities (usually located in the middle of highly populated sites) to cut costs might lead to longer delivery times for customers on the outskirts of metropolitan areas.
And because there are fewer delivery stations, it could even lead to more orders not delivered directly to customers’ homes, forcing them to step out of their house to pick up their parcel from a designated drop-off point. This defeats Amazon’s speedy port-to-porch delivery promise, which made the company almost as good as UPS and FedEx.
With Amazon scaling back its warehouse footprint and air deliveries this year, are we more likely to order from other sites that offer instant deliveries even if that means paying for shipping? Or, are we more likely to have to wait longer than 1 to 2 days? 🤔
It appears that Amazon is not only trying to rein in logistics spending, but also control customers’ same-day shipping expectations in an attempt to keep costs low.
Customers within metropolitan areas will still likely receive their orders within hours, but those outside of city centers might have to wait longer than a day or two. But this could all be temporary, as Amazon is still trying to return to “a healthy level of profitability” after inflation and supply chain challenges took a huge chunk out of its Q1-Q2 2022 earnings.
Amazon Has Bigger Plans for 2023
Although it seems that Amazon remains on track with its rightsizing plans, Wall Street Journal recently reported that the eComm giant is looking to add three new mega-warehouses in the US.
- A five-story, 3.1 million-square foot distribution center in Niagara, New York
- A five-story, 3.8 million-square foot warehouse in Loveland, Colorado
- A five-story 4.1 million-square foot mega-facility in Ontario, California
In a press statement, an Amazon rep said, “While we’re closing some of our older sites, we’re also enhancing some of our facilities and we continue to open new sites as well.” MWPVL estimates that Amazon will open 250 more distribution centers in 2022.
Aside from building these mega warehouses, Amazon has also acquired Cloostermans, a Belgian machinery and robotics manufacturer, to automate aspects of its fulfillment operations, such as moving heavy pallets and packaging products for delivery.
And just last month, Amazon hired Hawaiian Airlines to fly 10 Airbus A330 cargo planes for its air network in 2023. The converted freighters will replace the older Boeing 767s.
“These A330-300s will not only be the first of their kind in our fleet, they’ll also be the newest, largest aircraft for Amazon Air, allowing us to deliver more customer packages with each flight,” Director of Amazon Global Air Fleet Philippe Karam said in an Airbus press release.
The widebody jets are slightly larger than Boeing 767s and have a high volumetric payload capability that makes them ideal for carrying large amounts of packages in express delivery networks.
For improved overnight operations across the US, Amazon launched a new air hub facility at the Cincinnati/Northern Kentucky International Airport. The facility can handle 44 flights daily, a 71% increase from March, according to researchers at DePaul University. It also operates similar to UPS, FedEX, and DHL with its synchronized scheduling and fast aircraft-to-aircraft transfers to ensure same-day deliveries in Kentucky, Indiana, and Ohio.
A few weeks back, we have reported that Amazon’s doubling down on its logistics expansion plans to possibly provide support for its new low-cost logistics service called Amazon Warehousing and Distribution (AWD) and its Buy with Prime program.
In 2023, AWD won’t just serve Amazon fulfillment centers, but it’s also expected to replenish inventory to non-Amazon locations, including to fulfill brick-and-mortar stores.
So, once these new mega warehouses and freighters are fully operational, both Amazon and non-Amazon sellers can expect a significant improvement to transit times.
DePaul University researchers estimate that sellers who ship via Amazon Air from Cincinnati and have the goods ready for shipment by noon could have those packages delivered by next day to 25 largest US metropolitan regions. And they could also have the packages delivered by sometime the next day to approximately 95% of the mainland’s population.
Clearly, with these expansion plans for 2023, Amazon’s not only looking to please shoppers with a better delivery promise, but also to make Prime a more attractive logistics option for sellers, a crucial move amid increasing competition.
- In April, Shopify acquired Deliverr to bolster its own fulfillment network, i.e., offer 1 to 2-day delivery.
- In May, CNBC reported that Flexport is on track for $5B in revenue, positioning itself as a new top player in the logistics space.
- In October, the Financial Times released a scoop uncovering TikTok’s eComm expansion plans in the US.
Amazon Makes Play Toward Offering Prime for Non-Amazon Orders
Update 01/10/2023: Took Amazon a while, but the eComm giant is finally extending Buy with Prime (BWP) to all US direct-to-consumer (DTC) merchants on January 31, 2023. The service was previously available to some select sellers only.
With BWP, retailers not selling on Amazon.com can now offer Amazon checkout and fulfillment services on their own site, essentially allowing Prime users to shop anywhere online using their saved Amazon Pay checkout details and at the same time, receive free 1 to 2-day shipping and returns.
To help drive traffic, build consumer trust, and boost sales, the company also released a few marketing solutions back in September 2022, and recently, Reviews from Amazon, which lets BWP users show reviews from their AMZ listings on their own sites.
Amazon’s new fulfillment revenue stream has been reportedly shown to increase conversion by 25% on average.
“We’ve been working closely with merchants since the launch of Buy with Prime and have been thrilled to hear the results it’s helped drive for them so far,” said Peter Larsen, VP of BWP.
The retail giant did not disclose how many sellers have joined BWP so far or estimates on how many will be willing to adopt it. But if we had to guess, the program may make more sense for sellers without fulfillment capabilities or small brands with less than $5M gross merchandise volume, which is about 16% of US DTC merchants, according to PipeCandy.
However, issues around the company’s rising fulfillment fees, data grabbing history (more on this below), or Shopify warning merchants against BWP may be viewed as the dealbreaker.
As of this writing, BigCommerce is the first eComm service provider to roll out a self-service integration into Buy with Prime.
In the past two years, Amazon has ramped up its fulfillment capacity to meet high customer demand. Reports show that the eComm giant’s global fulfillment network and data centers grew from 272 million square feet in 2019 to 532 million square feet in 2022. Most of these facilities are located near metropolitan areas so that Amazon can deliver customer orders in one day or less, allowing them to compete with UPS and FedEx.
This unprecedented growth is much in response to what happened in 2020 and 2021. In the last two years, sellers had been subject to strict restock limits due to capacity constraints at Amazon (tough times!). Now, the pendulum is swinging the other direction and this kind of paints a picture of what we’ve been hoping for–that restock limits really may have eased up for a lot of people.
On an earnings call with analysts in November 2021, Amazon CFO Brian Olsavksy stated that Amazon hasn’t had capacity restrictions for the first time in a while. But the commitment to build out a larger network of facilities to store, sort and ship products at breakneck speed came at a cost.
Amazon Grapples With Excess Capacity
Amazon ended up with excess labor, storage space, and transportation capacity amid rising costs and eCommerce growth decelerating after a huge spike in 2020. This has resulted in $2 billion in incremental costs, according to Amazon Q1 Earnings Report for 2022.
To mitigate these costs, the online retail giant is expected to spend less on fulfillment centers this year than last.
Amazon will also try to generate more money from its vast fulfillment network by offering Buy with Prime to non-Amazon sellers, aka direct-to-consumer (DTC) merchants. This new service allows merchants to use Prime’s free two-day and next-day shipping and returns.
So, we went from Amazon turning away huge amounts of our inventory because it only had room for essential goods, which forced us to outsource storage to 3PLs, to now using its empire to fulfill orders for other retail sites.
While these are good profit-recovery measures for Amazon, could there be other reasons they’re doing this? What’s in it for them?
Not only is Amazon using Buy with Prime to potentially boost their revenue and offset some of their expenses, but we might as well say the quiet part out loud here, that this initiative has the added benefit of grabbing customer data, such as consumer names and addresses and potentially even phone numbers and emails as a requirement of shipment handling.
This information would be everything that Amazon would need to launch massive remarketing and retargeting campaigns to your non-Amazon customers if they chose to do so.
Beyond this, Amazon could also gain more insights into what products are successfully selling on other platforms which could act as an additional R&D source beyond the extensive Amazon data that is currently available to it. This scenario would not be out of the realm of possibility based on past history.
Were they to go this route with Buy with Prime, it wouldn’t be Amazon’s first attempt at (allegedly) violating user data privacy. In 2020, the Wall Street Journal reported that Amazon employees used third-party sellers’ data to launch competing products for their own Private Label (PL) business to boost their sales. Although an Amazon spokesperson denied this, and even launched an internal investigation of its PL division, the retail giant failed to provide a copy of its report. This has prompted the House Judiciary Committee to ask the Justice Department to conduct another investigation into Amazon over a possible criminal obstruction.
With that in mind, could this be an under the sleeve motivation for Amazon to attract DTC merchants who otherwise would have no Amazon relationship outside of Buy with Prime? If so, this would allow Amazon to surveil their data, such as sales velocity per SKU and customer details, and possibly use those to their advantage, i.e., fight for more market share.
Related: How a Seller Doubled Their Amazon Restock Limits
Potential Fulfillment Issues
Since Amazon didn’t have enough capacity to fulfill FBA orders for Amazon sellers and now they’re trying to fulfill for others, what headaches are we going to deal with?
On the one hand, it could be a welcome sign that restock limits are gone for good. On the other though, it could not. In July 2021, we discovered that, while Amazon was slashing restock limits for sellers, they were at the same time doubling restock limits for sellers who fulfilled their non-Amazon sales through Amazon.
At the same time they were telling us there was no space for our FBA-fulfilled inventory, they were incentivizing sellers to use their fulfillment network for other sales channels. The only sense it made was from a data grab perspective. Perhaps this was the initial testing ground for Buy with Prime and why so much focus was put into it in a time when FBA warehouse space was supposed to be at a minimum.
With that in mind, it could go either way but it’s worth posing the question:
Is this actually going to backfire and make it more difficult for Amazon to fulfill deliveries to our customers? 🤔
Buy with Prime could be beneficial to multi-channel sellers fulfilling Shopify orders through Amazon, as it might help them maintain or improve their restock limits if that remains relevant in coming months. Sales from multi-channel orders actually contribute to your Amazon sales velocity. So, the more you use multi-channel fulfillment (MCF) for your off-Amazon business needs, the higher your restock limits will be.
However, Buy with Prime is currently invite-only. Amazon could be reaching out to sellers who are currently selling on their retail site as well as selling on Amazon, or they could be focused only on sellers who are not selling on Amazon at all, including people interested in starting to sell on the platform who just haven’t made the move yet. So, again, all of this may partially be a play to try to get them into Amazon itself.
Expect a slow roll out from Amazon, as they’re still trying to see how it goes.
Participating merchants will be able to display the Prime logo and expected delivery date for eligible products on their online retail sites.
Other benefits include:
- No fixed subscription fee
- All fees except storage fees are charged only after you make a sale
- Pricing includes service fee, payment processing fee, and fulfillment and storage fees per unit
The payment processing fee likely means that Amazon’s going to be running payment processes through Amazon Pay, a service that gives your customers the ability to pay with Amazon payment methods rather than entering their credit card on your website.
Upside to Buy with Prime
Not to be a complete doomsday predictor, there are also many benefits to consider with Buy with Prime. Amazon’s Prime shipping program has set up an expectation in the mind of the online shopper that few other businesses can even hope to meet. Buyers expect free, fast shipping and 25% of cart abandonment is due unexpected shipping costs, while lack of express shipping option is another one at the top of the list.
For this reason, Amazon making their fast, free shipping network available is kind of a big deal. A note of caution is that, as opposed to your standard inventory on hand in your single outside fulfillment center, you’ll likely want to have much more inventory on hand in order to meet one or two-day shipping demands as Amazon meets these targets based on the spread of their inventory across the selling region.
The other benefit is borrowing the trust that Amazon has built around its shipping and payment processing. Your buyer does not need to enter his credit card information on your website because it is processed directly from Amazon’s site. This helps to safeguard against another cart abandonment issue which is concerns about payment security.
All of these factors, both the above warnings and benefits, should be weighed so an eyes-wide-open decision can be made on what you feel is best for your business if you are interested in exploring the Buy with Prime service for your off-Amazon fulfillment.
Now that its infrastructure has been built out to such a massive degree, Amazon is definitely looking to try to make Prime more of a concrete revenue generation system. While they have been previously focused on the “investment in the future” side of the operation by capturing buyer market share and adjusting consumer expectations regarding shipping cost and time, they seem now to be pivoting towards making it work for them on both the financial and data side of things.
And with the recent additions of dimensional weight calculations and 5% fuel and inflation surcharge, fulfillment fees just got a heck of a lot more profitable for them, all while sellers’ wallets unfortunately take the hit.
It seems like they’re flipping a switch and figuring out a way to make Prime an even more lucrative program for them. Amazon done a great job over the years in focusing on getting those delivery timetables right so that potential merchants and customers change their perspective on what is expected in the market, such as free shipping and fast handling and delivery times – from 2 days to same day, while keeping any other intention behind the strategy a bit more ambiguous.
Shipping FBA Inventory from China to UK with SEND: What Could Possibly Go Wrong?
After leaving the European Union (EU) in 2020, UK’s largest import market is China. The country imported £63.6 billion Chinese goods in 2021, which represented 13.3% of all foreign products shipped in to the UK.
According to the British Chamber of Commerce, the exit allowed the country to “independently control its trade,” changing the way in which it interacts with trading partners.
One such change is introducing the UK Global Tariff (UKGT) system, which enables the country to set its own tariff rates for imports with any international trading partners like China. As a result of this change, “over 3,500 products have seen tariffs canceled, reduced, or simplified – enhancing market access and thus encouraging further growth in the UK-China trade.”
However, UK’s departure from the EU also added some complexities around its import law and regulations that could make market entry difficult for some sellers. For instance, dealing with UK customs alone can be a long, arduous process that the government itself suggests hiring customs brokers or freight forwarders to help speed things up.
This is where Amazon’s new logistics service called SEND comes in handy. 🤔
Announced on January 9th, SEND is an Amazon Partnered Carrier Program (APCP) that makes it easier for sellers sourcing in China to ship their FBA inventory from China to the UK.
It’s a shipping solution that allows you to get your inventory:
- Picked-up by a partner carrier at a factory in China
- Cleared through customs and then shipped across Asia to a port in the UK
- Transported from the port to FBA centers in Great Britain
SEND essentially removes the middleman (3PLs, customs agents, or freight forwarders) from your supply chain, which may help lower shipping fees and cut down transit times.
You may also be eligible for the following fee reductions until April 12, 2023:
- Approximately 20% reduction on APCP fees for domestic shipments sent to UK FCs (from a UK shipping address to a UK fulfillment center).
- Up to 50% discount on APCP fees for domestic packages and palletized shipments shipped to Amazon facilities in France, Germany, Spain, and Italy.
Aside from Amazon-facilitated cargo shipping, SEND also offers:
- Seller Central Integration
- FC locking enabling, which means your inventory will only go to a single FBA facility.
- Customs clearance
- Carrier rates negotiated by Amazon
- Shipment tracking
Downsides of Using SEND
While SEND sounds like a cheaper and quicker way to get your goods to the UK, it has a few disadvantages that should be taken into consideration when making a decision.
- Letting Amazon take over your supply chain may not be a good idea. What happens when things suddenly go south, and you don’t have a contingency plan? Shipping delays are almost always a guarantee, especially during peak season. That’s why it would be wise to set aside some extra stock in your backup 3PL or supplier’s warehouse for emergencies, instead of just putting your entire inventory in one basket, especially when that basket is Amazon.
Related:How to Ship to Amazon FBA (And Speed Up Check-in Times)
- Can’t use your preferred carriers. When using APCP, you will be limited to carriers available within Amazon’s shipping network. You might have to spend extra time vetting those carriers you haven’t worked with before or pay a bit more to hire established carriers.
- Amazon may use your supplier information to their advantage. If you’re a top seller, chances are, Amazon’s already keeping a close eye on you. Similar to how they allegedly use seller data to develop competing products, they may use SEND to take a peek into your supplier information and undercut you by working with your supplier to create copycats.
- Amazon may just deliver your cargo from China to UK without checking it. Although not exactly a downside, as inspection is the seller’s responsibility, it’s still something that should be considered to prevent check-in delays at FBA. Amazon may also refuse to accept damaged or defective units. So, before handing your shipments over to Amazon, consider requesting detailed photos of your products and packaging labels from your supplier. Check if the goods meet your quality requirements or are packed correctly to minimize damage during transport. You may also hire a 3rd-party inspection company in China to do these things for you so that your supplier will be less likely to try and cut corners to save money.
In closing, hopefully this post has addressed the advantages and disadvantages of SEND or using APCP in general.
If you still want to give SEND a go, log in to Seller Central > FBA Inventory Dashboard > Select Product(s) > Send/Replenish Inventory to Amazon > Confirm Shipping > Amazon Partnered Carrier.
Or, click here to learn more about the program.
60-Minute Amazon Drone Delivery is Now a Reality
Prime Air, Amazon’s drone delivery service, has finally arrived in California and Texas. 🚀
According to Ars Technica, the online retail giant started flying 5-pound packages by drones to customers in Lockeford, CA and College Station, TX.
With this service, Amazon hopes to speed-up their last-mile deliveries from 1-2 days to less than an hour, especially at a time when they’re reportedly struggling to meet their 2-day delivery promise.
If successful, drone delivery may help Amazon change customer delivery expectations and potentially disrupt the retail industry (once again), aka the Amazon Effect. Why shop in-store when you can get your items delivered right to your doorstep in less than an hour?
In a statement to KTXL Fox 40, Amazon Air spokesperson, Natalie Banke, said that the company’s goal is to safely introduce its drones to the skies. Banke also mentioned expanding drone deliveries to more cities over time.
9 Years in the Making
Prime Air was first revealed by former Amazon CEO Jeff Bezos in a 60 Minutes interview in 2013. Part of the initial plan was to use Octocopters, drones with 8 motors and propellers, to transport lightweight packages to customers in just 30 minutes.
Bezos had estimated that Octocopters will be available to customers in 4 to 5 years, but several technical challenges extended that lead time to 9 years.
In August 2022, Amazon finally got the greenlight from the Federal Aviation Authority (FAA) to fly delivery drones with a maximum payload of 5 lbs each. The said weight represents 85% of the company’s last-mile shipments.
Four months later, the eComm giant’s current model, MK27-2 drones, which are reportedly lighter and quieter than Octocopters, started doing deliveries in California and Texas to help measure buyers’ interest in getting their packages flown over and placed safely into their backyards.
“The drone will fly to the designated delivery location, descend to the customer’s backyard, and hover at a safe height,” Amazon said.
“It will then safely release the package and rise back up to altitude.”
When assessing the safety of drone operations, the FAA takes into the consideration user feedback and all types of potential hazards such as:
- Drones crashing into homes or people
- Propellers causing injuries to people such as cuts and stabs and hearing problems due to engine or prop noise
- Hacking concerns. Drones could be used to hack into computer systems.
- Privacy concerns. Drones can hover over a property or look down into people’s yards.
This is why Amazon continuously develops new tech and redesigns their drones to ensure people feel comfortable receiving packages by unmanned devices.
“While it’s impossible to eliminate all risks from flying, we’re taking a proven aerospace approach to design safety into our system,” Amazon said in a press release dated August 17, 2022.
“Any car you drive is tested—that’s how you know it’s safe. We’re developing our drones in the same way. Just as aircraft manufacturers test their new planes, or automakers test their new vehicles to failure before they go on sale, we test our drones in private and controlled facilities.”
In 2020, the company received a Part 135 Air Carrier Certificate from the FAA. This means Amazon has provided all the required evidence that supports the safety of their drone operations, and thus given permission to “operate as an airline and deliver small packages via drone.”
As of this writing, only Lockeford and College Station residents may sign up for Prime Air. Once signed up, Amazon will then confirm whether they can deliver by drone to the customer’s mailing address. Confirmed orders will also get an estimated delivery time and tracking number.
What’s Next for Prime Air
As Amazon puts it, the MK27-2 drone model is just the beginning. Expect the eComm giant to “constantly redefining, iterating, and experimenting to meaningfully transform the customer experience.”
Amazon also plans to launch its next generation of drones, the MK30, in 2024. Lighter and smaller than the MK27-2, MK30 will have:
- Increased range
- Improved temperature tolerance
- More safety-critical features
- New capability to fly in light rain
With these improved features, customers may feel even more encouraged to select drone delivery over traditional modes of shipping.
Given its potential, we may also see other retailers and legacy carriers offering drone delivery in the coming years.
In fact, corporate giants like Walmart, Alphabet, Domino’s Pizza, and DHL have already taken the first step.
Bulgarian planemaker, Dronamics, is also slated to become the world’s first “cargo drone airline” in 2023. Dubbed Black Swan, the unmanned aircraft is the size of a delivery van and large enough to carry a 770-pound payload and travel across a 1,550-mile range (e.g., Austin, TX to NYC), essentially covering middle-mile shipments.
In sum, it’s an exciting time for the logistics industry as drones could be a safer and faster alternative to existing logistics systems that aren’t as efficient during a pandemic or supply chain crisis caused by labor issues, port congestion, or maritime/air disasters. It will be interesting to see what evolves in this space.
Sellers Feel the Squeeze After Amazon Announces US MCF Fee Hike
Amazon decided to be the Grinch who spoiled the holidays for US sellers after announcing major fee changes to its Multi-Channel Fulfillment (MCF) program.
Sneaking Fee Increases Just Before Christmas
On December 20th, the eComm giant said they will update their US MCF fees to reflect the recent improvements they have made to offer sellers:
- Faster shipping times (from 7 days to 5 days)
- Advanced shipment tracking capabilities and IT security systems
- Free MCF integrator apps for Big Commerce, Adobe Magento, and Wix
⚠️ The updates will take effect on January 19, 2023.
It seems to us that these improvements most impact customer experience rather than seller benefit. While sellers may feel the effects of faster shipping times, it probably won’t be nearly as much as they’ll feel the strain on their profit margins.
On the Forums page, one seller commented that these adjustments would increase the cost of MCF by a whopping 37% for them. Currently, a 5 oz large standard item costs $5.35 to ship, but in 2023, the fee would climb to $7.35 per unit, making MCF an expensive fulfillment method for many sellers. 🤦♀️
Here’s a quick look at how Amazon’s fee adjustments will increase MCF costs for Standard 3-5 Business Days Shipping in 2023:
|Size Tier||Current Rate Card (As of August 16, 2022)||New Rate Card for January 19, 2023 and after|
|Small standard 2 oz or less||$4.75||$7.15|
|Small standard 2+ to 6 oz||$5.35||$7.15|
|Small standard 6+ to 12 oz||$6.20||$7.80|
|Small standard 12+ to 16 oz||$7.45||$8.25|
|Large standard 2 oz or less||$4.75||$7.35|
|Large standard 6 oz or less||$5.35||$7.35|
|Large standard 6+ to 12 oz||$6.20||$8.20|
|Large standard 12+ to 16 oz||$7.45||$8.50|
|Large standard 1+ to 2 lbs||$7.65||$9.50|
|Large standard 2+ to 20 lbs||$7.65 + $0.46/lb above first 2 lb||$9.50 + $0.62/lb above first 2 lb|
|Small oversize 2+ to 30 lbs||$12.50 + $0.46/lb above first 2 lb||$16.00 + $0.62/lb above first 2 lb|
|Small oversize Over 30 lb||$24.70 + $0.46/lb above first 30 lb||$32.88 + $0.62/lb above first 30 lb|
|Medium oversize||$20.20 + $0.51/lb above first 2 lb||$25.25 + $0.62/lb above first 2 lb|
|Large oversize||$103.39 + $1.05/lb above first 90 lb||$118.80 + $1.16/lb above first 90 lb|
|Special oversize||$171.99 + $1.10/lb above first 90 lb||$189.19 + $1.21/lb above first 90 lb|
As you can see, Amazon has also made a few adjustments to its weight tiers. Both “2 oz or less” and “2+ to 6 oz” tiers now fall under a single new category: 6 oz or less. 🤔
So, any small standard item weighing less than 6 oz, for instance, will now cost you $7.15/unit to ship via MCF, a $1.80 to $2.40 per unit increase from the current rates.
If you’re using MCF for small and low-cost products (under $20), you might have to rethink your fulfillment strategy to stay profitable next year. You could raise your prices to account for this fee change, switch to FBA Small and Light to take advantage of reduced fulfillment costs, or incentivize shoppers to buy multiple units in one order so you can qualify for MCF shipping discounts.
Related: Amazon Announces Unbranded Packaging for MCF Orders
Tiered Discounts on Multi-Unit Orders
If the cost of shipping a single item is too steep for you, consider giving out discount coupons or bundling items to encourage customers to increase their units per order – for example, get 10% off with a minimum purchase of 3 items.
According to Amazon, when your MCF order has multiple units, you’ll receive up to 50% discount on your fees.
Suppose you’re shipping a 4-unit small standard 6 oz or less order. In that case, you’re going to be charged $3.72, which is 50% less than what you’d be paying for per 1 unit order.
Here’s how discounts will be applied to standard shipping multi-unit orders.
Go to Amazon Supply Chain to view the latest US MCF rates for expedited and priority shipping.
These price hikes are obviously squeezing every penny out of sellers. And if they continue to increase with little room for adjustment (amid soaring gas prices and inflationary pressures), Amazon might just become too expensive not only for sellers but also for customers, forcing them back to shopping in-store or to look for alternative online marketplaces.
If you have any feedback on these updates, send an email at
You can also visit Multi-Channel Fulfillment for more details.
Related: Amazon Hikes FBA Fees Again: What This Means for Your Business
Walmart Launches New Ways to Find and Buy Products
🙌 Amazon may be the undisputed eCommerce leader, but Walmart is catching up by introducing two new ways to find and shop products online.
Announced on December 8, TrendGetter is a platform equipped with image recognition technology that lets you:
- Upload or take a picture of an item you want to buy.
Often, shoppers browse through their TikTok or Instagram feed and find trending products that don’t have shoppable links or come with a hefty price tag. Luckily, they can now go to TrendGetter to add photos of their must-haves and then let the platform’s visual AI tech offer an exact match or similar items at affordable prices on Walmart.com.
- Select and buy products in seconds.
Once a product is found, buying is as quick as a few button clicks.
While Walmart just released this unique way of shopping online, the technology has been around for some time. In 2020, Amazon launched StyleSnap, where customers can upload a picture of the product they’re looking for in order to find and buy it in just a few clicks instead of scouring Google search for information.
Then in 2022, Amazon Fashion and Snap took things a step further by offering an AR-powered shopping experience on Snapchat through AR lenses that allow people to virtually try on sunglasses.
Given how ahead Amazon is in transforming eComm with artificial intelligence, it’s not surprising to find Walmart launching AI-powered features to change the way customers shop on their website in an attempt to level the playing field.
“We know our customers are searching for what they love at can’t-miss prices. Now, whenever you find a product you love, you can easily search for a similar item at Walmart’s everyday low prices and purchase as soon as inspiration strikes,” Walmart said in a statement.
Text to Shop
Walmart has also recently added a text-to-shop functionality to their eComm site and app so that customers can “shop as easily as texting.”
New users with an Apple or Android device can sign up for an account to get started. Existing eComm shoppers can simply log in to their Walmart account and follow the instructions to get their phone set up with Text to Shop.
Once you’re all set, you can start adding items to your cart with a text or voice text. The AI shopping assistant will then give you the most relevant search results so you can find the best match(es) easily.
Text To Shop was also designed to remember your previous buys so you can quickly update your cart with your favorite products with a text message. This allows for faster and smarter reorders, helping you save time.
“Between balancing your busy schedule, performing at work, managing your household, preparing meals — and ensuring you’ve got everything you need, when you need it — you’ve got a lot going on,” Walmart’s VP of Conversational Commerce, Dominique Essig, said in a statement.
“At Walmart, we know that keeping track of your household shopping list is often a mental task you manage as you go about your day. That’s why Walmart is excited to offer our customers a new and convenient way to shop — by simply texting us.”
Enhanced Version of Alexa
Walmart’s Text to Shop is similar to Amazon’s Alexa in that both AI assistants let you create shopping lists, but the similarities end there.
Walmart took a step further by making Text to Shop capable of remembering and offering items you’ll want to buy next based on your shopping history, and allowing you to set a time for home delivery or store pickup rather than just creating a list.
When grocery shopping with Alexa, for instance, it just helps you make a list, but it doesn’t know the brand names you usually purchase. Unless you specifically said “add Quaker Instant Oatmeal to the list,” it’d just add oatmeal.
Text to Shop, however, will already know what you usually buy, including serving size (e.g., 40 oz oatmeal bag), and suggest Quaker when you text for oatmeal.
And if you’re looking for something you haven’t purchased before, simply text Walmart the product name or information (in as little as one word) and the app will provide you with a few options to select from.
Overall, these advanced AI features may help narrow the gap between Walmart and Amazon. Customers who lead a very busy life may find Walmart the most convenient way to shop online – either by adding a photo of the product they’re looking for to TrendGetter or sending Walmart a text message via Text to Shop.
Related: Walmart and Amazon Battle for Dominance Intensifies, Should You Be Selling on These New Channels?
Updates to Amazon Return and Refund Policy
12/15/2022 (Originally posted 10/01/2022)
Update 12/15/2022: 😩 Another fee will take a bite out of your profits in 2023! Starting January 14, Amazon will no longer cover carrier shipping correction charges on seller-fulfilled returns with “incorrect return label information.”
Correction charges can be applied when:
- The return address label is invalid – for example, text is illegible or part of the address is incorrect or missing. According to Amazon, the carrier will charge $18 per undeliverable package.
- The package weight or dimensions do not match the information you provided. You will be responsible for the difference in cost between the initial label you paid for and the label correction cost. Fortunately, you may also be credited for any overpayment made due to these factors.
This update has drawn the ire of many FBM sellers, arguing that they don’t have control over how customers return unwanted products. A customer may return a small item in a box 5x to 10x its size, for instance.
Some sellers call on Amazon to instead push these correction charges on shoppers who use unnecessarily large boxes when shipping items back, as they rarely receive returns in the original packaging anyway.
But considering Amazon’s customer-centric policies, that’s very unlikely to happen. So the only paths forward sellers seem to have are to either, as per usual, suck it up and just cross fingers that the majority of customer returns come back without additional charges, or to switch to FBA. Otherwise, they’ll be paying the price as another line item to add to the profit and loss. 🤔
Go to Shipping Correction Charges for Seller-Fulfilled Returns to learn more.
Update 11/11/2022: 📢 Amazon just updated their Reimbursement Policy! Effective November 11, 2022, eligible unfillable units “will be reimbursed at a discounted rate to reflect the actual fair value of the item” rather than their regular retail price.
Unfillable items are returns from customers that can’t be sold as “New” on Amazon. If an unfillable item is lost or sent back in damaged condition, Amazon will reimburse you at a discount on the regular price. 😦
This could impact a lot of sellers that get a lot of returns in Q4. Profit is less in case a customer returns a heavily worn item (and thus unsellable) or Amazon loses them.
👉 Be sure to read on to learn more about the latest on Amazon’s Return and Refund Policy, as well as some pro tips for reducing unnecessary returns and abusive claims.
Amazon has updated its Return and Refund policies in preparation for Q4! 🚚
Extended Returns Window
For US sellers, the eCommerce giant is temporarily extending the standard returns window for early holiday shoppers.
Amazon recently confirmed that it will hold a 2nd Prime Day sale on October 11-12 to give (inflation-weary) consumers a head start on finding and shopping the best deals online.
Most orders have a 30-day return window, but for products bought between October 7 and December 31, 2022, customers can return them until January 31, 2023. That’s a 3 to 4-month extension, which is good for buyers, but some sellers don’t see the benefit of this update.
It could allow unscrupulous individuals to use their products for free for 3 months and return them in January when they’re “no longer wanted or needed”’ – for example, buying Christmas decor in November and then sending it back after the holidays. 🤦♀️
But do note that the returns eligibility remains unchanged for all orders, so not all returns will be accepted.
Refund at First Scan (RFS) for Seller-Fulfilled Returns
Amazon is postponing the release of RFS for seller-fulfilled returns in the UK until October 24, 2022. It was supposed to take effect on September 30th.
Initially introduced on May 4th, RFS is part of the Prepaid Return Label program that allows a shopper to receive a refund after their designated carrier has successfully scanned their returned item using the prepaid return label issued by Amazon.
During the scanning stage, sellers have no way of inspecting the item themselves, so the risk of receiving a knock-off version (or worse, a brick!) instead of the original item is high. 😓
If the product is received in damaged condition, sellers can file a SAFE-T claim on their Seller Central account within 60 days of the refund charge. However, this means Amazon may still deny your claim and you will bear some losses. It also means much more manual oversight.
To minimize unnecessary returns, consider employing tactics like having highly detailed product descriptions, images, and product sizes and dimensions or offering live chat support to address customer concerns immediately.
You can also try to reduce abusive claims by establishing some oversight mechanisms such as manual inspection of returned items, documenting each order (before and after photos), or using signature confirmation on premium products.
⚠️ Proper documentation of orders, from preparation to order tracking to delivery (e.g., signature confirmation on high-value items), is highly recommended to have a solid SAFE-T claim.
Sellers should be aware of these refund and returns changes and factor these into your cost of doing business this holiday season.
4 New Amazon Seller Tools to Accelerate Business Growth
In case you missed it, Amazon recently introduced multiple seller tools designed to aid you in growing your business quickly. 🚀
FBA Small and Light Recommendations
Amazon’s Growth Opportunities program continues to expand with indications of eligibility for Small and Light (SNL), an FBA program that offers fulfillment discounts on eligible compact and low-cost products. Based on current eligibility requirements, items weighing up to 3 lbs and priced under $12 may be qualified for the program.
With FBA Small and Light Recommendations, you can now:
- Discover and review products that are eligible for enrollment in SNL so you don’t miss out on potential savings. For instance, if you’re selling a 4 oz product that’s qualified for SNL, you will only pay $2.47 fulfillment fee per unit, $0.75 less than Amazon’s rate for non-SNL items weighing 4 oz or less.
- Use sales metrics to figure out which SNL products will deliver the best return on investment possible.
- View Amazon’s recommendations for your business in the Explore Selling Programs page.
This could be a quick win for sellers giving them an easy way to identify products that are eligible for SNL. Qualifying for the program could also give them more room to adjust their prices, especially after Amazon recently announced they will be raising FBA fulfillment fees again next year.
To get started, go to Product Recommendations > Top 50 Opportunities > Enroll in FBA Small and Light.
Account Health Assurance
Launched on November 16th, Account Health Assurance (AHA) helps sellers who maintain a high Account Health Rating (AHR) avoid automatic account deactivation when they encounter an issue. This new benefit basically allows them to keep their selling privileges while working on getting any issues resolved with Amazon.
Sellers who maintain an AHR of 250 for at least 6 months (except seasonal businesses) are automatically enrolled in the program. Suppose your account is at risk of deactivation due to policy violations, an Amazon rep will reach out by phone or email and provide you with recommendations for addressing the problem within 72 hours.
While AHA can be a helpful account deactivation risk alert tool, meeting or exceeding the 250 AHR threshold to be eligible may be quite steep for budding micro businesses that nevertheless have a good track record.
According to some sellers on the Forums page, one would need around 14 orders each day without any violations for 6 months to reach the 250 AHR cap, essentially putting smaller sellers at a disadvantage. So, either they have to significantly increase their daily order volume to hit (and maintain) the target or Amazon has to update its metrics to account for these micro brands.
As of this writing, the AHR formula only tracks order volume and violation count and type. For example:
- 200 is base AHR score with no infractions
- Assuming no infractions, to increase your score, you would have to fulfill 50 orders to gain 1 point. Simply put, 1 point for every 50 orders in 6 months.
- 204 AHR = 200 orders in 6 months
- 250 AHR = 2,500 orders in 6 months
- 1,000 = 40,000 or more orders in 6 months
In sum, AHA seems like a great tool for those who at least have 250 AHR, although its limitations may exclude some micro sellers who don’t want to go big or those that otherwise may have qualified if the AHR formula also takes the type of product (large appliances, luxury goods, among other niche items that are less likely to get sold 14x a day but enough to turn a profit) into account.
Related: How Does Amazon’s Account Health Assurance Work – And Is There A Catch?
Group Buyer-Seller Messages into Cases (UK Sellers)
Keep your interactions with the same buyer organized!
Group buyer-seller messages into cases instead of forming an ongoing thread.
For instance, once a buyer’s issue or question is solved, you can mark the “case” as resolved so that when that same buyer communicates with you again in the future, the interaction will start as a new case.
This new feature also allows you to sort messages by order and topic, making it easier for you to address concerns, which is essential in keeping shoppers satisfied with your customer service.
You can opt-in to this new feature by clicking the Messages Inbox banner.
Related: Amazon Now Allowing Email Marketing Campaigns to Repeat Buyers
Announced at Amazon Accelerate 2022, Express Payout is a new payment service that lets you receive deposits within one day (even on Sundays) rather than waiting 3 to 5 days on Automated Clearing House (ACH) transfers.
This is a huge deal for small and medium-size sellers that need to access their funds quickly to be able to buy additional inventory or fulfill any financial obligations owed to suppliers, aka inventory payments.
Who is Eligible for Express Payout?
US sellers must have the following to be eligible for the payment service:
- An in-network US bank account
- A primary address in one of the 50 states. Those in US territories are not eligible.
- Transactions of $1 million or below at the time of payment initiation
Express Payment is available to US sellers for free until September 2023. After the promo ends, Amazon will charge a $0.50 flat fee per transaction.
Visit the FAQ page for more details.
Bonus: Make last-minute changes to your product descriptions and brand story features to boost product visibility and sales this Q4 with A+ Content Practices Best Guide.
Amazon Will Pay Customers $2 per Month to Track Their Ad Data
Amazon is offering some select shoppers in the UK and US monthly monetary rewards for access to their ad data in an effort to improve personalized ads, a major growth area in Amazon’s booming ad business. 💰
Personalized ads have been found to have a higher click-through rate than other types of ads. In fact, a 2018 study from Epsilon showed 80% of shoppers are more likely to buy from a brand that offers personalized experiences. And in exchange for better user experience, 90% of customers are willing to share their personal behavioral data with companies, according to SmarterHQ.
But if provided with several offers from various pay-for-data apps, will they still choose Amazon and do it for $2 per month? You’re probably thinking it’s better than nothing. Afterall, many people are already trading their data for free apps like Google Search, Facebook, or Gmail, except that they’re not getting paid for it.
How Ad Verification Works
Some members of the Amazon Shopper Panel have been invited to opt into Amazon’s Ad Verification program, which if enabled on their phones, will allow the tech company to monitor:
- What ads users saw
- Where they saw them
- And the time of day the ads were viewed
The program tracks Amazon’s own ads and ads from third-party businesses that advertise through the company’s ad platform.
On the one hand, Ad Verification may be able to provide sellers with a vast trove of data about their customers’ shopping patterns, allowing them to target buyers at the exact moment they’re most likely to buy.
On the other hand, not only will this program help boost Amazon’s ad revenue, but the company could also use its access to people’s phones to identify and develop trending products for its own private label division – products which could compete with sellers’ own offerings.
Related: Amazon Reduces Their Private Label Catalog Amid Mounting Regulatory Pressure
Implications of Selling Your Data to Amazon
While it’s good that participants will get something in return, some industry experts can’t help but feel skeptical about Amazon’s ad data collection program, given the company’s penchant for questionable data mining tactics. 🤔
Some think that $2/month is too small in comparison to other pay-for-data apps that offer up to $50 per year, while others have data privacy concerns.
In a comment to Retail Wire, Ryan Mathews, Founder and CEO of Black Monk Consulting, said:
“Amazon telling consumers their ad data is worth something is a good move. Telling them it’s only worth $2 a month is an insult to their intelligence. Maybe $24 a year is a fair price for privacy in some people’s heads – it clearly is in Amazon’s – but I think the lack of participation and potential consumer and regulatory feedback will cost Amazon more than it will gain.”
When asked to comment on privacy concerns, an Amazon representative pointed Business Insider to Amazon Shopper Panel’s FAQ page and the retail site’s privacy notice, noting that participants can quit the program at any time.
Another concern raised by some experts is that the program may also suffer from some degree of self-selection bias (people select themselves to be included in a program, survey, or research, resulting in biased sample data). ⚠️ Therefore, when only those who like trading their data for a fee choose to opt in, the sample may leave out other demographics that could be just as, if not more, important or relevant to Amazon and third-party sellers, i.e., the big spenders.
For shoppers interested in joining Ad Verification, it would be best to consider the value of the data you’re trading versus what you’re getting in return and whether or not you’re the right demographic for the program.
For sellers, additional first-party data from Ad Verification may help them refine their ad strategies, especially at a time when ads are increasingly getting more expensive – might as well get your money’s worth with high-performing personalized ads – not to mention more restrictive.
However, the program is still in its early stages so its impact on Amazon Ads remains to be seen. Amazon may also have to ease people’s biggest concern first – how it handles customer data – in order to attract more participants to the program and reduce scrutiny from antitrust watchdogs. 👀
Related: Amazon Agrees to Final Deal to Close EU Antitrust Probes
Updated: EU Advised by NGOs to Refuse Amazon’s Flawed Proposal for Antitrust Settlement
12/06/2022 (Originally posted 09/08/2022)
Update 12/06/2022: 🙌 Three years after Brussels launched an investigation into whether or not Amazon uses seller data to conduct anti-competitive practices. The EU Commission has reportedly reached a final deal with the eCommerce company, according to the Financial Times (FT).
👌 Amazon has agreed to:
- Boosting the visibility of competing products by giving them equal treatment on the platform’s Buy Box.
- Creating an alternative featured offer for shoppers where the speed of delivery is less important. This means customers, including Prime members, will no longer be locked into Amazon Logistics.
These commitments show how other tech giants Alphabet, Apple, and Meta will have to comply with the EU’s Digital Markets Act, a pan-EU legislation that aims to ensure that platforms behave in a fair way online.
The EU Commission plans to make an official announcement on the 20th of December, noting that the date could still be changed, FT said.
I’m sure this will be a win for many sellers but time will tell as to how significantly the impact will be felt in the end. The Buy Box victory could be a big one in theory but we had hoped to see something around prohibiting the use of seller data for Amazon’s own branded product development.
After three years, the results seem a little lackluster but I don’t think we expected anything too mindblowing here. However, the EU seems to always be several steps ahead of the US in terms of fair practices towards sellers so we’ll give kudos there and wait to see how it all actually rolls out in the marketplace.
🇪🇺 Twelve civil groups called for the European Commission to reject “outright and in full” Amazon’s proposed changes to its business practices in Europe in order to resolve the two antitrust investigations formally opened by the Commission against the eCommerce giant.
The commitments that Amazon offered including their use of third-party seller data and non-discriminatory access to Buy Box and Prime have been criticized as “weak, vague and full of loopholes” by a dozen civil and digital rights associations, non-governmental organizations and labor unions.
These organizations include:
- Austrian Federal Chamber of Labour (AK Europa)
- Balanced Economy Project
- Digitale Gesellschaft e.V.
- European Public Services Union (EPSU)
- FairVote UK
- Simply Secure
- Center for Research on Multinational Corporations (SOMO)
- UNI Europa
- WEED (Weltwiommitmertschaft, Ökologie & Entwicklung e.V.)
How it All Began
In a press release dated 17 July 2019, the Commission announced its first antitrust investigation against Amazon to examine if its use of data from the independent sellers on their platform have violated the bloc’s competition rules.
Commissioner Margrethe Vestager, who handles competition policy, said she will closely examine the company’s business practices and its “dual role as a marketplace and retailer”, to guarantee healthy retail competition levels, diverse product choices, and competitive prices for consumers in the European market.
Sixteen months later, the Commission announced in another press release that it has sent a Statement of Objections to Amazon after its initial findings revealed the company had violated the EU’s competition rules by using the private business data of its marketplace sellers to drive Amazon’s own business decisions, resulting in unhealthy, distorted competition.
Vestager said Amazon utilized big data to “illegally distort” competition in eCommerce markets and take advantage of its market position in France and Germany, its two biggest EU markets.
The Commission also announced it is opening a second investigation into the company’s potentially biased practices regarding their own product offers and those of sellers who choose Amazon’s shipping services.
The first antitrust investigation stemmed from a sectoral eCommerce review conducted by the EU’s competition division way back in 2015. The Commission itself started probing on whether Amazon sellers were being placed in an unfavorable position by the company in 2018 – given its ability to access their business data.
Amazon came up with a list of voluntary commitments to adjust its business practices in the EU and address the Commission’s antitrust concerns.
These commitments show Amazon’s determination to end the ongoing antitrust investigations by the European Commission while it is facing increasing criticism and pressure from different law-making bodies all over the world, mostly about the misuse of its independent sellers’ business data for its own profit.
Should the Commission accept Amazon’s offer, the proposed commitments will be effective for a five-year period and enacted across the bloc except for Italy, which has already fined Amazon over $1 billion for exploiting its position in the market.
Any breach of the commitments will result in the eCommerce giant paying up to 10% of its worldwide revenue as penalty.
Dated July 7, 2022, the commitment proposal includes changes to:
- Amazon’s use of marketplace seller data. Amazon will not use the data linked to, or sourced from, the business operations of the sellers on its marketplace for Amazon’s own retail business that is in competition with said sellers.
- Amazon’s Buy Box winner selection and competition. Amazon will be fair to all sellers in evaluating their Buy Box offers; the company will also put a second competing offer to the Buy Box winner that is significantly different from the winner in terms of cost and/or shipping.
- Amazon’s Prime qualifications and shipping. Amazon will establish fair requirements for sellers and products to qualify for the program. Prime sellers will also have the freedom to choose their own courier and discuss matters directly with their chosen logistics provider. The company will also not use any data regarding external logistics providers’ terms and activities derived from Prime.
The Commission sought feedback from the public regarding these commitments from July 14 to September 8.
Reasons for Rejection
In a statement, the twelve organizations pointed out that the commitments Amazon offered are susceptible to avoidance and abuse by the company.
They argued that most of the commitments Amazon offered will be included in the Digital Markets Act (DMA), an upcoming pan-European legislation, that will change the EU’s strategy related to ensuring competition in Big Tech.
DMA will impose certain regulations for “gatekeepers” who are oftentimes accused of misusing data and showing preferential treatment.
Comparing the DMA and Amazon’s offer, the group said the new law – which is expected to take effect next year – is more comprehensive and will be imposed by the Commission instead of Amazon itself. The signatories do not agree that a private company should propose voluntary commitments that resemble the stipulations from an upcoming European law.
Amazon’s suggested five-year validity period or any time period at all is also deemed “unjustifiable.”
The fact that it is Amazon itself defining the terms of their proposed commitments ultimately undermines the European Commission’s authority, which, clearly, the civil groups have picked up on and are rallying against.
The group collectively urged the Commission to persist in pursuing its antitrust investigations against the company and enforce the necessary resolutions and sanctions on its own terms. They also requested the Commision to demand from Amazon a separation of its marketplace, retail, and delivery operations to tackle issues relating to its superior position and influence in interconnected services.
Impact on Amazon’s Future Operations
The ongoing EU probe, not to mention the impending US antitrust law called the American Innovation and Choice Online (AICO) Act (S.2992), could have significant repercussions on Amazon’s operations worldwide. ⚠️
These issues could force Amazon to rethink their use and level of access to the private data of their marketplace sellers in the bloc, US, and other regions that may follow suit.
Should US lawmakers pass the AICO, for example, Amazon could be penalized by the US government and antitrust bodies if found to have used their marketplace seller’s data to produce a similar product to intentionally compete with their third-party sellers.
Amazon already previously announced the reduction of their private label (PL) catalog items earlier this year due to low sales and possibly to avoid penalties under AICO.
Since its launch in 2009, Amazon’s PL business has been criticized for giving the company an opportunity to compete and highlight their own products over the independent sellers’ on their platform through a manipulation of their own search algorithms.
As a data-driven company, these laws will compel Amazon to rethink its current business model if it wishes to remain a trusted, relevant leader in the eCommerce environment.
Amazon Announces Unbranded Packaging for MCF Orders
📢 Amazon announced on December 3rd that sellers can now ship all Multi-Channel Fulfillment (MCF) orders once again in brand-neutral packaging, but this time, at no extra cost.
In 2016, the eComm giant inexplicably removed unbranded packaging from its paid FBA services and thereafter Walmart started suspending sellers guilty of using branded boxes or logistics services from its competitors because it was (and still is) against the company’s policies to fulfill Walmart orders in Amazon-branded boxes or to use Amazon Logistics for fulfillment.
In 2020, Amazon brought the program back under a different name – MCF Blank Box Order Fulfillment – but it was only available to a select group of sellers.
And just this month, Amazon announced a wider roll out of unbranded packaging service and started shipping MCF orders in plain cartons or poly bags at no additional cost.
This is especially helpful for sellers who may want avoid using Amazon’s branding when shipping to customers from competing sales platforms.
The reintroduction of unbranded packaging may be Amazon’s answer to rivals catching up. As previously reported:
- Walmart is rapidly branching out into eCommerce after dominating the brick-and-mortar space for decades. Over the last two years, it launched its own fulfillment service for third-party sellers, opened its online marketplace to non-US based sellers, and expanded its display ads program, Search Brand Amplifier, to take on Amazon.
- Shopify has also spent the last two years building out its own fulfillment network. It has recently acquired Deliverr to be able to compete with Amazon Buy with Prime.
- Alphabet continues to expand its suite of eCommerce tools to turn Google into an online shopping site and transform YouTube into a live shopping platform, allowing them to stand toe-to-toe with Amazon, Shopify, and Walmart, as well as social commerce giants TikTok and Instagram.
- Chinese tech giants Pinduoduo, Shein, and TikTok have also recently entered the US eComm market.
Clearly, the battle for dominance is no longer just between Amazon and Walmart. Sellers now have more diverse marketplace options to expand their businesses into – all the more reason for Amazon to try to keep hold of Walmart, Shopify, or Google orders to maintain dominance and more importantly, to hold on to your MCF data.
Gain Access to Valuable Intel
The termination of brand-neutral packaging in 2016 worked greatly to Walmart’s advantage as it helped them to keep their data from the prying eyes of Amazon.
As we’ve explained before, Amazon uses your MCF volume when calculating your Inventory Performance Index (IPI) score and restock limits. Additionally, when you fulfill orders from Shopify through FBA MCF, for instance, Amazon also gains access to your off-Amazon sales and customer data – extremely valuable information that they could use to:
- Size up and fend off the rise of their rivals
- Develop their own private label brands
- Remarket Amazon products to shoppers from other platforms
Realizing the significant amount of intel that Amazon lost from removing unbranded packaging may have prompted them to gradually bring the service back.
And to make sure you stay compliant with other marketplaces’ policies, Amazon now automatically ships all MCF orders in plain boxes or poly bags.
Unbranded packaging is available for eligible sortable items. Non-sortable goods, footwear, apparel, and any products heavier than 50 lbs (rounded off) or bigger than 56 inches are not eligible and therefore, cannot be shipped in brand-neutral packaging.
If, however, a certain marketplace prohibits you from using Amazon Logistics for fulfillment (like Walmart and eBay), MCF has a paid service that lets you add the option to block orders from being shipped by Amazon.
Even though Amazon provides this option to circumvent certain delivery, we still wouldn’t recommend using FBA’s MCF for Walmart as the channel is strictly against it and has ways of tracking down whether you may be violating their policies. Walmart seller accounts have been shut down for doing this so it is best not to take on the risk.
But overall, launching unbranded packaging is a smart move for Amazon that not only allows them to get their hands on some valuable data, but could also keep you dependent on MCF and make FBA look more attractive to non-Amazon sellers.
Amazon Storage Limit Manager: Would You Pay for Extra Storage Space?
Sellers can now buy more FBA storage space, but is it worth it? 🤔
What is Storage Limit Manager?
Introduced in February 2022, Storage Limit Manager (SLM) is a program that offers sellers with Inventory Performance Index (IPI) storage volume constraints a way to request for extra storage at potentially no additional cost.
Note: IPI storage volume limits must not be confused with restock limits, which is an Amazon inventory restriction based on storage units (e.g., 4 months’ worth of inventory), not storage space (e.g., 2,000 cubic feet).
When Amazon lowered the IPI threshold from 450 to 400 in January, we knew a service like SLM was imminent.
There are already sellers paying for Vine reviews and other Amazon programs. Around 10% of FBA sellers would be subjected to storage volume limitations with the recent IPI change. Thus, there was an opportunity to offer a pay-to-play service that lets eligible sellers bid for additional space.
Is Storage Limit Manager an example of Amazon making rules so they can create programs to allow you to pay to break those rules? 🤦♀️
While you could benefit from extra storage, you need to have the right processes and systems in place to efficiently use that space and minimize storage fees. Otherwise, it would just be an added expense.
⚠️ So, before pulling the trigger, consider the facts below.
How It Works
- As of December 2022, the service is only available by invitation to US sellers with an IPI score ranging from 350 to 400. We don’t know if “by invitation” means Amazon is sending out invites to everyone within the required IPI score range or to some pre-selected sellers within that range.
In order to apply for a storage limit increase, go to the Storage Limit Manager in your seller account and see if you have the ability to submit storage limit increase requests through their portal.
If you do not but you believe you are qualified, it would be best to contact Amazon to try to gain access to this program. But before you do that, be sure to read the rest of this article to know what you’re getting yourself into.
- When creating a request, you can specify how much additional space you need (up to 20% of the original limit) for a specific quarter and the maximum reservation fee you’re willing to pay to reserve it. You may request additional storage increases for standard-size, apparel, oversize, or footwear storage types.
- Amazon reviews their fulfillment capacity weekly and grants requests until all available space has been allocated. Seller(s) with higher bids are likely to get approved for storage increase more quickly.
- If granted, you will then be committed to the reservation fee specified in your request. However, depending on your inventory performance over that time, some or even all of that fee may be waived. More on that below.
Now, let’s look at the pros and cons of Storage Limit Manager.
- May help improve IPI score. If you’re eligible, you can use the additional storage space to boost sales. And as your sales increase, so will your IPI score, taking you closer to unlimited storage in the succeeding quarters.
- Only pay what you can afford. Again, you have complete control over how much you’re willing to pay for the additional space you need.
- Lowest reservation fee guarantee. Your fee may be lower or equal to the amount indicated in your request. For sellers whose storage increase requests are approved in the same week they applied, similar to how PPC bids work, Amazon could apply a lower reservation fee than your suggested reservation bid.
- Qualify for performance credits to reduce fees. These are monetary credits earned from sales made using the additional storage space. You’ll earn $0.15 per dollar of sales and they will be used to lower your reservation fee.
- No upfront payment required. Only pay the reservation fee (if there’s any remaining) after your target selling period.
- Amazon grants requests starting with the highest bidder. You may need to gamble a good amount of your working capital to increase your chances of getting approved, especially if you’re on a tight deadline. Otherwise, you may have to wait for weeks before getting the storage increase you need.
- Under pressure to move inventory as quickly as possible. You only have a quarter to sell through inventory and earn enough performance credits to reduce or eliminate your reservation fee. To achieve that, you may need to run flash sales, buy more ads, or generally have a solid marketing plan. If not, you will be “responsible for the remaining balance (reservation fee minus performance credits)” at the end of your target selling period.
- Not for everyone. You may be eligible for the program, but if you’re not confident that you can utilize the additional storage space efficiently and offset your fee with performance credits, it may be wise to not proceed and to instead explore other options.
If gaining additional storage space will really help your business, but you’re anxious about the cost, consider doing some math first.
IPI Storage Limit Increase Calculator
Thankfully, Amazon has provided sellers with a downloadable calculator that allows you to estimate performance credits and payments based on performance credits earned.
Estimate Performance Credits
- Inside the spreadsheet, enter your storage and sales information, such as storage type, initial FBA storage limit (cubic ft), and desired storage limit increase to calculate your estimated sales for the target period in your selected storage type. Amazon recommends keeping your storage increase request within 20% of your initial limit. This is perhaps to ensure efficient use of the added storage space.
- Based on the information above, Amazon automatically calculates your:
- Increase ratio (up to 20%)
- Sales qualified for performance credits (increase ratio x total estimated sales)
- Estimated performance credits ($0.15 x sales qualified for performance credits)
- Estimated performance credits per cubic foot (performance credits / storage limit increase)
Estimate Payments Based on Performance Credits Earned
There are three different sales scenarios that show the amount of performance credits you should earn to offset a portion or 100% of your reservation fee.
- Sales 20% below estimate – Sales below this percentage will result in fees.
- Sales equal to estimate – You’ll pay no reservation fee.
- Sales 20% above estimate – You’ll pay no reservation fee.
Ideally, you need to keep your sales right on or above 20% of the estimate to be able to fully offset the reservation fee.
Run multiple calculations so you can find the best possible scenario for you. Don’t forget to factor in the other expenses that will go into moving that additional inventory like marketing, logistics, and fulfillment fees. Then, compare the estimated total cost with alternatives like Fulfilled by Merchant (instead of FBA) or Amazon Warehousing and Distribution to figure out which path is best to pursue for your business.
Updated: Bad Actors Book Multiple Inbound Amazon Delivery Dates to Create Scarcity
12/02/2022 (Originally posted 11/24/2022)
Update 12/02/2022: The struggle to secure appointments at FBA continues! 🚨
In a LinkedIn post, Ephraim Ausch, Chief Logistics Officer at Tactical Logistic Solutions, shared that Amazon is routing a lot of FBA shipments to a new fulfillment center (FC) called QXY9 instead of LAX 9. Worse, still no delivery dates are available for the remainder of December, thanks to the scalpers! 🤦♀️
Ausch has already called on Amazon to stop the people that are selling delivery dates for large sums of money.
🤝 The Amazon seller community can also help out by sending over any proof of the alleged scalping incident to Jeffrey Cohen, Tech Evangelist for Amazon. On Ausch’s thread, Cohen personally called out for evidence that can be forwarded to Amazon during their investigation. The scammers are reportedly bundling these appointments with their trucking services or offering them “a la carte” to desperate sellers.
If you have any proof of these incidents, please reach out to Cohen to help with this matter.
We’re hoping for a quick resolution to this ongoing issue to help ensure that sellers who fight fair and square will have a successful holiday season. 💪
A LinkedIn Post from Brandon Young, CEO of Data Drive & Seller Systems, reveals that full truckload delivery dates to fulfillment centers in Southern California and other locations are booked up until the end of December because bad actors have found a way to rig the system. 🤦♀️
Malicious Concerted Action Against Competitors
When we reached out for more details, Young told us he’s “seen through WeChat messages in Chinese seller groups that some are booking the appointments with the intent of creating scarcity and hurting competitors. They warned others to get appointments early to avoid also being hurt.”
This anticompetitive behavior puts many sellers at great risk of missing the holiday selling period. Top sellers from China and Hong Kong make up 63% of all third-party (3P) sellers on Amazon, while their Western counterparts only take up around 37% of the entire 3P marketplace.
If a large number of Chinese sellers are in on the scheme, they could easily cause significant disruption to their competitors’ logistic operations, especially American sellers who make up 34.8% of Amazon 3P marketplace and have reportedly been gaining market share since November 2020.
Interestingly, California has the most number of sellers in the US, according to Ecomcrew. It is also one of the largest Amazon distribution hubs as west coast ports are most highly trafficked for Chinese shipments due to proximity. For these reasons, bad actors may have specifically targeted the Bear Flag state to ensure widespread disruption. 🤔
The US economy showing signs of slowing down might be one of the key factors driving this ferocious competition among sellers. During a downturn, consumers set stricter priorities (essentials over non-essentials) and reduce their spending.
These challenges have caused some sellers to take drastic action. Sellers who aren’t keeping up with these economic shifts are facing declining margins, forcing some to lower their prices to attract more customers, while others resort to abusive practices to reduce competition, which could then lead to higher prices.
However, rather than fighting for their market share fairly, some Chinese sellers are actively working to hurt their competitors, although some are not strangers to such extreme methods. In 2021, Amazon banned thousands of Chinese stores on its platform for review fraud, counterfeit products, sabotaging competitors’ listings, among other Terms of Service (TOS) violations.
Related: How Sellers Can Compete Against China’s Amazon Dominance
Truckers Extorting Sellers to Generate More Money
Young also shared in his statement that some trucking companies are booking multiple free delivery appointments “with the intent of selling them back to desperate sellers.”
The malicious truckers allegedly bundle the appointments with their delivery offers, while others just sell them as a stand-alone service for outrageous prices ranging from $500 to $2,000. 🤦♀️
Amazon recommends sellers to get their holiday inventory checked in by December 1st to avoid delays. With a few days left before the deadline, sellers who haven’t secured any appointment yet due to the artificial scarcity created by these bad actors may find themselves either:
- Giving in to one of these extortionists
- Or, shipping small parcels at 5x to 10x the cost of truckload deliveries
Not only will this add more stress on sellers (and their third-party logistics providers), but also take a huge bite out of their profits.
In a comment to Young’s LinkedIn scoop, Ephraim Ausch, Chief Logistics Officer at Tactical Logistic Solutions, expressed frustration over the issue and shared, “Some locations are booked up till end of December! I know someone that paid $2,000 yesterday for LAX9 appointment… This has to be resolved by Amazon!”
Hope for Resolution
Currently, Young is gathering more information about the sellers and truckers hijacking Amazon’s delivery appointment system. Industry experts in his post’s comment section also recommend naming and reporting these bad actors so that Amazon can remove their appointments and ban them on the marketplace.
The manner in which they’re able to game the system, whether by using some technology or buying intel from an Amazon employee, remains unclear. An internal investigation by Amazon will definitely help shed some light on the matter. 💡
Jeffrey Cohen, Amazon Tech Evangelist for the eComm giant, works with sellers and looks to help to bridge the gap between Amazon and industry influencers, brands, and third party integrators, has already asked Young to email him all of the pertinent details so that he can share them internally for investigation.
“I know that Amazon has been reaching out and trying to work with me on it as well,” Young told SoStocked.
“They acknowledge things need to change to ensure all sellers have the ability to send goods in a timely fashion,” he added.
His post and the fast action within the community have helped to sound the alarms to make Amazon aware of this issue.
Our hopes are that it can be resolved very quickly and that the loophole be closed so that the holiday season will be successful for the many thousands of sellers who play by the rules.
Note: This is a developing story. We will give updates on the situation as we learn more from our sources.
Related: How to Ship to Amazon FBA (And Speed Up Check-In Times, 3PL Logistics Backup for Amazon, 14 Mistakes Sellers Make When Shipping to Amazon FBA, Amazon Closing Shipping Loopholes May Wreak Chaos for Some Sellers
Is Amazon Prepared for the Holiday Rush?
Labor issues, rising costs, facility closures, bad actors rigging inbound FBA delivery systems, and persistent supply chain challenges grip Amazon, leaving many sellers wondering whether the eComm giant is really prepared for the holiday rush. 🤔
It’s Not All Doom and Gloom
Amazon’s record-breaking BFCM sales are a beacon of hope amid all the doom and gloom.
The retailer said on Wednesday that this year’s Thanksgiving-BFCM shopping weekend, aka Turkey 5, was its “biggest ever,” with shoppers ordering hundreds of millions of products during the sales period. 💰
Amazon did not disclose the sales figure for its Turkey 5 weekend, but data from Adobe Analytics show customers shelled out $9.12 billion online on Black Friday, a 2.3% increase from last year, while Cyber Monday sales grew 5.8% to $11.3 billion.
This suggests people are ready to splurge again and comb through Amazon for deals, thanks to deep discounts from sellers. In addition, this shopping trend may continue through December as customers are still not done with holiday shopping, according to the National Retail Federation (NRF). This indicates more purchases in the weeks ahead – all the more reason to be extra prepared for the rest of the holiday season.
For Amazon, the holidays may be short, but preparation begins a few months in advance.
Amazon has been preparing for Q4 since August when it brought back restock limits. With this change, sellers can only send up to four months’ worth of inventory, allowing the company to ease pressure on its warehouses ahead of the holiday rush.
In October, Amazon announced it’s hiring 150,000 US workers to “help deliver great holiday experiences” (and possibly to replace the 80,000 employees the company lost to attrition). The jobs include stowing, picking, packing, sorting, and shipping customer orders, among others.
The mass hiring began as the eComm giant geared up for major Q4 events, such as Prime Early Access Sale in October, Turkey 5 in November, and Christmas/Year-End Sales in December.
Amazon distribution centers typically see a significant increase in their deliveries during this period. For instance, a new facility in Ashland only delivers about 15,000 packages in Missouri during off-peak, but that number could rise to more than 23,000 packages per day during the holidays. Therefore, hiring additional workers is a crucial part of the company’s holiday preparations.
“We have spent the last couple of months preparing for this time,” Aaron Pondrom, owner of Frontline Logistics, told Komu, a local TV station in Missouri.
“We’ve been actively hiring within our community to hire good drivers in order to deliver for this time of the year,”
Although Amazon is looking to employ 150,000 warehouse associates for Q4, it also plans to lay off 10,000 corporate employees to cut costs starting in December. This may sound concerning given that they’re doing it during such a crucial time of year, but holiday orders will not be affected, according to Ofori Agboka, Amazon’s VP of People, Experience & Technology, Global Operations.
“In our operations, we are prepared, and we believe we’re gonna deliver on behalf of our customers in the timeframe that they need,” Agboka told CBS News.
Aside from ramping up its workforce, the tech giant also continues to develop its drone delivery fleet and increase warehouse automation efforts to streamline its fulfillment process despite getting flak from workers and union leaders.
While automation makes labor a lot less intensive, it also reduces the need for Amazon to hire more employees, which also means less unionization activity.
Amazon’s Black Friday event in particular kicked off with protests from warehouse workers around the world. Led by Make Amazon Pay, an assembly of 70 trade unions and organizations, protesters are demanding higher pay, safer working conditions, and lower carbon emissions.
Strikes were held in over 30 countries, including the US, UK, France, Germany, and Japan, according to the coalition. In the US, protests took place in more than 10 cities, including Amazon’s corporate headquarters in Seattle, Jeff Bezos’ penthouse in NYC, Whole Foods stores, and FBA fulfillment centers.
Amazon spokesperson Kelly Nantel recently told Insider that the retail company is working to address workers’ concerns, including carbon emissions.
So far, there has been no report from news outlets of any disruption to operations.
Interestingly, if you’re in California, there’s a greater chance of experiencing disruption from a group of malicious sellers and truckers than protestors.
According to Brandon Young, CEO of Data Drive & Seller Systems, inbound delivery dates to warehouses in Southern California are unavailable until the end of December because bad actors have hijacked Amazon’s delivery appointment system and booked up a lot of those dates to either hurt competitors or sell them to desperate sellers for up to $2,000.
In his updated LinkedIn post, Young mentioned that Amazon has acknowledged “things need to change to ensure all sellers have the ability to send goods in a timely fashion.”
Seeing that Amazon is still trying to resolve this issue, make sure you have a contingency plan to avoid giving in to these extortionists.
Talk with your 3PL or preferred Amazon-partnered carrier to figure out the best way to get your inventory checked in for Christmas. See if switching over to FBM is a feasible option for you during this period in case that becomes necessary. You may also have to resort to sending in small parcels, but only do so on an as-needed basis to keep costs under control.
Related: Amazon Tweaks Logistics Strategy to Streamline Operations
Amazon Hikes FBA Fees Again: What This Means for Your Business
Steel yourselves, as Amazon decided to kickstart the holiday season by announcing updates to its FBA fees. 😫
In an announcement last week, Amazon said it will implement changes to its US FBA and referral fees. Most of the changes will be effective on the 17th of January next year, while two other changes will be in force on February 16 and April 1, 2023. Full updated fee guidelines are available here.
FBA Fees Just Keep Stacking Up
These increases on FBA seller fees, which we’ll go over in more detail shortly, are the latest in the Amazon Fee Stack, the name we’ve assigned to the company’s incremental but regular fee increases and which is not unlike fee stacking in the auction industry.
According to Amazon, some of the fee changes are the result of their observation that some sellers utilized more of their storage space than what they deemed necessary. This has consequently limited the amount of inventory that other sellers could ship to Amazon warehouses.
For that given reason, the eComm giant said it “will create additional granularity” (e.g., new weight tiers) in its FBA fees to “better align fees with our underlying costs.” Amazon itself has emphasized that they hope these fee increases will encourage an improvement in seller inventory health. This makes proper inventory forecasting and packaging optimization more important than ever.
For example, over-ordering or sending in unnecessarily large boxes, will hike up your FBA storage needs and fees. You might need to examine and change the way you manage your inventory if you want to keep your costs down next year.
Without further ado, here are the affected FBA fees, how much they will increase, and when they will take effect in 2023:
FBA Fulfillment Fees
Though we always expect FBA fee increases around this time, it’s always painful.
Big changes this year include Amazon getting rid of its on and off-peak fulfillment fees and instead combining both into one single fulfillment. Peak season fulfillment rates are only slightly lower whereas off-peak fees are generally considerably higher with at least $0.10 per unit increases in most cases.
Dimensional weight calculations still apply.
This year, we don’t get to wait until February to enjoy these fee increases as they take effect January 17, 2023.
Fuel and Inflation Surcharge
Technically speaking, Amazon did not increase its fuel & inflation surcharge, which it introduced on April 28th this year. What they did was to instead add it to their regular FBA fees permanently so there will no longer be a separate fuel & inflation surcharge.
Of course, we already knew that this surcharge wouldn’t be temporary, even though the company initially said so. History taught us that it’s almost impossible to withdraw a surcharge after it has already taken effect.
Since fuel costs and inflation rates have skyrocketed pretty much everywhere, Amazon increased their fulfillment costs and chose to call it a surcharge earlier to soften the blow that we ourselves knew would finally come. They, of course, announced its permanence in the holiday season when they can be sure most sellers are busy with Q4 sales and personal holiday activities.
⚠️ Sellers can (unfortunately) expect this permanent addition to their FBA costs beginning on January 17th.
$0.22 Average Increase in FBA Outbound Fees
Amazon was quick to point out that this increase is still lower than what other delivery and fulfillment partners offer. They also said they will come up with more specific weight tiers for the ¼ and ½ lb. categories (as shown below). Effective January 17th.
Use of Dimensional Weight Pricing for Large Standard-Size Apparel
Amazon first applied dimensional weight (DIM weight) pricing catalog-wide last year, excluding apparel.
Starting February 16, 2023, however, apparel goods that fall under the large standard-size tier (4 oz to 20 lbs) will now also be subject to DIM weight pricing, where the greater of unit weight or DIM weight will be used to determine the shipping weight for apparel.
Notice in the table of fees below that Amazon has indeed added new weight tiers to its 2023 fee structure: 4 oz or less, 4+ to 8 oz, and 1.5 lbs just to name a few. Shipping a 4 oz large standard-size apparel in 2023 would cost you $4.43 per unit, which was Amazon’s rate for items weighing 6 oz or less in 2022. This tier structure will be an improvement for some lighter products but will drive some heavier products into more expensive tiers at higher rates.
And when you apply DIM weight pricing, your shipping fees could get even more expensive.
Suppose your large standard-size apparel only weighs 16 oz, but the DIM weight is 1.5 lbs. In that case, you’re going to be charged $6.10 instead of $5.32/unit, a $0.78 difference.
If you haven’t done so already, try to keep your apparel packaging compact. Consider using vacuum bags to remove excess air that makes it bulky. Read Master Carton/Pallet Calculator for more packaging optimization tips.
$0.03 to $0.20 per Cubic Foot Increase for Storage Fees
During the off-peak months of January to September, an extra $0.03 per cubic foot will be added for products under the oversized category, while those under the standard size category will be charged an extra $0.04 per cubic foot.
During the peak months of October to December, an additional $0.20 per cubic foot will be added for products in their non-sortable fulfillment centers (i.e., those holding huge and heavy items like furniture and large equipment). Effective January 17th.
New Storage Utilization Surcharge
Amazon said this only applies to sellers with large inventory cube sizes in their warehouses compared to their “recent weekly sales.”
⚠️ This is a big one! What this means is that you will now have a surcharge tied directly to your cubic sell-through. Amazon will look at your stored cubic feet against the daily average in cubic feet shipped over the trailing, past 13 weeks.
While the company gauged that around 7.5% sellers will be affected by this surcharge, it is something that all sellers need to be aware of as a slow in sales or too much overstocking can have a significant impact on your Amazon storage costs.
This surcharge will be effective on April 1st.
Aged Inventory Surcharges
Products stored in Amazon warehouses between 180-270 days will now be fined with an aged inventory surcharge. Additionally, existing surcharge rates will be increased for items stored between 271-365 days.
These adjustments apply to all product categories except for Apparel, Bags, Jewelry, Shoes, and Watches.
Fees increase every 30 days starting at $0.50 per cubic foot at the 180 day mark with a significant jump at 271 days increasing by 2.5x to $3.80/cubic foot, which is also 2.5x what it previously was in 2022.
Amazon claims these increases will boost efficiency and free up warehouse space for sellers who are able to maximize their storage space.
This change is effective for the April 15th aged inventory assessment period. Amazon encourages sellers to review their aging inventory and take the necessary measures.
Removal and Disposal Fees
Amazon said the rising costs of removing and disposing products led them to increase these fees.
Here’s what changed:
You’ll want to be prepared for significant fee increases by almost double for removal and disposal fees, effective January 17th.
Which Fees Went Down
The good news is that some FBA fees were adjusted in favor of the sellers’ profit margins. Here are the three FBA fees Amazon lowered and by how much:
$0.20 Average Decrease In Returns Processing Fee for Some Categories
Sellers of apparel and shoes can save an average of $0.20 per return when customers send back their purchased products. This does not apply to other product categories.
US FBA New Selection Program
Amazon made several attractive changes to its US FBA New Selection program, in a move that seems to encourage catalog growth through incentives for new-to-Amazon offerings.
Sellers will receive higher sales rebates – up to 10% on average from 5% – for qualified new parent ASINs. Amazon also doubled the number of eligible units from 50 to 100 per unit per parent ASIN and stretched the 90-day eligibility period for rebate and storage benefits to 120 days.
These changes will take effect in March 2023.
Related: Qualify for Rebates and Free Liquidations with the Updated FBA New Selection Program
Small and Light Program
Sellers can enjoy lower fees for more of their products after Amazon expands it to include items priced at $12 and below, up from its previous $10 mark. Effective January 17th.
Which Fees Stayed The Same
There is no movement on referral fees and liquidation fees.
Amazon also announced they will remove the Collectible fee categories, namely:
Affected ASINs will be reclassified to the most appropriate category, but there is a chance that sellers will be charged a higher (or lower) fee after they have been reclassified.
What This Means For Your Business
Amazon has a penchant for announcing price hikes and fee increases that significantly affect sellers’ margins, sometimes on short notice.
Unfortunately, we cannot predict which fee or surcharge they will introduce next time and when.
This is why sellers who want to run a profitable Amazon business need to be not only agile but also strategic.
Adapting quickly to changing storage needs, making accurate inventory forecasts, and right-sizing your packaging are more important than ever.
Given the increases in storage fees and aged inventory surcharges that Amazon will implement next year, sellers need to be very careful not to send excessive amounts of inventory to Amazon fulfillment centers.
What The FBA Sellers Are Saying
Many FBA sellers reacted negatively to this announcement and expressed their anger at Amazon for draining their diminishing profits (or what’s left of it).
Some sellers pointed out that the company already gets up to 40% of their sales because of these never-ending fees. A couple of sellers shared their frustration that their products were returned by customers because of “missed fulfillment promise” or because they were “delivered late by courier” but still, they are the ones absorbing the costs for Amazon’s failures.
Other sellers expressed their frustration that, as much as they want to increase the prices of their goods, they cannot because their product listings get deactivated due to high pricing errors.
Several sellers also raised the fact that because Amazon is laying off 10,000 of its employees and shutting down or subleasing several warehouses, there is a slim chance that things will improve in the near future.
For these reasons, some have started looking at other e-commerce platforms like Shopify and Walmart to ensure their business remains viable.
Related: Should You Be Selling on These New Sales Channels?, TikTok Gears Up for US Market Entry, eComm Players Dial Up Rivalry Ahead of the Holiday Season
TikTok Gears Up for US Market Entry
11/14/2022 (Originally posted 10/13/2022)
Update 11/14/2022: TikTok has officially launched its in-app shopping feature in the US, allowing American users to watch live selling videos and buy products directly on the app.
“We’ve seen the positive impact of TikTok Shop, and we’re excited to continue experimenting with this new commerce opportunity to support businesses of all sizes,” a TikTok spokesperson told Semafor.
The social media giant is currently inviting select American businesses and influencers to participate in testing TikTok Shop. Interested sellers can also apply on the TikTok Shop Seller Center website.
TikTok is reportedly preparing to launch live shopping just in time for the holidays. Recent job listings on LinkedIn also indicate the company’s plans to build out its own fulfillment network in the US, allowing them to play in the big leagues. 🥊
An interesting and not totally unexpected play for the platform that practically reinvented the concept of virality, going so far as to spawn the FOMO-fed trend, “TikTok made me buy it.”
If any platform can make this work for them, TikTok has a better chance than most.
According to the Financial Times, the Chinese social commerce app is bringing TikTok Shop, a Quality Value Convenience (QVC)-style shopping feature, to North America through TalkShopLive. The two companies are still in talks, which is why no official announcement has been made yet.
TalkShopLive runs an online platform for live streaming and home shopping shows featuring various brands, retailers, and influencers. Once its partnership with TikTok is finalized, it will provide the technology and support that TikTok needs for its live commerce efforts.
Owned by ByteDance, TikTok Shop would enable sellers to advertise and sell products on the short video platform as they stream videos live to their followers. It’s quite similar to how Instagram lets users buy items directly from stores on IG.
TikTok has found massive success in Southeast Asia (SEA) but failed to establish a foothold in the UK in 2021.
If the UK didn’t embrace live online shopping, does this mean TikTok Shop will also flop in the US?
After canceling its plans to expand in Europe, TikTok has instead set its eyes on the land of milk and honey.
However, expanding the business to the US won’t be a breeze. Here’s why:
Live Commerce Struggles to Take Off in the US
As we’ve previously reported, the US live commerce market is still in its early stages and no company, including social media giant Meta, has figured it out yet.
While live selling worked out great in China with sales estimated to hit $423 billion in 2022, it has failed to attract large audiences in the US, with only $11 billion in sales in 2021. But that didn’t stop US eComm giants Shopify and Walmart from recently investing in live shopping, while Facebook decided to remove its live shopping feature this month.
In a Times post, Ying Zhu, an assistant professor in the Faculty of Management at the University of British Columbia, theorizes that the slow adoption of live commerce in the US is probably because consumers themselves don’t understand how it really works.
“[Live commerce] is a really good concept,” Zhu added. “But without building up infrastructure and educating consumers, suddenly dropping this idea into the market and expecting it to just be successful is kind of naive.”
But with TikTok’s proven live shopping feature and popularity among more tech-savvy shoppers (aka Gen Z’s), it may succeed in turning things around.
“TikTok likely won’t ever be an Amazon killer,” Insider analyst Andrew Lipsman says.
“But its unique algorithm could help break new ground in the social commerce space by turning social shopping into a more habitual practice. TikTok is really good at serving up the content that people want based on their behavior,”
“If it can use its algorithm to tee up the right products,” that could help attract more consumers to the app and increase buys.
TikTok Faces Scrutiny in the US over Data Privacy
Another obstacle to TikTok’s entry to the US is its close ties to China.
A report from Forbes reveals that 300 current employees at TikTok’s parent company, ByteDance, used to work for state media outlets, indicating “significant connections between the app and the propaganda arm of the Chinese government.”
Some speculate that Beijing could use TikTok to access American user data to manipulate public opinion, and even track the location of its users. 😟
TikTok is currently working with the Biden administration to come to an agreement, under which it would make changes to its data security practices to resolve national security concerns, but the agreement is only in the preliminary stages.
TikTok Plans to Create its Own US Fulfillment Network
🤔 It is even more likely that TikTok Shop will be pushed through in the US, seeing that the company is already planning on building out its own supply chain infrastructure, as indicated by several new job openings recently published on LinkedIn.
The US is TikTok’s largest market outside of China. No wonder the company’s doubling down on its expansion plans to make the country its next major revenue stream.
In a report from Axios, the new entrant is looking to fill a Logistics Solutions Manager position for a global fulfillment center.
Part of the job description is to “plan and design fulfillment centers and eCommerce logistic solutions that include the transportation of goods, order prediction, and inventory management.”
Other job openings indicate the need for a team responsible for a global logistics and warehousing network.
In sum, live shopping has potential in the US, although getting more people to get used to it is still a struggle for many eCommerce companies. This represents an opportunity for TikTok to bring about improvement in the live commerce market if it can get the approval of US lawmakers and the public. However, concerns about data privacy may delay its launch.
It’s an exciting time. The eComm cold war between giants is nothing if not wildly entertaining. I, for one, am reaching for my popcorn. 🍿
Amazon Aggregators: Comments and Concerns
Thinking of selling your Amazon business? 🤔
Whether you’re starting a new venture or feel like your business has a higher potential for growth with greater resources, Amazon brand aggregators may be able to help you move forward by acquiring, scaling, and expanding your business.
The good news is that Amazon sellers planning to exit their business have about 100 active Amazon aggregators to choose from.
⚠️ The not-so-good news? They have to sift through almost 100 companies to see who might be a good fit to sell their business to.
Some of these companies have seen massive growth and continue to thrive, while others are facing challenges from lawsuits to funding.
Choosing the right aggregator is critical not only to your business’s continuous operations but also to your income. After all, depending on your deal structure, your earnings may depend on how well the aggregator has scaled and run your business. 🚀
If you have an earnout over time based on performance, you want to make sure the aggregator you sell to can deliver, or even that they will still be around by the time your earnout date arrives.
So let’s check in on how some of these Amazon Aggregators have been fairing in recent times.
Perch is one of the leading Amazon aggregators that has shown a lot of promise since its early days. The company reached a unicorn status after achieving a 10-figure valuation just one and a half years after it was founded in November 2019. After acquiring more than 80 brands (including Web Deals Direct for upwards of $100 million last year) and expanding its business internationally, the company has made headlines again, but for the wrong reason.
Freya Pratty, a reporter for the European publication, Sifted, wrote in an article published last month that the company is facing a lawsuit.
Perch acquired the business of Gutter Games, Inc. but another company named That’s What She Said, Inc. claims it already had a contract with Gutter Games before Perch acquired it. As a result, Perch and Gutter Games are facing a lawsuit for breach of contract.
As Perch has achieved an enviable level of success in the competitive eCommerce aggregator industry, these types of lawsuits are bound to happen, but it’s something to be aware of when considering your options.
Simply put, Amazon sellers should make sure legal battles such as this that plague some aggregators could have an impact on the company as a whole, something which may impact a seller’s second exit, where they receive their final earnout money.
Perch remains silent on this issue.
Like Perch, Seller X is another aggregator that has reached a significant level of success in a short span of time. After launching in September 2020, the company added more than 40 brands to its portfolio within one year and has raised over $750 million in funding.
But after allegedly committing a breach of contract, the company is now facing a lawsuit.
According to an article written by Melissa Daniels and published in Modern Retail last month, the aggregator bought Regal Games’ Chalk City and agreed to pay Regal Games $900,000 one year after its purchase, except when the sales of the product fell to over 15%.
The lawsuit filed by Regal Games claims that Seller X intentionally avoided performing its obligations – such as exploring new markets, investing in ads, and having enough stock of the products on hand – so when the sales of Chalk City dipped to over 15% (which they did), the aggregator would not be bound to pay Regal Games the $900k.
There has been no court ruling in this case to substantiate these claims so we will have to see how this case develops, but it should open sellers’ eyes to the fact that they should be structuring their deals and working with aggregators that will best secure their earnouts.
Seller X said it is ready to defend itself in court.
Unlike Perch and Seller X, Telos Brands is not facing any legal battles. But they have recently been reporting less-than-stellar financial performance.
Among all the Amazon aggregators, Telos Brands has one of the lowest amounts of capital raised at only $2.1 million. The fact that they raised this capital last September 2021 could be cause for even more concern about this company’s financial status.
Funding for aggregators is dwindling this year. Hopefully, it hasn’t fully dried up for Telos Brands but time will tell.
While multiple aggregators are losing steam, some are still holding strong.
Founded in 2020 by two former Amazon employees and an investment expert, Acquco is one of the youngest and fastest-growing Amazon aggregator companies on this list.
The company buys leading Amazon brands and, using its proprietary technology, data, algorithms, and Amazon expertise, grows and scales them so they will become household brands.
Despite it being a young player in the field, Acquco has shown an impressive financial and operational performance so far: it generated a revenue of over $420 million for the year 2021, amassed more than $450 million in funding, grew its team of seven to more than 250 worldwide, and acquired 40 brands to date. The company also launched its own in-house tech and analytics divisions earlier this year, emphasizing its highly measured and strategic approach to identifying, valuing, acquiring, and managing brands.
Aside from these figures, the company takes pride in its seller-friendly approach throughout the process. Their thorough and transparent due diligence, flexible deal structures, legal assistance, dedicated support team, and streamlined processes give Amazon sellers a convenient, efficient, and hassle-free way to exit their business confidently in as little as 23 days (on average).
Last but not the least, Acquco’s brands have purportedly, up to tripled their growth after acquisition. If you’re looking for an aggregator with a proven track record in growing businesses, this company may be the one for you.
Benitago was founded by two Computer Science majors and Amazon sellers in 2016. The company has raised $380 million in funding to date.
This aggregator targets businesses with annual revenues of $3 million and innovative products that other aggregators may not be interested in.
They have an excellent record of growing Amazon FBA businesses, with more than 20 products in their portfolio having more than $250,000 in sales and achieving Best Seller Rank Improvement Trailing Twelve Months (TTM) 12 times. They also helped scale more than 300 products from over 15 categories such as beauty, electronics, health, maternity, orthopedic, and pet supplies.
Benitago’s acquisition process involves just three steps: business evaluation; intensive business data analysis; contract drafting and payout. This is perfect for sellers who want a short and fast exit from their Amazon FBA business.
The company also used to offer qualified Amazon sellers an Aggregator Offer Match Guarantee where they matched the amount offered by another aggregator for your business and give you an extra $250,000 if you sell it to Benitago.
In terms of post-acquisition performance, their brands show a 30% year-on-year growth rate, so there’s a high chance your business will also grow under their management.
Founded towards the end of 2016, Elevate Brands has emerged as another leader in the Amazon aggregator world.
The company buys FBA businesses based in North America, Europe, and the UK, preferably those that hold patents and those from the groceries, pets, and supplements categories. They have acquired over 25 brands and generated more than $500 million in funding to date.
What sets Elevate Brands apart is their focus on the relationships they build with Amazon sellers, founded on the fact that they started out as Amazon sellers themselves. Their relationship-first strategy seems to be working well, as their pet brands show a 57% growth in sales, and their grocery brands show a whopping 1556% growth in ad sales.
Their world-class mergers & acquisitions (M&A) team ensures sellers will also have an easy and seamless exit from their businesses in less than 30 days.
With headquarters in Mexico City, Merama positioned itself as the aggregator for Latin American brands looking to scale and grow to be $1B businesses. The company is valued at $1.2B and has raised $445 million in funding.
Their strategy is very different from the other aggregators, however: instead of buying many brands at a time, Merama will invest in only a few leaders in their respective categories and work at scaling and growing them exponentially. They currently have more than 20 brands in their portfolio.
Another thing that separates them from other aggregators is their Future Exit Option. Instead of buying your entire business from you, Merama will initially invest and become a strategic partner of your business, taking a significant stake but not owning 100% of it. Together, they will help you grow it to become a $1B business by providing you access to non-dilutive capital and human resources, then give you options to exit your business three to five years later.
Latin American sellers who want to stay hands-on in growing their businesses will find Merama’s strategic partnership approach ideal. Apart from their solid financial backing and proven track record in growing Latam brands, they also promote inclusivity as their brands come from a wide range of product categories.
Berlin-based Razor Group was founded in 2020.
A major player in the Amazon aggregator industry, Razor Group has raised more than $1B in funding from leading investors, manages over 200 brands, and has evaluated over a million FBA businesses from their five offices in Europe, Asia, and North America.
The company has a fair, fast, and forward-thinking approach in how they evaluate businesses. They’re interested in businesses with products that have high product quality and great reviews, low complexity, robust growth, promising potential, and sales ranging from $1 to $15 million. Their acquisition process has only three phases and takes only a few weeks from evaluation to closing, which is ideal for sellers in a rush to sell their business.
In summary, the stressor is to know who you are getting into bed with when you sell your company. It is important to look at not just the numbers but also the track record and future prospects for the aggregator you may essentially be going into business with. That is essentially what you are doing when you are selling your business with an earnout on the back end.
Knowing more about the aggregators you are in talks with towards your exit will help you to narrow down your decision to make the right choice for your business. 💯
eComm Players Dial Up Rivalry Ahead of the Holiday Season
eComm Players Dial Up Rivalry Ahead of the Holiday Season
The clash of eCommerce titans just heated up as Amazon, Shopify, Google, and Overstock announced new features and partnerships that will enhance their ability to attract more customers this holiday season. 🚀
Both online shoppers and sellers are in for a treat with:
- Amazon partnering up with Snap to offer Augmented Reality (AR) shopping feature on Snapchat
- Google introducing new live commerce solutions to make YouTube more shoppable
- Shopify adding big celebrity brands to its platform
- Overstock repositioning itself from being an online liquidator to a home and furniture retailer
Amazon and Snap Collab
To take online shopping to the next level, Amazon Fashion and Snap have teamed up to provide brands and customers with a seamless AR-powered shopping experience on Snapchat through a digital Shopping Lens which enables a “try on” feature for various shoppable products.
The new AR lens allows 363 million Snapchatters to virtually try on a variety of eyewear products from Amazon Fashion brands such as Ray-Ban, Oakley, and Persol and then click on the “Shop Now” button to buy it from there.
The eyewear AR lenses are accessible via Amazon Fashion’s store in Snapchat, Snapchat Camera Lens Carousel, and Snap Lens Explorer in the Dress Up and For You pages.
According to Snap, more than one billion products were ordered on mobile phones by Amazon Fashion users in 2021. And that number could grow with the addition of this new Virtual Try-On feature for eyewear, as AR apps in general can help boost engagement and conversion.
Marketing Dive research shows that people utilizing AR tools typically spend 75 seconds interacting with them, which is 25 seconds longer than with 60-second business-related videos. This indicates that AR users are far more engaged in the content than with some other marketing methods.
As for boosting conversion, a study from sunglasses manufacturer, Goodr, shows that the company saw a 32% increase in conversion rates among mobile customers who used its virtual try-on features.
While Amazon and Snap’s AR lens is initially designed for specs, it will be the first of more AR lenses to come.
“With the combined innovation and technology between Snap and Amazon, we are unlocking exciting and fun new try-on experiences for hundreds of millions of Snapchatters. AR eyewear is just the first step in our partnership, and we can’t wait to continue our innovation together.” Ben Schwerin, Snap’s SVP of Content and Partnerships, said in a press release.
Google Expands Suite of Live Shopping Tools
In an attempt to transform YouTube into an online shopping destination, Google has been adding eCommerce features to the video platform since 2018.
It has also recently made advancements geared towards winning more shoppers and keeping them on-site rather than outside of YouTube, potentially making it a lucrative sales and ad channel for brands.
In 2018, YouTube allowed popular content creators to sell their merchandise like t-shirts, phone cases, or hats directly to fans by listing them below their videos. YouTuber Lucas the Spider sold over 60,000 plushies, raking in around $1 million in profit in just three weeks.
In 2020, the company introduced a new advertising solution that lets marketers showcase their video ads on their storefront and complement them with “browsable product imagery to inspire the next purchase… and drive traffic to the product pages that matter.”
One year later, YouTube entered the live commerce space by launching Shop and Stream hosted by some of the biggest content creators, such as Mr. Beast, Gordon Ramsay, The Merrell Twins, and Patrick Starr.
In 2022, YouTube doubled down on its live commerce plans by bringing Shopify into the fold. With this partnership, Shopify sellers are able to connect their store to YouTube, hold live selling events themselves or with their preferred influencers, and process payments within the platform via Shop Pay, essentially allowing them to take on Amazon Live sellers.
At its recent Broadcast event, YouTube announced new features that will allow creators to:
- Go live at the same time, i.e., co-host a live shopping video. For brands, this could double the viewers for the event, as each host would bring their own loyal fanbase to the live stream. For YouTube, this could make them more competitive with Meta’s Instagram, which launched the same co-hosting feature last year.
- Start live selling on their YouTube page and then redirect viewers over to a brand’s channel for them to keep watching, also known as Live Redirects. This allows brands to leverage the creator’s platform to reach new customers.
As you can see, both sellers and content creators are provided with everything they need to offer a seamless live shopping experience on YouTube. This reduces the need for customers to be redirected to a different website to complete their purchases, which increases the risk of discovering other eCommerce channels like Shopify-powered stores that offer Amazon Buy with Prime.
It’s a smart move that allows YouTube to keep customers on-site, which gives them the opportunity to persuade people to spend more time on the platform and watch more video content, essentially increasing their ability to boost ad revenue after experiencing a 1.9% drop in Q3 2022.
Shopify Launches New Celebrity Product Lines
The Canadian eComm giant banks on the Kardashians and other major influencers in a bid to increase market share after two quarters of sluggish growth.
During Shopify’s Q3 2022 earnings call, company President Harley Finkelstein shared that celebrities are going to play a big role in their strategy for the platform’s digital sales.
“The world’s biggest superstars are also building their brands on Shopify Plus. In Q3, the Kardashian brand continued to build their Empire on Shopify with their latest brand, Courtney Kardashian’s vitamin and supplement company,” the president shared.
In Q2, Kim Kardashian rolled out her SKKN BY KIM line of skincare products on the platform. Fashion model Hailey Bieber also launched her own skin care brand called Rhode Skin. Shopify Plus appears to be positioning itself as the go-to platform for celebrities to grow their personal brands and transform them into products for their massive fanbase.
In addition to the Kardashians, Shopify Plus will also feature:
- Celebrity chef Giada De Laurentiis’s new line of sauces and condiments, Giadzy
- American singer Ciara’s On A Mission Skin
- Toronto star Matty Matheson’s workwear brand, Rosa Rugosa
The addition of big names comes at a time when Amazon revealed that its net income dropped to $2.9 billion in Q3 2022 compared to $3.2 billion during the same period last year, while Shopify’s revenue grew 22% this quarter or $1.4 billion versus last year’s $1.12 billion.
The gains in revenue indicate Shopify’s resilience to economic uncertainty and is a good sign of progress as we head into the holidays.
“Looking ahead, the flexibility of our platform, breadth of solutions, pace of innovation, and disciplined investment approach position Shopify well to realize the enormous opportunity ahead,” said Amy Shapero, Shopify’s CFO.
Overstock Launches Ad Campaign as a Home Furnishings Retailer
Inventory liquidation pioneer, Overstock.com, is repositioning itself as an online home and furniture retailer, teeing up to directly compete with Amazon Home, Wayfair, and Ikea.
On October 20, Overstock launched a home-focused national campaign entitled “Making Dream Homes Come True” to promote its wide array of stylish home products at smart value prices. The campaign also features brand ambassadors Vanessa Deleon, Lizzy Mathis, Farah Merhi, Tarak El Moussa, Luke Caldwell, and Taniya Nayak. The six brand ambassadors collectively bring a huge audience of 20 million followers.
“This new campaign is the next step in our journey. It shows our strong vision for the future as we continue to deliver simple product findability, smart value, and easy delivery and support to our customers. As we better associate our name with new home products, it should dispel any lingering misconception that Overstock sells liquidated or excess merchandise,” said Overstock CEO Jonathan Johnson.
Earlier this year, the company finished stripping itself of all non-home items, a process that took six grueling quarters to complete. In June, Johnson shared with Furniture Today that pivoting to home will “create a better, fitter company in the long run.”
Over the last few years, Overstock offered a broad assortment of discounted goods across multiple categories. But in 2021, 94% of the platform’s sales came from home products, the highest percentage in the company’s history.
eCommerce sales skyrocketed for a lot of home-focused retailers during the pandemic as homebound consumers began shopping online to renovate their bedroom and living spaces. And even after the pandemic-driven highs, home goods sales of $11.8 billion in August 2022 was only down 1.6% from August 2021’s $11.97 billion.
“Our business is growing. We’re taking market share, and we’re doing so profitably,” Johnson said.
“Because we’re profitable, our partners are more inclined to sell to us. They know we’ll pay them on time compared to many competitors… These suppliers limit how much inventory they will tie up with someone if they don’t know if or when they’ll get paid.” he added.
Overstock maintains an asset-light business model with “three flexible warehouses that can accommodate up or down depending on suppliers,” which makes them nimble. As of this writing, the company only has 3,500 suppliers dropshipping most orders, allowing them to hold minimal inventory.
👉 In closing, Amazon, Shopify, Google, and Overstock continue to make great strides in their commitment to provide customers with remarkable online shopping experiences.
A huge part of their strategy seems to be focused on working with influencers and creating tools that support the influencer economy, suggesting that live commerce could be the next big thing in eCommerce. 🤔
However, all these platforms launching influencer programs ahead of key selling events may lead to tougher competition in the days leading up to and throughout BFCM, Christmas, and New Year’s, as brands may try to supplement their ad efforts with shoppable videos in order to attract livestream shoppers.
So if you haven’t already, consider getting on these new trends now to gain a grip on an influencer’s fanbase before someone else does.
Amazon UK At Risk for Box Shortages During BFCM
Brace yourself for another potential disruption, as there’s a chance Amazon may have a packaging shortage during the upcoming Black Friday/Cyber Monday (BFCM) sale period. ⚠️
The reason for the potential shortage?
Almost 1,000 employees of the packaging company DS Smith – all of whom are General, Municipal, Boilermakers, and Allied Trade (GMB) union members – voted to hold a strike over their pay. ✊
According to the union, their members working across the five DS Smith offices in Britain could protest before November ends.
Aside from Amazon, this British packaging company supplies corrugated boxes to beverage giants Diageo Plc and PepsiCo Inc., biscuit company McVitie’s, brewer BrewDog, and snack company KP Snacks.
What Triggered the Vote to Strike
DS Smith submitted a proposal to increase their workers’ salaries by 3% and release a £760 payment for the fiscal year 2022-2023. The union said that out of their 1,000 members employed by the company, 93% apparently responded to this proposal with a vote to strike.
The union went on to say that the salary increase and payment offer is a “massive real-terms pay cut” as the nation grapples with its record-high inflation rate. Market research company Kantar announced that the UK grocery price inflation is now at 14.7% and overall inflation rate at 10%. 🤯
GMB national secretary Eamon O’Hearn pointed out that DS Smith employees continued working during the pandemic and urged the company to adjust their offer, noting that the company can afford to propose a better offer that shows its appreciation for the work put in by its members.
How Amazon Sellers and Consumers will be Affected
O’Hearn also emphasized the repercussions of an industrial action to the company and their clients’ businesses.
“A strike at DS Smith could have serious implications across a range of household names – not least Amazon which gets packaging from the company,” he said.
Amazon is just one of the many retailers that offer promos and sale events during Black Friday, the last Friday of November.
For this year, Black Friday falls on November 25th, which may coincide with the industrial action that the affected DS Smith employees are planning to hold.
🚨According to The Guardian, Amazon said that it isn’t expecting a shortage of packaging. No further explanation was provided.
However, the mass walkout could still spell trouble for Amazon sellers as higher sales volumes, which are typical during the Black Friday up to Cyber Monday period, result in a greater demand for packaging.
With less workers involved in the production of these boxes during an extremely busy period, Amazon sellers may encounter delays before their products get shipped out to their customers.
The DS Smith union members’ decision to take industrial action is the latest in a series of strikes that have plagued London since the start of summer.
London retailers have shared that their revenues dropped drastically because of less footfall in stores due to the back-to-back rail and transport strikes held by different unions for the same reason: dispute in pay.
For retailers who are only just beginning to recover from the pandemic’s losses, these strikes are making their efforts to achieve their business’ pre-Covid sales and profits futile.
How Sellers can Prepare for the Potential Delivery Disruption
While Amazon said it is not expecting a shortage of packaging despite this news, it would be best for you to plan and prepare for this potential disruption in order to still make the most out of BFCM.
With only two weeks left before Black Friday, you may have just enough time to keep your 3PLs up-to-date with your packaging needs and ensure you have buffer stock in your 3PL warehouse to fulfill orders via Fulfilled by Merchant (FBM).
✔️ That way, if the strikes push through, you have the option of selecting your preferred courier and shipping orders from your own warehouse instead of Amazon’s.
To save on shipping costs, try packaging optimization techniques like using a material that can remove excess air or bubbles from your packaging (e.g., vacuum bags for pillows) to reach a smaller parcel size. This method will allow you to fit more units per carton.
Check out our Master Carton Calculator to figure out the best way to optimize packaging and reduce shipping costs.
Related: Pallet Calculator, How to Ship to Amazon FBA
Updated: Amazon Enters the 3PL Space with New Amazon Warehousing & Distribution Program
11/03/2022 (Originally posted 08/29/2022)
Update 11/03/2022: There have been questions about whether or not inventory will still be sent to FBA from AWD warehouses even if sellers are currently overlimit in their maximum restocking capacity.
Now, here’s the official and confirmed answer from Amazon themselves:
This screenshot was shared by our friend, Gianmarco Meli, Founder and Host at The Seller Process podcast, known for shorter-form episodes focused on actionable systems and processes to scale your eComm business. 🚀
Amazon may be a formidable player in the logistics space, but for years, they’ve also been one of the more expensive out there, especially during the holiday season when rates nearly triple for standard-size products.
For that reason, many sellers opt to outsource their bulk storage and distribution needs to third-party logistics companies (3PLs) that are typically more affordable than Amazon FBA.
🔥 Well, the game is about to get a little more interesting with the launch of a new low-cost logistics service called Amazon Warehousing & Distribution (AWD).
But looks can be deceiving, especially when you’re not comparing apples to apples. Is AWD really more cost-effective than your 3PL? It depends on your rates. Read on and then weigh your options.
What is AWD?
It is a storage and distribution solution that gives sellers access to state-of-the-art logistics facilities and services without the hefty price tag that comes with Amazon FBA. Participation is currently by invitation only, so keep an eye out for Amazon updates.
Top features and benefits include:
- Auto-replenishment feature. To avoid stockouts, Amazon will automatically send additional units from AWD to their fulfillment centers (FCs).
- No restock limits. This is huge because Amazon has just brought back restock limits! With AWD, however, you can circumvent this restriction and not worry about having to jump through a lot of hoops to stay in stock this Q4.
- Integrated supply chain. No need for 3PLs when you have a service provider that will take care of everything for you, from receiving your inventory to storage to distribution to fulfillment.
- Transfer inventory to Amazon and non-Amazon destinations. In 2023, the AWD program won’t just search Amazon warehouses, but can also replenish to other non-Amazon locations, including to fulfill brick-and-mortar stores.
- Pay As You Go Pricing. No hidden costs like early termination fees and only pay for services you use.
- Lower storage and processing fees. This is welcome news for sellers who have been cutting back on spending this year due to rising costs and increasing inflation. According to Amazon, they’ve made changes to their rate card to offer more competitive pricing. For example, based on the updated card rate below, it would only cost you around $24 (non-peak) to store one pallet of standard-size goods per month in AWD (versus FBA’s $47). A standard 40” x 48” pallet (plus 50” overall pallet shipment height) can hold 56 cubic ft, so multiply cubic ft by the current AMZ rate to get your monthly AWD storage fee.
Amazon Warehousing & Distribution Fees
Versus FBA Fulfillment Centers (February 2022 and after)
|Storage Month||Standard Size||Oversize|
|January – September||$0.83 per cubic ft||$0.53 per cubic ft|
|October – December||$2.40 per cubic ft||$1.20 per cubic ft|
Cons of AWD
- You have less control over your inventory. Using AWD basically means turning over a boatload of products to Amazon and hoping that they don’t mess up, e.g., skip over your trailer, swap two trailers with different destination addresses, or lose your shipments. This is why it’s still best practice to have a backup 3PL for emergencies, especially during peak season.
- May not be cheaper than your local 3PL. While $24/pallet may be a savings for some sellers if paying over $20/pallet, that pricing is only between the months of January through September.
Peak holiday storage, however, is where it could become more expensive than your average 3PL warehouse, with a standard 50” stackable pallet clocking in at close to $45 per month.
Of course, that’s still much cheaper than the $133 per pallet equivalent that you’d be doling out at FBA from October to December.
You should also look at Processing and Transportation Fees when estimating the difference between using your current 3PL and AWD. If you’re paying $3.60 per carton/case in processing with your 3PL but AWD is offering $2.00 per case, that savings may be enough to offset the additional per pallet storage in peak season.
Of course, Amazon is also sweetening the pot with a waiving of restock limits for any of the inventory held within the AWD network. All these factors will have to be considered when determining whether AWD is right for you.
Related: How to Ship to Amazon FBA (And Speed Up Check-In Times)
Is AWD Different from Amazon Upstream Storage?
In 2021, the eComm giant rolled out a low-cost bulk storage and distribution program for full container load (FCL) shipments called Amazon Upstream Storage (AUS).
AWD and AUS share a lot of similar features like auto-replenishment, no restock limits, integrated supply chain, and lower storage costs, but the difference is that you don’t need full containers to use AWD.
Amazon Continues to Add More Mega Warehouses
Despite posting a $3.8B loss due to excess storage and transportation capacity in Q1 2022, Amazon is still reportedly looking to add:
- A $300 million, 5-story, 3.1 million-square-foot distribution center in Niagara, New York
- A 5-story, 4.1 million-square-foot facility in Ontario, California
- A 5-story, 3.8 million-square-foot warehouse in Loveland, Colorado
If these plans push through, these 3 multi-million-square-foot warehouses would top among the biggest in Amazon’s entire network of 1,200 facilities in the US.
As of this writing, the largest is a 3.6 million sq ft distribution facility in Mount Juliet, Tennessee.
⚠️ Amazon doubling down on its warehouse expansion plans is a strong sign that AWD is here to stay. 3PLs that are too small to beat Amazon may see themselves joining its vast distribution empire as a partner in the future, while others may struggle to keep their customers if they don’t offer more competitive rates.
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What Amazon’s New Merchant Cash Advance Program is Going to Cost You
Amazon US recently announced its new financing program to help their online sellers expand their businesses. (Or so they say). 🤔
The sales-based merchant cash advance program offers eligible Amazon sellers access to capital—from $500 to $10 million-–that they can use for:
- Business-related activities
- Marketing and promotions
- Product research and development
The program is being offered in partnership with Parafin, a US-based capital financing provider that enables marketplaces and platforms to extend capital to their sellers.
According to Amazon, sellers with approved cash advances only need to pay Parafin a fixed capital fee: there are no interest charges or late payment fees.
As this is a sales-based funding program, the payment for the cash advance is tied to a part of the seller’s future sales. They will also enjoy a flexible repayment schedule that is pre-arranged according to a forecast of the sellers’ Gross Merchandise Sales (GMS).
Unlike other loans, this program does not involve credit checks, tedious paperwork, minimum payments, and personal collateral and guarantees.
Currently, this program is available to those who have been selling on Amazon’s online store for a minimum of three months. The e-commerce giant is targeting to make this program accessible to more than a hundred thousand Amazon sellers by 2023.
The Catch With Merchant Cash Advance
Any seasoned Amazon seller knows that every time the company launches something new that sounds too good to be true, 99.9% of the time, it really is.
⚠️ Amazon and Parafin’s merchant cash advance program is no different.
A closer inspection of the details of this program revealed what we suspected: Amazon is not necessarily offering this program purely out of goodwill, but because they are also getting something out of it.
Parafin’s website clearly states that companies and platforms that choose to partner with them can earn additional revenue by getting a portion of every successful capital advance.
But the real question on many sellers’ minds is this: given that nothing is free in this world (and certainly not in the world of Amazon), what are the real, hidden costs of getting approved for this cash advance?
A couple of sellers pointed out a screenshot on Parafin’s website that shows a 12% repayment rate calculated against the seller’s daily sales.
Another seller awaiting his cash advance approval shared that, while the program is positioned as a “no interest” funding solution, repaying the advance within one year is equivalent to paying a high-interest charge, adding that it goes higher the sooner a seller pays for the advance in full.
One thing sellers should remember: merchant cash advance is not the same as a loan.
The amount of the cash advance is determined by the cash flow and volume of sales of the business and not by the credit score of the merchant. The payment for a merchant cash advance can also be taken against the future sales of the business. This helps explain why Amazon and Parafin’s program is marketed as a “no interest” financing solution, as merchant cash advances, by their nature, do not come with interest.
Instead, they use a flat capital fee, so, holding the money longer means you are paying less for that borrowed money. The faster you pay it off, the more that money technically costs you when stacked up with a traditional loan with interest rates. With traditional loans, you are able to reduce the total interest paid by paying the loan off early. With flat capital fees, you have no incentive for early repayment, yet, with this program, you’ll be locked into just that with this if you do better in your business.
Now, this may work out better for some sellers who take out loans with monthly payments that are much larger than what the repayment structure of this loan would be, or sellers who see their sales volume drop within the life of the loan who would have gone out of business if they had to make such large monthly payments. But those business owners should use great caution as any loan taken out puts them in a precarious position as the business itself needs more stability and a loan could worsen the risk.
For sellers who wish to proceed in applying for this program, make sure you count the cost before accepting the offer.
Consider evaluating whether the fixed capital fee is a fair amount in your best-case scenario and if you’ll be able to sustain your business against it in a worst-case scenario. Then make the decision that is best for you and your business according to your profit and cash flow goals and risk tolerance.
Get To Know Parafin First
Amazon sellers who are considering applying for this program may want to investigate further before filling up the online application form. After all, responsible borrowers take the time to scrutinize their lenders, and eligible sellers should do the same too.
As a fintech startup (Parafin was founded only in 2020), the company still has a lot to prove in terms of its sustainability.
Despite its young age, however, the company has had significant success in terms of raising funds for its cause, which is to help platforms, marketplaces and vertical SaaS providers, among others, offer embedded financial services to their sellers and to small businesses.
Last August, Parafin was able to raise $60 million during its Series B financing round, which drew participation from former and new investors.
Financing Options for Amazon Sellers
Now, if you think a merchant cash advance is not for you—and taking out a business loan is also off the table—don’t worry!
There are many types of alternative funding available to online sellers in particular. You may want to consider Amazon inventory financing or check out the other products under Amazon Lending.
Of course, it’s worth emphasizing that just because you can borrow, doesn’t always mean you should and that every business should consider the pros and cons and analyze the best and the worst of what’s possible with any funds they borrow.
The right funding at the right time can mean huge things for your business so long as you are strategic about it and go in with your eyes wide open.
Amazon to Shut Down Appario Amid Allegations of Circumventing Indian Law
In a joint statement released on October 31st, Amazon has announced that it will close Appario, one of the biggest sellers on its platform in India. 🤔
The brand is a unit of Frontizo Business Services, an Amazon and Patni Group joint venture that started in 2017.
A Move to Minimize Regulatory Pressure
For years, Amazon has been in the crosshairs of antitrust regulators for allegedly giving preferential treatment to a few sellers and using them to circumvent Indian laws.
Leaked internal documents reviewed by Reuters show that in 2019, Amazon exec Jay Carney was “cautioned not to divulge that some 33 Amazon sellers accounted for about a third of the value of all goods sold on the platform,” to India’s ambassador to the US, as that information was “sensitive/not for disclosure.”
Other documents also reveal that Amazon had indirect equity stakes in two more sellers on the platform (24% in Frontizo and 26% in the now-delisted Cloudtail, internally called as “special” merchants). These two sellers also accounted for about 35% of the site’s sales revenue in early 2019. They were also allegedly given “discounted fees and exclusive access to Amazon’s retail tools for inventory management,” to stay ahead of the competition.
Recent changes to India’s foreign direct investment regulations threatened to disrupt Amazon’s business operations in the country. One of the new rules that came into force in 2016 prohibits a single seller to have more than 25% of total sales for any online marketplace, forcing Amazon to sweep that “sensitive/not for disclosure” information about Cloudtail and Appario under the rug.
Another recent change to domestic regulations now also involves not allowing marketplaces to have controlling stake in sellers on their platform.
To prevent further scrutiny, Amazon reduced its stake in Cloudtail – registered as Prione Business Services, a joint venture with Catamaran Ventures providing support systems for sellers – from 49% to 26% and in Frontizo from 49% to 24%.
However, in early 2021, the Competition Commission of India (CCI) approved Amazon’s acquisition of its partner’s entire stake in Prione Business Services, prompting it to close Prione’s B2C retail unit Cloudtail.
Now, Amazon appears to be making the same move with Frontizo/Patni Group joint venture by delisting Appario to possibly avoid more stringent foreign investment laws and disruption to its operations (e.g., India’s antitrust authorities raiding Appario office as part of its investigations into the company’s anti-competitive behaviors) 🚨
According to an Amazon spokesperson, “The partnership with the Patni Group is the next step in our strong ramp up to support Amazon’s vision to transform the way India buys and sells. The Patni’s have a strong track record of building large-scale operations for IT-enabled services and understanding of India as a market.”
Therefore, it’s crucial for the partners to “continue to explore new business opportunities, including helping businesses across India to scale up their online presence,” even if that meant delisting Appario as a seller within the next 12 months.
Related: Amazon Reduces their Private Label Catalog, EU Advised by NGOs to Refuse Amazon’s Flawed Proposal for Antitrust Settlement, Why Amazon Wants You to Lobby Congress: What is S.2992?
UPS Braces for Holiday Delivery Surge in December
During UPS’s Q3 earnings call, CEO Carol Tome revealed that they expect package volumes will peak a little bit later this year compared to 2021 as customers postpone holiday purchases until Christmas or go back to “more pre-pandemic shopping behaviors,” such as in-store shopping or opting for store pickups.
Christmas-Like Surge During Q2 2020 & 2021
Before the COVID-19 pandemic, the holiday season used to be the busiest time of year for UPS.
However, when nationwide lockdowns took hold in March 2020 to mitigate Coronavirus transmission, millions of homebound consumers quickly turned to eCommerce for their shopping needs, creating an avalanche of packages that UPS wasn’t prepared for.
During the second quarter of 2020, UPS’s average daily volume (ADV) in the US increased by 22.8% or 21.1 million packages a day. 🤯 And despite experiencing a decline in domestic demand in Q2 2021, the legacy carrier’s ADV was only down by 0.8% during that quarter.
What happened was people felt highly optimistic about their spending and started holiday shopping earlier than before to avoid delays and missing out on popular items (#FOMO). Many were even willing to shell out extra dollars to receive their packages within 1 to 2 days.
But this year, retailers have a surplus of products and not enough buzz because consumers are now more conservative with their spending in attempts to make ends meet amid a looming recession, marking the end of their 2-year shopping spree.
UPS Predicts Package Volumes will Peak in December
The prediction follows a quarter wherein the company suffered a 1.5% drop in its domestic ADV and a 5.2% dip in its international ADV due to a general slowdown in economic activity (e.g., disruptions to manufacturing output in China).
“In the third quarter, the global economy softened, especially outside the United States,” Tome explained during the quarterly earnings call.
“Softening” is a stage in the economic cycle where a market shifts from rapid growth to slow growth to flat revenue growth.
In retail, if there’s more supply than demand, businesses are forced to offer promotions like deep discounts to win inflation-fatigued customers and boost sales.
Given the current economic situation and retailers facing inventory bloat, we may see more products on sale this Christmas compared to the previous years. 🛍️
In fact, holiday shopping started early at Amazon.
For the first time, the retail giant held a second Prime Day called Prime Early Access Sale that ran from October 11 through 12 to reduce inventory glut. However, reports show that the event failed to best the initial Prime Day launched back in July.
It could be that customers simply didn’t like the featured products or they wanted to wait for bigger bargains usually offered during BFCM and Christmas.
Either way, UPS is ready for the anticipated package volume surge in Q4, although overall volume in this quarter is expected to decline from 2021 due to contractual agreements with Amazon and Amazon itself bringing more and more of their logistics and shipping into its own growing internal network.
To prepare for the holiday season, UPS is reportedly working with major shippers and looking to hire 100,000+ seasonal workers to ensure timely delivery of packages across the US. It has also recently put shipping limitations on Amazon to make more room for its B2B segment and provide businesses with excellent logistics service during peak. 🚀
Related: 3PL Logistics Backup Plan for Amazon, How to Ship to Amazon FBA (And Speed Up Check In Times)
Amazon Faces Backlash for Alleged Abusive Practices
Amazon is under fire for allegedly copying top sellers for its private label business, manipulating the Buy Box algorithm, and price fixing. 🔥
Using Seller Data to Copy Products
Mounting evidence from investigative reports suggests that Amazon has deliberately utilized third-party seller data, such as sales velocity and customer information, to launch competing products and then rigged search results in their favor.
In 2020, Wall Street Journal released a report detailing how some Amazon private label employees used data about independent sellers to create knockoffs despite it being both an antitrust and company policy violation.
Amazon reps have denied these accusations. Former Amazon CEO Jeff Bezos himself told Congress in 2020 that the company forbids its employees from using exploitative practices to boost its private label business.
However, in March 2021, Peak Design company founder & CEO Peter Dering called out Amazon for releasing an imitation of its most popular product, the Everyday Sling Bag.
In an interview, Dering told CNBC that Amazon “copied the general shape, they copied the access points, they copied the charcoal color, and they copied the trapezoidal logo badge. But none of the fine details that make it a Peak Design bag were things that they could port over because those things take a lot more effort and cost.” 🤦♀️
To poke fun at Amazon’s copycat ways, Peak Design posted a video that went viral and was even featured on John Oliver’s Last Week Tonight. The brand’s supporters bombed the knockoff version with negative reviews, forcing Amazon to have it removed from its private label catalog.
Another evidence that could prove Amazon’s anticompetitive behavior is its alleged covert strategy for its Indian marketplace in 2016.
Published in October 2021, a report from Reuters shows that in India, creating copycats and manipulating search results to put the tech giant’s in-house products at the top were part of a clandestine strategy called the “Solimo” project, which was reviewed by two Amazon execs – Diego Piacentini and Russell Grandinetti – in 2016.
Based on the internal documents examined by Reuters, part of the Solimo strategy was to “use information from Amazon.in to develop products and then leverage the Amazon.in platform to market these products to customers.” The company also reportedly teamed up with the manufacturers of the products targeted for imitation to ensure their quality.
However, Amazon has again denied these claims saying that they are “factually incorrect and unsubstantiated” as Reuters was unable to provide a copy of the internal documents in question. 🤔
Amazon may continue to deny the allegations shown in these reports, but in recent years, more and more independent sellers have come forward to expose the company’s abusive practices. More on that in the next section.
Manipulating the Search Algorithm
According to a report from The Markup, a non-profit newsroom, Amazon places its own products and brands exclusively selling on the platform ahead of third-party sellers, even those with higher sales and customer ratings. 😦
For instance, a coffee grinder seller shared that after Amazon introduced a competing product from AmazonBasics and another from an exclusive brand, the products ranked high on search right away.
He believes that the products rank well because they’re an Amazon brand.
Amazon has long denied that it is giving preference to its own products over independent sellers on its retail site.
“We display search results based on relevance to the customer’s search query, irrespective of whether such products have private brands offered by sellers or not,” Amazon said.
However, the findings in Markup’s report seem to contradict this statement.
Apparently, the researchers could easily tell whether a product was an in-house or exclusive brand because in 7 out of every 10 cases, Amazon would place it first on the search results page.
“These listings are not visibly marked as ‘Sponsored’ and they are part of a grid that Amazon identifies as search results in the site’s source code. We only analyzed products in that grid, ignoring modules that are strictly for advertising.” The Markup explained.
So, it doesn’t matter if you’re a top seller with excellent customer ratings. When predicting the first spot, being an Amazon private label brand or exclusive brand influenced search ranking more than customer reviews or star ratings.
Unfortunately, Amazon making cheaper versions of the best-selling products from sellers and giving higher priority to them can hurt businesses, especially the little guys.
It demolishes the level playing field. And by Amazon eating into your market share, your sales may go down, which has a direct impact on your ranking and your business as a whole.
Price fixing is an anticompetitive behavior where competitors agree to lower, maintain, or increase prices, thereby taking away the opportunity to compete freely in the market and to fix your price levels based on supply and demand.
On September 14, 2022, California filed a lawsuit against Amazon for forcing sellers and suppliers into inflating their prices. Those who fail to comply (e.g., sellers who opt to offer lower prices elsewhere online) may get penalized.
This has resulted in consumers paying for overpriced products for years, the state claims.
Filed by California state Attorney General Rob Bonta, the lawsuit aims to stop Amazon from “bending the market to its will at the expense of California consumers, small business owners and a fair and competitive economy.”
As usual, Amazon has denied any antitrust violation and claimed that a similar case in the District of Columbia was junked and that Bonta has got it all wrong.
“Sellers set their own prices for the products they offer in our store,” an Amazon spokesperson said in a statement.
“Like any store we reserve the right not to highlight offers to customers that are not priced competitively.”
California isn’t the only one that’s currently suing Amazon over price fixing, though.
In the UK, Amazon also faces a class-action suit to put a stop to its “secretive and self-preferencing” Buy Box algorithm, which the company uses to boost its own products (and sales).
Similar to the California case, this has made customers pay more by hiding better deals.
Seeking $1 billion in damages, the lawsuit will be filed by Hausfeld & Co by October 31st at the Competition Appeal Tribunal.
Sellers and Industry Groups Band Together to Fight Amazon
Many sellers and industry groups like Online Merchant Guild (OMG) have been organizing to launch antitrust probes into Amazon.
For instance, OMG recently won a sales tax lawsuit against Amazon in Pennsylvania court, thereby prohibiting the state and its marketplace facilitator, which in this case is Amazon, from collecting sales tax nexus that online remote sellers supposedly owe from previous years.
Meanwhile, since 2019, a group of sellers led by SmartScout CEO & Founder Scott Needham has been communicating their needs to the Justice Department and the Federal Trade Commission.
In a statement to Business Insider, Needham said: “We’re a group of sellers or kind of a movement,”
“We are trying to unify the voice and just make sure that us who contribute to the Amazon marketplace are listened to as well.”
That may come true if the US antitrust bill, S.2992, is passed into law.
Amazon has also reportedly reduced its private label catalog due to poor sales and possibly to appease antitrust regulators. The company has also offered concessions to halt two EU antitrust probes, recent moves that could set more pro-seller changes in motion. 🚀
Should You Be Selling on These New Sales Channels?
🥊 Macy’s, Pinduoduo, and Google have just joined Walmart and Shopify in battling Amazon for the US market share!
This means greater marketplace diversity for sellers, especially for those who are looking for (cheaper) alternatives to Amazon, which as previously reported, has gotten 30% more expensive in the last two years.
For Amazon, however, tougher competition is an incentive for them to keep innovating (i.e., launch new tools, services, or products) so they can stay in the game and continue capturing more independent sellers and consumers.
Simply put, opening the market to emerging players not only generates more attractive offers, but also breaks up anti-competitive practices. 🔥
Introducing the New Amazon Challengers
Amazon is a global eCommerce leader with a reported revenue of $610 billion in 2021, surpassing America’s largest brick-and-mortar store, Walmart, with only $566 billion.
However, as big as Amazon is, it doesn’t stop new players from firing onto the scene. 🚀
On September 1, Chinese eCommerce giant, Pinduoduo, quietly launched its US online shopping site, Temu, in an attempt to replicate the international success of Shein and AliExpress. The company’s expansion to the US also offers new growth areas at a time when the Chinese tech sector is having a rough year due to the government’s tech crackdown.
We present this new marketplace to sellers not so much to consider selling on the platform, but more to provide a view of what new competition is coming that could steal clicks and purchases from sellers on Amazon.
What to expect with Pinduoduo
- Ideal for discount retailers. To keep the prices low on the platform, Pinduoduo negotiates with sellers to achieve the lowest offer possible. At a glance, the prices on Temu range from $0.99 to $25, making it a good online shopping destination for customers who love a good bargain.
- Extensive connection with manufacturers and merchants. The company works directly with over 11 million sellers from across the globe, which allows them to cut out the middlemen, aka distributors. They also don’t have in-house brands like Amazon does, as all products are supplied by third-party sellers.
- 10-billion worth of resource packages for Chinese manufacturers. Pinduoduo launched an overseas support initiative that aims to help 10,000 domestic factories sell internationally.
- No warehouses in the US. All products are shipped from China, which suggests delivery may take longer than 2 days. If customers prefer 1- to 2-day shipping, Pinduoduo may not be the best alternative marketplace for them.
- Low margin business. As mentioned earlier, most products on Temu are sold at bargain prices, so depending on market demand, you may make profit, break even, or lose money. In addition, unsold products (let’s say more than 90 days) may be returned to you, and when it does happen, you will sustain a loss. Alternatively, you can try to join Temu’s flash sales to attract more customers.
- Potential counterfeit issues. In 2018, Pinduoduo was added to the US Trade Representative’s blacklist over suspected fakes. This means you could face the same intellectual property issues that are troubling Shein sellers.
Pinduoduo may be a good option for suppliers in China who want to easily connect with US customers. But for Amazon sellers, that means that your suppliers could quickly become your competitors, if they aren’t already.
On September 28, the department store chain officially welcomed third-party sellers to its eCommerce site, macys.com.
Powered by Mirakl, a top online marketplace technology provider, the new digital channel now allows you to seamlessly integrate your products into Macy’s and access tools that will help you to monitor and grow your business.
As of this writing, Macy’s provides customers with 400 new brands, 20 product categories, and sustainable offerings from women-owned and diverse-owned businesses.
Reasons to join Macy’s
- Guided onboarding process. The retailer will work with a select group of sellers and brand partners to ensure they meet Macy’s product and fulfillment standards. They will also offer seller support, training programs, and promotional participation.
- Sellers will be denoted by a badge. A “Shipped by and sold by” badge will be displayed on your product listings to differentiate yourself from other brands and communicate who’s responsible for fulfilling and shipping customer orders.
- Send your products for approval and listing. Similar to Pinduoduo, Macy’s makes the final decision as to which products end up on the marketplace. This helps the company to maintain a well-curated assortment of goods, control product prices, and combat counterfeiting.
Reasons not to join
- Seller-fulfilled orders. As a third-party seller, you’ll be responsible for processing your own orders. If you don’t have the storage space and manpower to fulfill orders yourself, you may need to hire a third-party fulfillment company to pack and ship items for you, which means added costs and complexity to your operations.
- Fierce competition. Like Amazon, Macy’s has multiple in-house brands that you need to compete with, not to mention the other private label brands from participating third-party sellers. And as the platform owner, they could easily collect and use customer data and analytics to gain an edge over direct competitors.
Advanced sellers may find Macy’s an excellent addition to their multi-sales channel strategy, whereas beginners or smaller businesses may struggle with the downsides of fulfilling orders themselves and competing in a highly competitive marketplace.
Released the same day as Macy’s new digital marketplace launch, Google has nine (9) new online shopping features and tools designed to offer a more efficient way for you to discover and shop products on its search engine.
Introduced at the recent Search On event, these new features include:
- Search with the word “shop,” followed by brand name, product type and category, among other relevant search terms.
- Shop the look. Find and buy your preferred clothing ensemble (e.g., summer outfit) within Google search.
- Trending products. Check out what’s trending in Search to discover the latest styles, models, and brands.
- Shop in 3D. Engage with 3D visuals of staple products like home goods, clothing, and sneakers as you search them on Google.
- Buying guides. Make an informed buying decision by reading all the relevant information about a product from trusted sources. If you’re looking to buy a road bike, for example, the buying guide feature might display information about the item’s size, weight, materials, fork suspension, wheelset, and so on. Arming yourself with this information will allow you to make decisions with a great deal of confidence.
- Page insights. Find out what other customers think about a product’s pros and cons.
- Personalized results. Enable personalized results on Google to narrow down your search to your preferences and previous shopping habits.
- New filters. Take advantage of dynamic shopping filters to discover what’s popular right now. If you’re shopping for sneakers, you might see filters for “retro” and “white” right below the search bar because those are the hottest styles.
- Suggested styles in Google app. If you prefer mobile shopping, use the Google app to browse through Google’s suggested styles for you. These suggestions will be based on your previous buys and what others have searched (and bought) too. Use the “Lens” feature to expand your shopping options.
Several of these features seem to be making Google a great resource for product research for sellers as well, so this is something to keep in mind the next time you look to find your new best seller.
Reasons to join Google
- Free for sellers. In a blog post, Google states that they have taken two steps to support all merchants: remove commission fees and make product discoverability free for sellers on Search. The tech giant uses a powerful AI called Shopping Graph that allows them to provide customers with relevant shopping information, such as brands, images, videos, product reviews, and inventory data from different sellers. If you have something a customer is looking for, your product ad or listing may show up on search. When a customer decides to buy it on Google, you won’t have to pay any commission fee (versus Amazon’s 8% to 15% fees).
- Plethora of shopping features and tools. Google is trying to establish itself as the one-stop-destination for customers. That’s why it’s introducing a suite of features designed to quickly sift through over 35 billion listings on the internet and bring a more personalized, immersive, and informative shopping experience.
- Optimized for Shopify merchants. Google has an existing partnership with Shopify that lets its merchants feature their products across Search, YouTube, Shopping, and more in just a few clicks. This collaboration helps sellers become highly discoverable to different types of buyers (intent buyers and window shoppers, for example), and as a result, drive traffic and boost conversion.
Reasons not to join Google
- Cut-throat competition. If you have a competitive product such as fashion and jewelry, you may experience difficulty in getting your ads to reach your target customers given that there may be thousands of others doing the same exact thing. Conversely, if you have a niche or rare product, you may have a better chance of attracting customers.
- Products could be disapproved or suspended. If you want to sell directly or advertise on Google Shopping, you have to get your products approved by meeting specific attributes and compliance requirements stated in the Shopping Ads policies. What may be allowed on Amazon may be prohibited on Google, so be sure to read up on the company’s product approval process to avoid potential issues that could delay your launch.
In sum, while expanding to new sales channels has its own advantages, it also has a few disadvantages, such as additional costs. It can also complicate your business operations, from sales & marketing (inconsistent messaging on different channels) to inventory management to fulfillment.
If you want to cast a wider net with a multi-channel selling strategy, make sure you understand the risks involved with selling on a particular sales channel. 👌
Related: Amazon FBA Calculator
New Ad Strategies for Winning the Holiday Season
🤔 Unsure of how best to approach your holiday ad campaigns at a time when 55% of consumers are cutting back due to economic uncertainty? Want expert guidance from the best and brightest in the business?
From October 25 to 27, live and in virtual access, Amazon is holding its annual advertising conference, unBoxed, at the Jacob Javits Center in New York City, where you’ll:
Learn the Latest Amazon Ads Solutions and Innovations
Similar to Accelerate, the unBoxed keynote will be chock full of new product releases and services so you can equip yourself with the latest knowledge and tools necessary to:
- Smoothly navigate the economic challenges that are affecting consumers and businesses today
- Create engaging assets that resonate with your audiences to help you stand out
- Launch ad campaigns that reach the right customers
- Measure and improve the impact of your ads and channels
Create Meaningful Connections with the Industry Pros
unBoxed is bringing you closer to several industry leaders, including Amazon Ads execs themselves. Take this opportunity to learn about actionable insights to inform your ad strategy. Attend the breakout sessions you need to help you end the quarter on a strong note.
Key topics include the future of advertising, best practices for brands, navigating supply chain issues and inflation, strategies for driving growth during high-traffic shopping events, video advertising, the power of audio storytelling, and more.
Rub Shoulders with other Marketers
On October 26th, unBoxed will have an “After Dark” concert with the American rock band, The Killers! 🤘🔥
Both novice and seasoned advertisers are welcome to attend! 🥳
Whether you’re preparing for a rocky Q4 or just need to stay up-to-date with the latest advertising trends, unBoxed is your chance to learn what you can do with Amazon beyond sponsored ads!
If your brand is looking to expand into display, programmatic, OTT, streaming, or video, then you’ll have a lot to learn at unBoxed. 💪
How to Join
You can join in person in NYC or online via live stream.
- General admission ticket (in-person) costs $349, which includes access to 60+ educational sessions, hands-on training and demos, networking events, breakfast and lunch, and an exclusive musical performance.
- Virtual admission is FREE, but only provides access to the keynote live stream and select video-on-demand content post-event.
There’s only a couple of weeks left to register. Don’t miss out!
Amazon Unveils New Affordable Shopping Hub Just in Time for Holidays
To better serve customers during these challenging times marked by record-breaking inflation, the eCommerce giant introduced Amazon Access, a resource hub for easier and more affordable shopping on Amazon.com. 💰
What is Amazon Access?
Amazon Access is Amazon’s newest hub packed with resources to help customers discover ways that they can shop and save more on Amazon. These resources include information on Amazon’s various flexible payment options, discounts offers, and programs designed for a more budget-friendly shopping experience.
The cost-saving features and benefits of the new program include:
SNAP EBT payments
Customers holding a valid SNAP EBT card can now order their essential goods and grocery items from Amazon.com, Amazon Fresh, and Whole Foods Market using their SNAP funds.
With the exception of customers from Alaska, this option is available for customers from the remaining 49 states. They can also take advantage of Amazon’s fast and free delivery service for qualifying orders.
Amazon Layaway allows customers to pay for their purchases over an extended period of time without incurring huge interest fees or going through stringent credit checks. Under this program, customers only have to pay 20% of their total purchase amount to reserve items and lock in their price. The remaining 80% is then paid over time; product to be delivered once paid in full.
Prime Access for less
Qualified US customers who receive government subsidy can take advantage of a discounted Amazon Prime membership amounting to only $6.99 per month – an $8 monthly savings compared to the regular Amazon Prime membership cost.
Prime Member discounts
Aside from getting Prime for more than 50% off its current price, qualified customers can also enjoy more discounts on home products, get access to clip coupons, save up to 15% on various products with Amazon’s Subscribe & Save, and enjoy free shipping on auto-deliveries of certain items.
Pay and pick-up your way
Customers without a credit or debit card can still shop from Amazon.com and pay with Amazon Cash. They can also opt to pick up their goods from an Amazon Hub Locker or Hub Counter.
30-day free trial
US customers can try out Amazon Access for free for 30 days. After the 30-day period has passed, they can simply register by uploading a valid proof of their identification or government benefits documents.
Why Did Amazon Launch Amazon Access
It probably goes without saying that Amazon came up with Amazon Access not only to serve Prime members but also to gain more customers!
Here are the top three reasons why Amazon decided to introduce this hub at this time:
Increase Prime membership
Amazon Access can be viewed as the retailer’s latest attempt to attract more customers to sign up to Amazon Prime.
By making Prime’s benefits more accessible to a wider range of consumers, Amazon can ensure the program’s profitability. In case you’ve forgotten, the company increased Prime’s subscription fee from $119 to $139 last February (the original fee when it was launched was $79).
Boost 2nd Prime Day profits
In light of the upcoming Prime Early Access Sale, Amazon is also probably looking to maximize its revenue from the two-day sale event. The more customers who are subscribed to Prime by that time, the higher their sales and profits will be.
Response to inflation-weary consumers
Consumers are on the lookout for the biggest bargains and discounts during times of economic turmoil, and this time is no different.
The US inflation rate of 8.3% for August 2022 may have improved from July’s 8.5%, but it was still higher than the forecasted rate of 8.1%. Economists predict an average rate of inflation of 2.4% from 2022 through 2026, with this year being the worst of it. They also expect inflation to return to its normal rate next year and beyond, thanks to the central bank’s interest rate increases.
Take Advantage of Amazon Access
In these tough economic times, people continue to spend on essential goods, but cut back on wants, or at least wait for the next big sales event.
But with Amazon Access, the tech giant can make a wide selection of goods affordable, allowing them to encourage more customers to shop on its retail site and essentially help sellers keep making bank.
To finish the year strong, take advantage of the sudden demand increase that Amazon Access may create by offering discounts, flexible payment options, and promotions, especially on basic must-haves. Just make sure you have enough inventory for this new demand to stay in stock. 💪
Amazon to Hold Prime Early Access Sale on October 11-12
🛍️ Holiday shopping at Amazon is starting early this year, allowing customers to reduce the cost of their BFCM and Christmas purchases by taking advantage of the 2nd Prime Day sales event!
What We Know So Far
Amazon announced that its 2nd Prime Day event, dubbed as the “Prime Early Access Sale”, will take place from October 11 to 12, in a move that mimics that of its rivals Walmart and Target.
The new two-day sales event is exclusive to Amazon’s more than 200 million Prime members, and will grant them access to huge discounts on the most popular brands as early as fall, giving them a head start to find and shop the best holiday deals.
The sales extravaganza will also showcase Amazon’s Top 100 list which includes best-selling gift items and amazing deals in electronics, fashion, home, and kitchen products, among other top categories.
The announcement confirms Business Insider’s report just three months prior, when it said that the eCommerce giant was planning to hold another Prime Day event in October.
Why is Amazon Holding a 2nd Prime Day Event?
- Protect its Q4 market share. The competition for sales during the upcoming holiday season is heating up as other retailers announced sale events scheduled earlier than Amazon’s. Walmart’s holiday sale will start on October 1 and will feature thousands of discounts in toys, tech, home, and beauty product categories.
On the other hand, Target will kick off its own two-day Deals Day event from October 6 to 8, offering shoppers “hundreds of thousands” of deals in different product categories plus a price-match guarantee until Christmas eve.
According to Texas A&M marketing professor Venkatesh Shankar, Prime Early Access Sale represents Amazon’s attempt to “cover its bases” and grab the largest share of consumers’ holiday shopping.
- Offload excess inventory. The fact that there is an oversupply of consumer goods from fashion, electronics, toys, home and other popular categories also fuels the competition between these rival retailers. Due to supply chain challenges, these products, which the retailers ordered to meet their projected customer demand, arrived late and are now stuck on store shelves and in warehouses. These retailers must be feeling the pressure to sell these products fast and replace them with new products for the holiday season and the new year.
- Fill up unused warehouses. Another possible reason is that Amazon is seeking to fill up its empty warehouse space for the coming quarter and so is hoping to invite more sellers to send in inventory.
Amazon CFO Brian Olsavsky admitted to reporters last April that the company has way too much warehouse space, infrastructure, and staff than the required demand. Amazon has made significant investments in logistics and human resources given the surge in eCommerce during the onset of the pandemic.
But now, given the record-breaking inflation that consumers are grappling with and the decreasing eCommerce purchases, retailers like Amazon need to be creative in increasing their revenue. Holding these big sale events will allow them to attract more sellers to stock up on their products, which will occupy more space in their warehouse, and increase their fulfillment revenue.
It is also possible that Amazon is trying to recreate the success of its first Prime Day of 2022 held last July 12 to 13, which saw the company earning $12.09B.
Related: Walmart and Amazon Battle for Dominance Intensifies
What’s in it for Amazon Sellers?
Sellers may want to take advantage of Prime Early Access Sale to increase their restock limits, which can come in handy for the upcoming Black Friday/Cyber Monday (BFCM) event. 🚀
Just last month, Amazon announced that they are bringing back restock limits in preparation for the Q4 holiday rush. Sellers have been given up to four (4) months’ worth of inventory in FBA fulfillment centers.
⚠️ However, I wouldn’t recommend maxing out your restock limits for the October Prime event, as it means increased difficulty in restocking until you free up enough storage space for products as limits fluctuate. In turn, this may translate to missed selling opportunities during BFCM and through the rest of the holiday season.
If you have excess inventory, try getting rid of it faster by offering deep discounts during this 2nd Prime Day. Increasing sales results in a higher sell-through rate, which is a very important metric used by Amazon in determining seller restock limits.
And remember, the Prime Early Access Sale is expected to be a “high velocity” sales event, so make sure your business and inventory are ready for it! 💪
Related: 3PL Logistics Backup for Amazon, Master Carton Calculator, How to Ship to Amazon FBA (And Speed Up Check-in Times)
Non-Amazon Sellers Are Now Stealing Your Ad Space
Amazon continues to beef up its Buy with Prime business with more marketing capabilities to help non-Amazon sellers drive traffic and increase sales on their own stores. 📈
Buy Ads to Drive More Shoppers to Off-Amazon Stores
The tech giant launched Buy with Prime in April 2022 to allow direct-to-consumer (DTC) brands off Amazon.com to offer free 1 to 2-day shipping, an easy checkout process, and free returns to customers. They do this by becoming these brands’ fulfillment centers. FBA essentially becomes available to non-AMZ sellers.
That’s right. While you get saddled with restock limits and reduced FBA warehouse space, Mr. Shopify Only seller snuggles up in your spot. 🤔
Participating brands feature a Buy with Prime button on their sites to provide shoppers with a seamless buying experience via Amazon payments and fulfillment.
As Prime benefits are some of the main reasons why customers pick Amazon over other online retail platforms, offering Prime on an eCommerce site can be an effective way to increase conversion.
However, conversion is only half the battle. The other half is expanding your reach and driving new customers to your own DTC site, which many participating sellers are reportedly struggling with.
To help address this pain point, Amazon is introducing three (3) new marketing solutions that will enable DTC brands to attract and direct more shoppers to their own brand offerings.
So now, not only are non-AMZ sellers stealing your warehousing space, they’re also stealing your ad space.
However, it’s not all bad news. This actually could present some interesting opportunities for Amazon sellers to take Amazon traffic into their own websites and finally collect some of that customer information in a way that is TOS-compliant. Read on.
- Buy with Prime Pages and Sponsored Brands Ads
Amazon invites DTC sellers to showcase their products on Amazon with a Buy with Prime page within an Amazon brand storefront.
They would then create and launch Sponsored Brands ads to attract and drive Amazon shoppers to their products.
Sponsored Brands ads are customizable cost-per-click (CPC) ads that highlight a brand’s logo, headline, and products. They also appear in relevant parts within the Amazon search result pages to help shoppers discover your brand.
When a customer clicks on a Sponsored Brand ad, it directs them to a seller’s Buy with Prime page on Amazon.
From there, the customer can preview the product offerings and decide whether to buy on Amazon or directly from the brand’s website via Buy with Prime.
However, as you can see, this process takes several clicks that may increase checkout friction in the customer’s path to purchase, which could then lead to cart abandonment.
But the good news is that both these DTC Sponsored Brands Ads and Buy with Prime pages are currently in beta. So, expect to see some changes to these features as they go through this testing period.
In a blog post, Marketplace Pulse Founder Juozas Kaziukėnas speculates that non-Amazon sellers might be able to advertise directly in Amazon search results in the future.
We could imagine a world where, when a customer types in “filtered water bottles,” and clicks on the first Sponsored Ad they see, for example, it would take them directly to the brand’s website instead of its Buy with Prime page on Amazon. Amazon would pocket the ad spend and the fulfillment fees and it is possible that they’d throw in an additional referral fee on top of the ad spend, knowing Amazon.
Removing as many steps as possible is key to improving customer experience and ecommerce sales.
2. Amazon-Funded Social Media Ads
With the advent of omnicommerce, people are no longer following a linear customer journey path. Many shoppers now go back and forth between your own website, social media ads, emails, and Amazon storefront to search for and buy products.
For this reason, Amazon is launching a co-branded Buy with Prime social media page and ads on Facebook and Instagram to help Buy with Prime sellers reach more customers at no extra cost. The ads from the Buy with Prime page will also feature specific sellers. This is a smart value add that Amazon is using to attract sellers to the program.
Suppose a customer sees a Buy with Prime ad featuring your brand on Facebook and clicks on that ad. In that case, they will be redirected to a Buy with Prime page where they can place an order.
3. Buy with Prime Marketing Toolkit
This toolkit provides you with a Buy with Prime badge that you can feature in your media assets, including product pages. It also allows you to market to Prime members on your own website.
In Amazon’s official press statement, Patrick Sean Briseno, eCommerce and marketing manager at Great Circle Machinery shared:
“It’s tough to gain shoppers’ trust to make a purchase on our own website, but the Buy with Prime badge gives them peace of mind knowing their orders are fulfilled by Amazon with the Prime delivery promise.”
Related: Amazon Now Allowing Email Marketing Campaigns to Repeat Customers
Effective Way to Embrace Omnichannel Strategy
Many consumers rely on Amazon through all stages of their shopping journey. So, while you could come up with compelling offers to entice people to shop directly on your website, you could still face an uphill battle when competing with the retail giant.
But with Buy with Prime, along with borrowing trust, you can also use Amazon as an additional marketing and distribution channel to massively expand your reach and fulfill orders for Amazon shoppers, especially the company’s over 200 million Prime members. 🚀
But if you didn’t already consider it, this could also be a backdoor into Amazon getting all those non-Amazon, DTC sellers actually going toe-to-toe with you selling on Amazon itself. I’m sure, for Amazon, it’s just a waiting game. It’s all a bunch of these tiny yeses til Amazon’s got them going all in.
A word of caution for Shopify sellers: Shopify warns its merchants against Buy with Prime as using it violates the company’s Terms of Service. If you’re on Shopify, make sure you understand the risks of participating in the Buy with Program before getting involved. Read this article to learn more.
Related: Shopify Acquires Deliverr and Takes Aim at Amazon’s Buy with Prime
Clash of the Titans: Walmart and Amazon Battle for Dominance Intensifies
🆚 For years, Amazon and Walmart have been pulling out all the stops to win customers and sellers. Both retail giants are offering a wide range of products at low prices and ramping up free, 1- to 2-day shipping and return services to maintain dominance.
While Amazon leads US eCommerce, Walmart rules over brick-and-mortar stores. But the battle for dominance intensifies as Walmart encroaches more deeply into eCommerce territory after:
- Launching its own fulfillment service for independent sellers in 2020
- Opening its online marketplace to sellers outside of US in 2021, and more recently
- Extending its display advertising program, Search Brand Amplifier (SBA), to brand owners. SBA displays products at the top of Walmart search results, but this platform was previously limited to eligible sellers and a few suppliers whose ads were managed by Walmart Connect itself or platform partners like Tinuiti. Opening SBA to more eComm businesses and allowing them to launch their own ads will help them connect with millions of Walmart shoppers, making Walmart an attractive (and potentially lucrative) marketplace even for Amazon sellers.
With Walmart going after Amazon’s market share, it’s not surprising to see Amazon unveil new marketing capabilities for sellers during the recently concluded Accelerate event in an attempt to stay dominant.
On September 14, 2022, Amazon announced a new lineup of marketing tools to attract more e-commerce businesses to its marketplace. These include:
- Amazon Tailored Audiences, a free email marketing tool that allows sellers to reach repeat customers
- New Buy with Prime offerings to help non-Amazon sellers capture more shoppers and increase sales
- New A/B testing features, such as title and image notifications and auto-publishing winning experiments
- Additional analytics and data with the enhanced Search Analytics Dashboard, Product Opportunity Explorer, and Marketplace Product Guidance
Interestingly, shortly after Amazon made these announcements, Walmart responded by introducing the updates to its display ad services, Search Brand Amplifier. 🔥
In a press release, Mike Greenberg, Head of Marketplace Walmart Connect, reveals that SBA is coming to sellers in October to help them reach more customers, especially this holiday season.
New sellers or brands with new products that may not yet have high organic search rankings will benefit greatly from SBA, as it offers them the opportunity to showcase their products in prominent places within search results similar to Amazon’s Sponsored Brand ads.
Brand-registered sellers are eligible for the ad program. You can also take advantage of the following features to help scale your business:
- Faster enrollment with automated onboarding at the Walmart Ad Center
- Additional application programming interface (API) partners to support sellers in China, Canada, UK, India and other countries
- New resources to help sellers optimize Sponsored Search campaigns
Walmart’s Booming Ad Business
The move to open SBA to marketplace sellers also came after Walmart made $2.1 billion in ad revenue in 2021, which represents an important growth area for the company.
According to Doug McMillon, Walmart’s president and CEO, the ad business played a crucial role in elevating customer experience on the site by highlighting better deals and the right products.
Therefore, “the relationship between digital growth, marketplace growth and advertising is something that we’re trying to take advantage of,” said McMillon.
Aside from generating revenue, the ad business will also provide Walmart with valuable insights into the way customers shop on the site.
In fact, Walmart has recently added Innovation Partners to its ad network to connect advertisers with potential customers on TikTok, Snapchat, and Roku. Through this new program, you can:
- Serve ads on popular social media platforms, including TV streaming site Roku
- Create engaging shoppable videos via Firework and TalkShopLive
- Measure your advertising campaign’s impact on your sales
Innovation Partners seeks to help sellers connect with Gen Z shoppers. But for Walmart, it allows them to take a crack at the elusive US live commerce market, which no other retail company, even Amazon, has figured out yet. For instance, Shopify’s attempt found them partnering with YouTube while Amazon released Amazon Live.
If Walmart succeeds, it would give them a huge competitive advantage over their rivals.
Amazon’s $31 billion ad business may be far up there with behemoths like Google and Meta, but with Walmart’s growing ad network, the competition will only get tougher in the future, especially as the lines continue to blur between in-store and online shopping. 💪
Amazon To Increase UK Multi-Channel Fulfillment Fees By November 12th
Amazon just announced another fee increase that may whittle away at your profits just in time for the holidays. 💸
Amazon said that they will be increasing the multi-channel fulfillment (MCF) single-unit-order fulfillment fees beginning 12th of November this year. The price hike will apply to all parcel size tiers and already includes the additional fuel and inflation costs.
The retail giant explained the increase mirrors the surge in order fulfillment and logistical costs, and will allow them to keep on providing the same high-speed delivery and high-quality service their customers expect.
This is the latest in the seemingly never-ending fee increases Amazon imposes on its independent sellers.
If you have been following our posts for some time, you may remember the Amazon Fee Stack, the term we’ve assigned to the incremental but regular fee increases that Amazon has been making at the expense of the sellers’ profit margins.
⚠️ Constant price hikes, even if they are only small in amount, can have a negative effect on your bottom line.
When you add them all up, you may be surprised at just how much they amount to. And when you add these higher fees on top of all the other increasing operating costs of your business, you may be shocked to see how little is left for your business to operate sustainably.
UK MCF Fees Before November 2022
Amazon actually reduced their MCF fees for specific size categories beginning on April 26, 2021.
For the large envelope 960g size tier, for example, the MCF fees for Standard and Expedited Delivery dropped from £3.93 and £4.95 to £3.39 and £4.10, respectively.
But starting from May 12, 2022, Amazon added a 4.3% fuel and inflation fee to the existing FBA fulfillment fee per-unit rates in the UK and other European countries and territories. MCF, in case you’ve forgotten, is a division under the FBA Program.
UK MCF Fees After November 2022
Have a look at the table below to see the difference between the old and new MCF rates per unit for local and international deliveries. Keep in mind that these rates apply to standard shipping, not expedited shipping.
|Local shipping||Cross-border shipping|
|Domestic, Multi-Country Inventory, Pan-European||European Fulfillment Network|
|Size tier||Before November 12||After November 12||Before November 12||After November 12|
|Small envelope to 80g||£3.15||£3.31||£4.59||£4.96|
|Standard envelope to 210g||£3.30||£3.45||£4.74||£5.12|
|Large envelope to 960g||£3.39||£3.48||£5.10||£5.51|
|Standard parcel to 1.4kg||£3.65||£3.91||£7.75||£8.37|
|Standard parcel to 6.9kg||£4.95||£5.90||£11.73||£13.07|
|Standard parcel to 11.9kg||£6.38||£7.34||£12.75||£15.41|
|Standard oversize to 2.7kg||£6.48||£7.13||£13.82||£14.93|
|Standard oversize to 29.76kg||£9.28||£9.45||£19.53||£21.09|
|Large oversize to 31.5kg||£13.77||£14.50||£28.66||£30.95|
For local shipment, sellers will have to pay an extra £0.09 to £0.96 per unit – depending on the size of the product – after the MCF fee adjustment takes effect on November 12.
Following our large envelope 960 g size tier example, Amazon increased the MCF rate per unit by 2.69% from £3.39 to £3.48, or an additional £0.09. If your item falls under the standard parcel to 6.9 kg size tier, expect to fork out an extra £0.95 per unit as the rate jumped by 17.51% from £4.95 to £5.90.
On the other hand, cross-border shipping will incur higher rates – between £0.37 to £2.66 more per unit. From £5.10, the new rate for an item under the large envelope 960 g size tier will be £5.51 – an increase of £0.40 or 8.03%.
If your product is categorized under the standard parcel to 6.9 kg size tier, you’ll see an increase of £1.34 or 11.42% as the old rate of £11.73 rose to £13.07.
These small increases, while seemingly negligible at first, can be significant enough to shrink your profits and test your business’ level of resilience.
Multi-Unit Order Discounts
The good news is Amazon still seems to be listening to sellers when it announced the launch of multi-unit order discounts, as suggested by the sellers themselves.
Sellers who ship multi-unit orders will enjoy lower per-unit costs, resulting in savings averaging to 25.2%. If you want to save more and/or offset the higher MCF fees, you may want to consider taking advantage of this new offer by creating multi-unit or cross-selling offers on your UK marketplace listings.
Check out the table below to see the difference between the local shipment fees for single-unit orders and multi-unit orders.
Aside from this new discount, Amazon also shared three developments geared towards boosting their sellers’ business growth:
- Launch of unbranded packaging for UK sellers, available for free
- Reached over 99% on-schedule delivery rate
- Allocated for the expansion of fulfillment center capacity
Read more on these in the updated MCF rates announcement under the section “What am I getting for these higher rates?” (Yes, that really is the name of the section.)
Keep your head up and your margins down.
Amazon Now Allowing Email Marketing Campaigns to Repeat Customers
Amazon makes huge strides in its Manage Your Customer Engagement (MYCE) tool to help brand-registered sellers expand their email marketing reach. 🔥
Amazon Tailored Audiences
On September 14th, at its annual seller conference, Accelerate, the eComm giant unveiled Amazon Tailored Audiences, a free email marketing tool within MYCE, which allows sellers to set up email promotional campaigns for three new audience types.
Aside from brand followers, you will now be able to send email marketing messages to your:
- Repeat customers. Customers who have ordered your products more than once in the last 12 months.
- Recent customers. The most recent 20% of shoppers who have bought from your registered brand.
- Biggest spenders. The highest spending 25% of your customers in the last 12 months.
Other features include:
- Option to select a specific audience type
- Enhanced email templates
- Custom HTML content
- Monitoring tools to track your campaign’s key performance metrics like emails delivered, open rate, click-through rate, opt-out rate, sales, and conversion
With expanded email marketing capabilities, you will have more control over how you engage your customers, build brand loyalty, or increase product visibility and sales – for example, remarketing to recent buyers, allowing for more specific messaging and upselling. 🥳
Amazon is Breaking its Own Rules
As you know, Amazon has strict guidelines for communicating with buyers to prevent fraud and unethical competitor actions.
For example, you may only send Permitted Messages to previous customers and those who have contacted you about buying a product. Or, as mentioned earlier, send marketing emails to your brand followers, making it difficult for you to build and maintain long-lasting relationships with other types of audiences.
But with the launch of Tailored Audiences, the rules have changed. Amazon may have decided to make this move to:
- Boost sales after the eCommerce boom has finally slowed
- Reduce pressure from antitrust regulators by adopting a more collaborative approach with third-party sellers
There’s one drawback, however. Directly sending promotional emails to more customers could lead to a lot of spam. If you send too many emails, people may get overwhelmed and decide to unsubscribe. A high opt-out rate may result in Amazon reducing your campaign reach or suspending your campaign. ⚠️
Be sure to follow customer engagement best practices to minimize your opt-out rate and to stay compliant with Amazon’s communication guidelines.
Amazon Tailored Audiences is currently in beta and is expected to roll out more broadly in 2023. Check out Customer Engagement Tailored Audiences for more information.
Financial Win for FBA Sellers in PA Court
On September 9, 2022, the Commonwealth Court of Pennsylvania released an order prohibiting the state’s Department of Revenue (DOR) from pursuing Amazon FBA sellers for sales tax nexus owed from previous years. 🎉☝️
This means less financial burden to bear especially amid the mounting Amazon fee stack moving into the fourth quarter!
What is Sales Tax Nexus?
In tax law, nexus describes the level of connection between a business and a taxing authority such as Pennsylvania’s DOR. Nexus specifically applies to businesses with little to no physical presence in a state, aka out-of-state online sellers, who meet certain criteria such as having physical inventory in the state – as is the case with FBA warehousing – or who exceed a set level of sales or number of transactions within the state.
Until a nexus is established, a state cannot impose its sales tax on a remote seller.
The US Constitution provides two clauses to determine a nexus:
- The Due Process Clause which requires a definite or minimal connection between a state and the business it seeks to subject to sales tax
- The Commerce Clause which requires substantial presence
Nexus determination may vary by state, but it generally requires that an entity such as your Amazon business must meet the following conditions to be considered to have a connection or presence in a particular state.
- You maintain a place of business
- You employ workers or salespeople
- You store merchandise in a warehouse
- You engage in an activity related to leasing or servicing of property
The third bullet point puts FBA sellers in a very tricky situation because Amazon distributes their inventory across multiple states.
Suppose Amazon stores a portion of your inventory in a state where nexus laws are enforced. In that case, the retail giant may be authorized to collect taxes on your sales in that state and remit them to the revenue department on your behalf. Or, depending on the nexus provisions of the state, the tax man may require you to pay directly.
For years, Amazon has resisted calls from state governments to charge sales tax to keep the prices of goods on their platform more affordable than brick-and-mortar stores. Both parties have engaged in a long, arduous debate over whether online sellers having a physical presence in a particular state through FBA (i.e., storage and distribution centers) causes them to have a nexus. 🤔
In a 2017 New York Times post, Amazon reportedly found a loophole that allowed them to collect sales tax only when the order came from their own inventory, e.g., customers buying from AmazonBasics, not from third-party sellers who account for 60% of Amazon’s total sales. This action basically left sellers to charge and remit taxes on their own. 🤦♀️
Many sellers found this action unfair and self-serving, claiming that they don’t have control over which warehouse location(s) Amazon selects to store their goods. Besides, Amazon is the owner of these warehouses, which establishes their connection with the state.
Therefore, out-of-state sellers, whose only connection to an Amazon warehouse is their inventory, should be exempted from sales tax.
Unfortunately, the loophole has resulted in millions of dollars in uncollected sales tax revenue and states aggressively pursuing sellers (instead of Amazon) for back taxes they presumably owe. 😓
Paul Rafelson, Director of Online Merchants Guild (OMG), said he believed that some states were chasing after sellers for back taxes to prevent a clash with Amazon.
States Started Taking Action
To close any loophole and protect their budget, several states have passed nexus laws, aka Amazon laws. These laws seek to remove the burden and cost on out-of-state FBA sellers to charge and remit sales and income taxes.
Some states have also used different approaches, such as increased reporting requirements on retail companies and implementing certain mechanisms (e.g., concessions or state agreements) to collect back taxes that sellers owe.
As of this writing, Amazon now collects and remits for many states, but not all of them. Florida, for example, still requires third-party sellers to pay directly. Either way, this puts an end to tax-free online shopping on Amazon and places more strain on sellers and consumers.
👌 This is why getting the Pennsylvania (PA) court to side with FBA sellers is a pivotal moment, as groups like OMG could leverage this win as precedent to challenge other similar Amazon laws. It could also pave the way for more states to stop pushing for more e-commerce taxation.
Dispute Over Obligations to Pay PA Sales Tax
In OMG (a group of Amazon sellers) vs. Hassell (Secretary of Revenue), the PA court found that:
“The Revenue has failed to provide sufficient evidence that non-Pennsylvania businesses selling merchandise through the FBA Program, and whose connections to the Commonwealth were only shown to be limited to the storage of merchandise by Amazon in one of Amazon’s Pennsylvania warehouses, have sufficient contacts with the Commonwealth such that Revenue can mandate they collect and remit sales tax pursuant to the Tax Code.”
Simply put, any attempt to collect sales tax from out-of-state FBA sellers is considered illegal in Pennsylvania. 🚨
This legal battle within the Keystone State has been going on since 2012, when non-PA online retailers, including Amazon, agreed to voluntarily collect and remit sales tax on their internet, catalog, and telephone sales. However, this state agreement did not apply to FBA sellers.
In 2018, Amazon entered into a new agreement with the state to collect and remit sales tax for FBA sellers. The remittance also included taxes the retail giant failed to collect before 2018.
Furthermore, representatives from the DOR handed out Business Activities Questionnaire Requests to members of the Online Merchant Guild. These forms indicated that they may have a physical presence in PA that would subject them to sales tax and personal income tax. In addition, the DOR provided voluntary compliance services to assist the Guild members in paying back the taxes owed.
In 2021, OMG filed a lawsuit with the Pennsylvania Court to stop DOR’s attempt to request payment from its members, stating that it violated their civil rights.
When asked about the impact of the PA’s ruling on nexus with other states, OMG Director Rafelson told EcommeceBytes that “Basically all of that tax nonsense for the last five years, and even going forward was bogus and unconstitutional. Of course, this is one state ruling, but it is a first state ruling.” 🔥
Boost Conversions with Amazon’s New A/B Testing Features
Amazon continues to roll out new tools to help you manage and optimize your content more efficiently! 🚀
Unveiled at the Accelerate event on September 15, you can now use these new A/B Testing features to update your product listings with winning content. 🤩
- Title and image notifications. Run A/B tests on your titles and main images to see which version performs best. You will also receive an alert for content that’s too similar to your existing content so you can make the necessary adjustments to ensure maximum conversion.
- Recommendation system for images and titles. Review Amazon’s best recommendations for product images and titles to increase your conversion rate.
- Auto-publish winning content. Amazon will automatically publish title and image experiments that are at least 66% better than the other versions, thereby reducing the time spent updating your product listing.
With these new Manage Your Experiments features, it’s now easier to test more content and convert traffic from hundreds of millions of Amazon shoppers.
Go to Manage Experiments to get started.
Amazon FBA Deadlines for Sending In Q4 Inventory
📢 Amazon just dropped the deadlines for checking in your Q4 2022 inventory! It’s time to get into gear if you want to stay in stock during the holiday season.
Make sure your inventory arrives at FBA ahead of the following dates:
- November 2nd for Black Friday and Cyber Monday
- December 1st for Christmas
☝️ Also, keep these public holidays in mind when creating your shipping plans or securing delivery appointments with FBA to avoid receiving delays.
- October 10th: Canadian Thanksgiving Day
- November 24th: US Thanksgiving Day
- December 24th: Christmas Eve
- December 25th: Christmas
- December 26th: Boxing Day – Canada
- December 31st: New Year’s Eve
Be Mindful of Your Restock Limits
As previously reported, Amazon recently brought back restock limits to prepare for this year’s holiday selling period.
All sellers will be allowed to store at least four months of inventory in FBA fulfillment centers. However, those who already have a high utilization rate might not be able to restock additional units, unless they make more space for their inventory.
Before sending in your shipments, be sure to check your Restock Inventory report to avoid maxing out your restock limits overnight, which can lead to stockouts on best sellers. ☠️
But if you’re currently facing restock restrictions with no clear way around them and want a quick solution, consider enrolling in Amazon Warehousing & Distribution program to leverage its no restock limits benefit.
Alternatively, follow my in-depth guide to improving restock limits or join my live webinar to learn what you should do right now to prepare for Q4. 🔥
Related: How to Ship to Amazon FBA (And Speed Up Check-In Times), Amazon Freight Forwarding Tips to Avoid Stockouts, 14 Mistakes Sellers Make When Shipping to Amazon FBA
Software Updates For September 2022
Here’s what’s new this month!
Now Connect To All Amazon Marketplaces!
Including Australia, UAE, India, Singapore, Japan, and More!
Thank you for your patience! We are happy to announce that we have opened up SoStocked worldwide with the new Amazon SP-API!
You can turn on new marketplaces and start tracking your inventory across all your stores. Some of the newer marketplace additions include Australia, Abu Dhabi, Dubai, India, Japan, and Singapore.
To turn on a new marketplace, simply go to the Settings page, Connected Stores, Connected Amazon Stores. From there, you can connect to a new region of your choosing. Follow our how-to video for more details.
If you have any questions, feel free to email us at [email protected]
ICYMI: FEATURE SPOTLIGHT
Contact Us or Get the Help You Need Faster With the New Guided Tours and Resource Center. On the bottom right corner of SoStocked there is a new Guided Tour option. This is great for setting up your new account and learning how to use SoStocked, onboarding new VAs, or accessing our helpdesk any time of day or night when you need help.
When you first connect your account, you walk through the Guided Tour Get Setup steps. For most of you, this has already been completed. But from this same menu, you can access our comprehensive collection of tutorial videos or set up a 1-on-1 onboarding call with our SoStocked team. Even if you have had SoStocked for a long time, you can always schedule a call with our onboarding specialists to get one-on-one tips on how to best set up your account for your business model or specific needs. We hope to keep providing you with the best hands-on customer service within the Amazon software space.
Need more information?
- Send Message: We typically reply within 2 hours during office hours.
- Schedule Demo: Dive deeper into the nuances of our software with Chelsea.
- Join Live Upcoming Webinar: New to Amazon inventory management? Learn three inventory techniques you can implement right away.
Gloves Off: Shopify Warns Sellers Against Amazon Buy With Prime
🥊 Shopify’s fight to maintain and increase their eComm market share continues, as the Canadian company recently issued warnings that are bound to cause sellers to reconsider Buy with Prime, Amazon’s new service offering fulfillment and checkout to Direct-to-Consumer (DTC) businesses that don’t even sell on Amazon.
Protect Your Shopify Store Against Fraud
According to Marketplace Pulse (MP), Buy with Prime badges started to appear on a few Shopify stores back in June.
This new service offers a way for non-Amazon sellers to attract new customers to their stores by offering 1-2 day shipping and secure, trusted payment processing through Amazon Pay.
How do sellers enable Buy with Prime on their sites?
First, you need to receive an invitation from Amazon to sign up. Once signed up, Amazon will send you a few lines of code that you need to embed in your product template to display the Buy with Prime button.
Sounds harmless, right? Shopify thinks otherwise. 🤔
In an article posted by MP on September 1st, Shopify has reportedly sounded the alarm about the potential security issues that you could face when installing the Buy with Prime button code in your store. 🚨
The code includes an “Unsupported external checkout script” that violates the platform’s Terms of Service (ToS). It takes the checkout process outside of Shopify, thereby disabling Shopify Fraud Protection against fake orders, which can result in chargebacks, which can then lead to financial loss.
These are the account terms that Amazon’s service supposedly violates.
Shopify also warns that Buy with Prime could steal your customers’ data and cause incorrect charges – for example, discounts not applied correctly due to a technical glitch or Amazon themselves incorrectly charging your customers.
While you may still opt to install the unsupported script, you must agree that Shopify will not be liable for any fake orders, illegal valuable data extraction, or incorrect charges conducted through Buy with Prime.
My prediction however, if they’re smart, is that Shopify will update its ToS to ban Buy with Prime altogether, following the example set by Walmart.com. We may see that they even develop a script that removes the Buy with Prime code snippet from even appearing on your product pages. I’d put money on it eventually going this way.
Amazon’s Response to Shopify’s Claims
In response to the accusations, Amazon reps said that they developed the new fulfillment service to serve Prime members no matter where they shop online. And while they do collect data via Buy with Prime, they use the information to improve the service for sellers and customers. Uh huh… Makes sense. 🤔
As for providing a safe and secure payment processing platform, Amazon Pay is equipped with the same fraud protection technology used on Amazon.com. In addition, sellers also have full control over how much they charge their customers.
But those statements don’t exactly excuse them from other anti-competitive allegations like data grabbing, which I believe is the clandestine intent of Buy with Prime to Amazon. ⚠️ More on this in the next section.
Amazon’s Data Grabbing History
As we’ve reported on in the past, Amazon is no stranger to data grabbing, which involves harvesting valuable information about web users which can then be used for a variety of purposes.
The data collected from customers and competitors, including third-party sellers, could then be used to create unfair competitive advantages.
Here are just a couple of the data grabbing opportunities available to Amazon:
- Multi-Channel Fulfillment (MCF). Each time Amazon sellers complete orders from Shopify and other eCommerce platforms through MCF, Amazon gains access to their sales velocity and customer data (name, delivery address, contact details, among others) from those sites. This allows the tech giant to watch their competitors closely and remarket to their customers through relevant product ads across the internet.
- Buy With Prime. Similar to MCF, Buy with Prime also has the added benefit to Amazon of data grabbing, but this time from non-Amazon seller Shopify merchants fulfilling orders through Amazon. Beyond grabbing customer information and retargeting, they could use the harvested data as additional product research and development information to create their own products for their in-house brands and launch retargeting campaigns to attract Shopify audiences.
✊ In a move to protect their data and market share, Shopify acquired Deliverr, a fulfillment operation with the capacity to offer 1-2 day fulfillment for merchants across multiple sales channels, including Amazon, Walmart, Etsy and social commerce sites like Facebook, Tiktok, and Google.
Therefore, with Shopify’s revamped fulfillment network, merchants will be less likely to need to use Buy with Prime and risk exposing their sensitive data to Amazon.
Shopify is certainly holding its own against Amazon’s advances and has really been making some impressive moves in defense of their own market share. But the battle rages on and I for one am busting out the popcorn. 🍿
Amazon Brings Back Restock Limits to Prepare for the Holiday Rush
LIVE WEBINAR: The Return of Restock Limits 🙁. Learn what you should do RIGHT NOW to Prepare for Q4 2022. Register Here ➜
🚨 After not having capacity restrictions for the better part of 2022, on August 29th, sellers woke up to just that with an announcement from Amazon that they are, in fact, bringing back restock limits to prepare for Q4!
With this update, all sellers will be allowed at least four (4) months of inventory in FBA, which completely contradicts recent moves they’ve been making to entice eCommerce sellers that are not even selling on the Amazon platform to use FBA Prime fulfillment services – all signs pointing to Amazon not being worried about running out of space after nearly doubling their fulfillment network during the pandemic. 😓
The announcement also came after the launch of Amazon Warehousing & Distribution (AWD), a low-cost upstream storage and distribution program that could rival independent 3PLs.
One of the selling points of this new service is that you can send inventory to an AWD facility without any storage limits. Interesting timing… 🤔
They also boast lower storage and transportation costs, making it an attractive logistics option for sellers who may want to bypass the current inventory restrictions without leaving the Amazon fulfillment network, and possibly to keep costs down amid rising FBA fees.
So, coinciding the return of restock limits with the launch of AWD seems like a deliberate move by Amazon to:
- Make sellers more reliant on their storage, distribution, and fulfillment network. Otherwise, if sticking with your 3PL, you’ll be dealing with low restock limits leading to stockouts. You may have to run flash sales to sell through your slow-moving inventory that’s clogging your storage limits, pay hefty removal fees to get rid of extremely slow sellers, or cancel your FBA shipping plans to make room for products within your restock limits.
- Take more customers from Shopify and other 3PLs. In April 2022, Amazon rolled out Buy with Prime to offer fulfillment services to non-Amazon sellers, taking direct aim at Shopify. The Canadian eComm giant then fought back by acquiring Deliverr in order to offer 1- to 2-day shipping to marketplace sellers, going toe-to-toe with Amazon’s Prime services.
But if everything works out in Amazon’s favor, they will be able to generate more revenue for their fulfillment business arm, which recently grappled with excess capacity and massive financial obligations associated with maintaining facilities they no longer need as economies reopen.
It’s unfortunate (but not surprising) that the cost of Amazon’s over-expansion is, more and more, trickling down to sellers. While AWD can be a good way to avoid restock limits, it is still in its early stages and may not be as seamless as one could hope. We saw how Amazon handled its logistics last year!
Handing over months’ worth of inventory to Amazon may be risky given that they’re not exactly immune to shipping delays and mistakes, especially during congestion times.
So, proceed with caution, weigh your options carefully, and don’t ever let anyone have all your stuff! Especially not Amazon. Be sure to check out Amazon Restock Limits Tips and Updates for more information and sign up to get notified when new restock updates drop!
New Amazon Badges Increase Discoverability and Allow for Values-Based Buying
Amazon continues to usher in a more values-based shopper experience by spotlighting small business and minority-owned brands through new Amazon badges. 🙌
US-based small businesses and artisans may qualify for and apply to this certification program by registering with Brand Registry or Amazon Handmade. It is currently being tested and allows for clearer identification and transparency as to the brands behind the listings.
New Badges to Highlight Small Businesses
- Black-Owned Business Badge. In celebration of the Black Business Month and the 1st year anniversary of Black Business Accelerator, Amazon launched a new badge that will make it easy for shoppers to find Black-owned businesses on the retail platform. This badge tells people when a product offer they’re looking at is sold by a Black-owned business. Aside from search, the badge will also be visible to customers when they’re on a Black-owned product detail page.
- Small Business Badge. You’ve probably heard of the Small Business Badge, but it’s worth repeating here in case you missed it.
Amazon introduced the small business badge earlier this year, announcing, “We’re starting first by testing the Small Business badge on a subset of eligible product detail pages in the U.S., and plan to scale further as we learn how the badge can best help customers discover small business products they love.”
Making good on the promise, it is now possible to apply for one of several of these new badges on the Add a Certification page. 👌
Other certifications that may be of interest to you include:
- National Diversity Certifications for Women-Owned Businesses, Veteran-Owned Businesses, Economically Disadvantaged Women-Owned Business, LGBT Business Enterprise, and more.
- State Diversity CertificationsState Diversity Certifications
- Climate Pledge Friendly Badges
♻️ We previously featured the Climate Pledge Friendly Badges in another post, specifically highlighting Amazon’s own Compact by Design program.
In this competitive landscape, it’s important to take any advantage you can and these badges are beginning to allow us “little guys” to start differentiating ourselves from the big brands that are sometimes harder to compete with. 💪
As buyers increasingly become socially conscious and begin to realize they can reinforce their values through their buying habits, Amazon seems to be attempting to humanize the shopping experience and community sellers may reap the benefits. 🔥
Royal Mail Strikes to Disrupt Mail and Deliveries Across UK
08/23/2022 (Originally posted 08/16/2022)
UPDATE 08/23/2022: Amazon just announced that they will extend delivery date promises to Amazon customers for seller-fulfilled orders during the Royal Mail strikes. The planned 4-day protest is expected to cause UK-wide postal disruptions, prompting the retail giant to create a contingency plan to minimize customer dissatisfaction that may impact seller account health.
⚠️ In one week, over 115,000 Royal Mail workers will go on strike over pay, which could jeopardize deliveries and collections across the UK. If you haven’t done so already, it’d be wise to find an alternative carrier ASAP to avoid delays or lost parcels in the coming weeks.
When is the Mass Walkout Happening?
The Communication Workers Union (CWU), a group that represents British postal workers, recently announced that they will stage four days of industrial action, a protest against low pay and poor working conditions, on the following dates:
- August 26, Friday
- August 31, Wednesday
- September 8, Thursday
- September 9, Friday
The August Royal Mail strikes are also set to coincide with:
- Crown Post Office protest on the 27th. Employees who work in 114 Crown Post branches will stop work again in an escalating fight over pay. The staff rejected and took industrial action against the 3% pay offer and £500 lump sum by the Post Office last month because it wasn’t enough to improve their living standards, especially at a time when inflation is at 10.1%.
- Strike at Port of Felixstowe from August 21st to 29th. Around 2,000 dockers at UK’s largest container port will protest for 8 days over poor pay. Transport economists at MDS Transmodal estimate that this week-long industrial action could put $4.7B in trade on hold, potentially delaying the arrival of goods expected to go on sale this holiday season. Companies that rely on the port like Amazon, Mars Foods, GSK, and General Mills will all be impacted.
- Bank Holiday in England and Wales on the 29th. This is a public holiday that gives workers a long weekend to make the most of the summer season.
- Supply Chain & Admin action on the 30th. Union members whose jobs are related to supply chain and administration will also walk out at the end of this month in hopes of getting a fair pay increase for their hard work and dedication.
These additional walkouts could lead to an even bigger postal disruption. 😩 And if the planned protests go ahead, collectively it would be the largest summer strike ever held by postal workers in the UK, according to CWU.
Postmen walking out of their jobs on the 26th of August means you’ll have to make sure customer orders or any additional inventory must get picked up before the 25th. It’s also best to notify your customers of expected delays due to the protests. Because even if collected, they won’t be delivered right away, which could create a massive backlog of undelivered items.
Additionally, Post Office walkouts and the Bank Holiday coinciding with the Royal Mail strikes may also exacerbate the situation. So, experiencing shipping delays even after the industrial action in September is highly likely.
Certain items are at even bigger risk of being delayed during the strikes because Royal Mail will prioritize special deliveries, medical prescriptions, COVID testing kits, and tracked shipments over letters and normal parcels to minimize the impact of the upcoming disruption.
Main Reasons Behind the Postal Strikes
Postal workers are threatening to walk out of their jobs in a dispute over pay amid soaring inflation.
According to CWU, the Royal Mail leadership has presented an offer worth up to 5.5% for their workers, which they have broken down to:
- A 2% pay raise, which is too low when inflation is predicted to hit 13% before the year ends
- A £500 incentive in 2023 for reaching “unattainable” targets
- An additional 1.5% “signing away our terms and conditions” bonus
Therefore, for the union, there was never a 5.5% pay increase put on the table, resulting in approximately 97.6% of postal employees voting in favor of industrial action. 💪
Scottish Regional Secretary of CWU, Craig Anderson, told BBC that “a fair offer from our perspective would be for them [Royal Mail] to sit back round the table with us and actually look at where or what comes out at the moment with a cost-of-living crisis, where the company’s been with the profits that they’ve made, and actually start negotiating on a percentage pay raise that reflects that.”
In 2021, Royal Mail raked in £758M in profit and handed over £400M to shareholders, and £2M in bonuses to 2 CEOs and finance executives, while many employees overwhelmed by the rising costs were forced to rely on food banks to feed their families. 😓
In a report from Bloomberg, Royal Mail argued that it will suffer a full-year loss in the event of mass walkouts by their workers over several days. The negative impact of the strikes on the company will only make pay increases less affordable and therefore, could lead to layoffs.
But CWU General Secretary, Dave Ward, said, “Nobody takes the decision to strike lightly, but postal workers are being pushed to the brink. There can be no doubt that postal workers are completely united in their determination to secure the dignified, proper pay rise they deserve. The CWU’s message to Royal Mail’s leadership is simple – there will be serious disruption until you get real on pay.”
Royal Mail said it remains open to negotiate with the union to “try and avert damaging industrial action.”
Prepare Your Business for the Upcoming Disruption
With one week left before the protest, both Royal Mail and CWU only have a small window of opportunity for negotiations. So, it would be best to put some contingency plans in place now to minimize shipping and delivery delays in the event of strikes.
Here are some tips:
- Keep some buffer stock in your 3PL or supplier’s warehouse and transfer only when needed.
- Consider sending additional units via small parcel delivery for faster FBA check-in times.
- Ship parcels with alternative couriers, such as DHL, FedEx, DTDC, and UPS. While typically more expensive than Royal Mail, they will try to get your items picked up and delivered to customers on time. Plus, deliveries will not be limited to health essentials like what UK’s postal office is planning to do. For letters, consider UK Mail, Citipost Mail, The Direct Mail Company, or Whistl as alternatives.
- If shipping costs are too expensive, try to reduce your packaging to achieve smaller dimensions and pack as many units per carton as possible. Consider using a Master Carton Calculator to find your ideal carton configurations.
Related: Amazon FBA Freight Forwarder Tips to Avoid Stockouts and Reduce Costs
Amazon’s New Holiday Surcharge Takes Another Bite Out of Seller Profits
🚨 Fulfillment costs continue to climb as Amazon has just announced a new holiday surcharge that will be applied to core FBA, apparel, and dangerous goods from October 15, 2022 to January 14, 2023.
Sellers will now pay an average of $0.35 per unit sold via US and Canada FBA on top of all other applicable charges plus peak holiday storage surcharge of $2.40 per cubic foot. 😩
This is the first time the eComm giant has raised fulfillment fees for Q4 in order to deal with soaring inflation. Though on January 15, 2023, the fees will revert back to current levels according to Amazon. 🤞
The Mounting Amazon Fee Stack
We’ve recently been “lovingly” referring to Amazon’s extensive fee increases as the Amazon Fee Stack. What we’re referring to is the series of seemingly small fee hikes that yet are leading to significant increases when all added up. Also known as “death by papercuts”.
Unfortunately, when costs are greater than your total sales, your profit can turn negative, so it’s crucial to learn how much you’re actually paying in fees in order to protect your margins.
According to Marketplace Pulse, Amazon has raised their fulfillment fees by more than 30% since 2020.
It is true that the past two years have seriously challenged the eComm giant, rirst with supply chain disruptions, followed by record-breaking inflation rates. The company also sunk a lot of money into its warehouse expansion efforts to keep up with the surge in eCommerce demand.
“At a certain point, you can’t keep absorbing all those costs and run a business that’s economic,” Amazon CEO Andy Jassy told CNBC in an interview in April.
Dealing with these macroeconomic factors, however, has led Amazon to apply:
- An average of 4.4% fulfillment fee increase for all standard size items and around 28% removal fee hike across all categories in June 2021.
- Approximately 7.5% increase for small standard and 2%-12% increase for all standard and oversize categories in January 2022. Amazon has also started using dimensional weight to calculate the billable weight for large standard-size and oversize items, which contributed to these fee increases.
- 44% to 61% removal fee increase in January 2022.
- 5% fuel and inflation surcharge in April 2022.
- Aging inventory surcharge in May 2022.
- FBA Canada and Mexico remote fulfillment price adjustments in June 2022.
- Holiday peak fulfillment fee, which would increase FBA costs temporarily by more than 30 cents.
Below is a table showing the historical increases for standard size and oversize items. You can easily see how the various fee changes over the years (2019 – 2022) impact your margins.
6 oz or under
3lbs to 20lbs
|2019||$2.41||$2.48||$3.28||$5.26||$5.26 + $0.38 above the first 3lbs|
|2020||$2.50||$2.63||$3.48||$5.42||$5.42 + $0.38 above the first 3lbs|
|2021||$2.70||$2.84||$4.25||$5.68||$5.68 + $0.30 above the first 3lbs|
|2022||$2.92||$3.07||$4.52||$5.79||$6.13 + $0.30/lb above first 3 lb|
|April 2022 (base rate + 5%Fuel and Inflation surcharge)||$3.07||$3.22||$4.75||$6.08||$6.44 + $0.32/lb above first 3 lb|
|2022 Holiday Peak, including fuel and inflation surcharge||$3.28||$3.43||$5.06||$6.60||$6.96 + $0.32/lb above first 3 lb|
|2019||$8.26 + $0.38/lb above the first 2 lbs||$9.79 + $0.39/lb above the first 2 lbs||$75.78 + $0.79lb above the first 90lbs|
|2020||$8.26 + $0.38/lb above the first 2 lbs||$11.37 + $0.39/lb above the first 2 lbs||$75.78 + $0.79lb above the first 90lbs|
|2021||$8.66 + $0.38/lb above the first 2 lbs||$12.20 + $0.39/lb above the first 2 lbs||$76.57 + $0.79lb above the first 90lbs|
|2022||$8.94 + $0.38/lb above the first 2 lbs||$12.73 + $0.44/lb above first lb||$82.58 + $0.79/lb above first 90 lb|
|April 2022 (base rate + 5%Fuel and Inflation surcharge)||$9.39 + $0.40/lb above first lb||$13.37 + $0.46/lb above first lb||$86.71 + $0.83/lb above first 90 lb|
|2022 Holiday Peak, including fuel and inflation surcharge||$10.44 + $0.40/lb above first lb||$15.99 + $0.46/lb above first lb||$89.33 + $0.83/lb above first 90 lb|
Clearly, there has been a steady increase in Amazon fulfillment fees since 2019. The pandemic and its aftermath have presented certain economic conditions that induce the online retail giant to introduce multiple surcharges in 2022, making fulfillment cost per item significantly more expensive in August than in January.
While inflation and holiday surcharges are only temporary, the latter, we are predicting, is most likely going to be a yearly fee similar to what major carriers have been doing. In fact, the US Postal Service has already requested a temporary price hike for Q4 to help cover additional handling costs, while the UPS and FedEx are expected to follow suit shortly.
Like the online retail giant, you can’t keep absorbing these increasing fees. Therefore, at some point, you might also have to raise your prices to stay profitable. Or even better, learn some strategies for recovering more of your profit to stay resilient throughout the rest of the year and beyond.
Amazon Attribution Update Makes for a More Effective Sales Tool
Great news for sellers using Amazon Attribution to drive external traffic to Amazon! 🥳
The tech giant has reportedly rolled out a new Amazon Attribution feature that will replace the previously featured competitor ads placed at the top of your listing with other popular products from your own store. 🔥 This means an increase in brand awareness and new cross-selling opportunities within your catalog, which may help boost conversion and minimize Advertising Cost of Sales (ACOS) for off-Amazon traffic.
Currently in beta, the new feature is available to sellers utilizing Amazon Attribution with Google Ads through January 2023.
What Prompted This Update From Amazon?
Brand-registered sellers use Amazon Attribution (AA), a free advertising tool, to track and measure the performance of their off-Amazon efforts, giving them insights into which channels are best for their business. They also utilize the Brand Referral Bonus (BRB) program in conjunction with AA to earn, on average, a 10% discount on referral fees associated with the sales generated from off-Amazon ads.
🤔 It makes sense for Amazon to incentivize sellers willing to drive external traffic using AA because they are more likely to continue driving that traffic if they can see that it is working for them. Without that visibility to measure against, they might abandon external traffic campaigns that are actually working for them. Attribution helps to prevent this from happening.
⚠️ However, there was a major flaw in the program.
Prior to the update, when a customer is directed to a listing from Google Ads, the first thing they see at the top of the screen are ads from competitors. This essentially resulted in sellers paying for Google ads that simply drove traffic to their competitors. 🤦
To prevent this from happening, some sellers started sending traffic to their brand Storefront instead of driving it to a specific product page. However, the former doesn’t convert nearly as well as the latter, as the shoppable content customers see may not be related to what is being advertised on Google. Some may get confused and leave the store, while, less often, others may end up browsing through and buying more than one of the seller’s products.
💪 The bottom line is sellers did not want to be twice-burned by wasting ad dollars and sending their potential customers into the arms of their competitors.
Amazon Has Finally Listened
“Now in beta, when brands use Amazon Attribution to direct their non-Amazon marketing to their product detail page via Google Ads, customers will see a new section at the top of the page labeled ‘Other popular products from this brand.’ This new feature is meant to help increase brand awareness and promote new selling opportunities by showcasing three additional products from the brand.” Amazon said in an email sent out to its brand partners on August 9.
Making this change also shows Amazon’s desire to strengthen its partnership with sellers conducting off-Amazon marketing campaigns. Now, they can bring more customers to their target listing when utilizing Amazon Attribution with zero competitors at the top section of the page, which should help increase sales through conversions and cross-sells while decreasing Amazon fees. 💰
However, note that your BRB rate may vary by product category and marketplace. As of August 2022, Amazon US is the only marketplace that rewards sellers with a 10% bonus, whereas Canada, Mexico, EU, among others simply have the tracking capability.
It’s possible that Amazon would lower the BRB rate for the US marketplace from 10% to 5%, or to 0% eventually. But the opposite scenario could occur too, in which Amazon offers BRB to sellers from other marketplaces in the future.
Overall, Amazon Attribution can be beneficial to your business. Not only does it help increase conversion and potentially lower referral fees through BRB, it also improves your on-Amazon organic ranking, leading to more sales.
So, sellers who adopt this program early could gain a huge competitive advantage over those who don’t. And the good news is that Amazon Attribution has only just begun and as the eCommerce landscape continues to change, sellers and SaaS companies alike, in conjunction with Amazon Attribution, will continue to find new ways to make external traffic more measurable and impactful within the Amazon seller toolbelt. 🚀
Related: Amazon Budgeting & Advertising Tips with the Customer Journey Principle
Software Updates For August 2022
We are excited to fill you in on all of the new changes in SoStocked, so let’s get right to it…
SoStocked Joins the Carbon6 Family
We are excited to announce that SoStocked has recently become a part of the Carbon6 family! This is very good news for you, our SoStocked users!
Our roadmap and vision for SoStocked haven’t and won’t change. This will only help us to get there faster. Now with Carbon6, we have many more resources at our disposal to catch up on some backlogged development. You can look forward to a smarter, more integrated, efficient, and profitable way to run your eCommerce business, something that we’ve needed for a long time now. Carbon6 was brought together by entrepreneurs who want to empower entrepreneurs. The group of like-minded eComm advisors and industry-leading software tools who have come on board is what made it a great fit for us.
The SoStocked team and leadership aren’t going anywhere. The team that you have come to know and love will still be here for you. In fact, several SoStocked execs are even stepping into advisory roles within Carbon6 to help bring more value across the entirety of the Amazon seller journey. We truly believe in Carbon6 and what we can accomplish together. Our mission has always been to change the face of operations and profitability within the eCommerce industry. With Carbon6 we can do that. They truly stand behind and support our vision and can provide the team and resources to help us go further.
This is a pivotal success for SoStocked. We are very grateful to all of our users who have helped us along the way and we can’t wait to see all sellers benefit from our coming together!
API Access to Amazon AU, Far East, and Middle East
Migrating from the old Amazon MWS programming Interface (API) to the new Selling Partners API that is required in order to add these additional selling regions has been a huge undertaking and we appreciate your patience. Our development team has worked hard to do an entire overhaul of the SoStocked system to make this process not only possible but fast and reliable, and the best inventory management tool worldwide. We are in the quality assurance phase and we are set to release the new regions later this month.
Shopify is on track for Q3! Yes, we thought this would have happened much sooner, too. We have been testing Shopify in beta for a while now, with distractions like Amazon restock limits and new API out of the way we are almost set to roll out this new marketplace. With the help of the Carbon6 additional resources, the focus is on training a larger software development crew and getting Shopify out of beta and released quickly.
Subtle Improvements to Make Your
⏱ Faster Recalculations on the Forecast Page
Making changes and updating information from Amazon now takes half the time so you can complete your work faster.
📩 Set a Default cc Email Address for Purchase Orders and Work Orders
Always cc another contact on POs and WOs? Now you can add a default cc email for orders and save time. From the Settings page, click Company Info to set the default cc email.
ICYMI: FEATURE SPOTLIGHT
Vote For or Add New Suggestions
Flat File for Amazon’s New Shipment Workflow
Amazon Seller accounts are using a new shipping plan interface. This interface still accepts flat files, but sometimes asks for an additional flat file in the workflow. This new file is called the “Manifest Shipment Workflow”. These templates are now included in the SoStocked download. See full tutorial here.
Warehouse Location Now on the Bulk Export/Import File
You can find this new column under the Warehouse Inventory Levels tab. This feature is especially useful for tracking items with a short shelf life like perishable goods. Or wholesale sellers with many different kinds of items in storage. Now you can use the Bulk Export/Import file to keep up-to-date with your warehouse locations. Let us know if you have any questions!
Need more information?
- Send Message: We typically reply within 2 hours during office hours.
- Schedule Demo: Dive deeper into the nuances of our software with Chelsea.
- Join Live Upcoming Webinar: New to Amazon inventory management? Learn three inventory techniques you can implement right away.
Amazon Releases Inventory Ledger to Streamline Inventory Data Reports
Simplify the way you view all your inventory movements! 🚀
Amazon UK announced the roll out of their new Inventory Ledger report that will help you check your Amazon-fulfilled inventory more efficiently.
This all-in-one report offers you:
- A comprehensive and full view of your FBA stock and its movements. You can now see your beginning inventory balance, shipments to Amazon fulfillment centers (FCs), purchase orders, returned items, settlements, reconciliations, removed products, and closing balance – all from one place.
- Historical movements of your FBA inventory during the last 18 months, including event type, product name, quantity, unique product codes, FC transfer updates, location (country or name of warehouse), and disposition (products sold, returned, removed, disposed of, damaged, lost, and found).
- A list of your reimbursements. However, reimbursements for lost or damaged products may take up to 45 days to show up on your account.
You can use the new Inventory Ledger to also spot any discrepancies in your inventory balances that could have occurred in the previous months, thereby affecting the accuracy of your data in the report window.
For instance, discrepancies could occur due to human error or warehouse theft. If it goes undetected for months, it could lead to significant profit loss.
- Keep an eye on your available (and unfulfillable) stock by expanding the dates of your ledger to get a detailed view of your inventory movements in Amazon FCs and to reconcile inventory balances.
The Inventory Ledger receives updates every 24 hours and essentially replaces these six older inventory reports:
- Daily History
- Monthly History
- Inventory Adjustments
- Event Detail
- Inventory Reconciliation
- Received Inventory
Amazon said that the six reports will no longer be used beginning the 30th of September 2022.
Related: Types of Inventory that Amazon Sellers Should Know About
Updated: Amazon Suspension Risk For The Uninsured
08/02/2022 (Originally posted 09/23/2021)
UPDATE 08/02/22: A win for sellers! Amazon has reversed its recent policy change requiring sellers earning under $1M in sales to obtain a $0 deductible insurance plan citing the challenges they face in procuring zero-deductible policies as the primary reason for the reversal.
Less than 2 months ago, we told you about changes to the A-to-Z Guarantee. Well, a lot has changed in that short time.
This is important, so pay close attention. Amazon may restrict you from certain selling categories or even suspend your account for non-compliance of this policy.
You can read the full policy on Seller Central, but the cliff’s notes are this: if you’ve sold $10,000 or more in any one month, you need business insurance of at least $1 million in aggregate. Previously this was set as any seller who hit $10,000 for any 3 consecutive months.
Further, it is not enough just to have it. (I’ve had this insurance since I started selling in 2014.) You now need to ensure Amazon is named as an additional insured by way of a certificate of insurance.
I’m not done yet. You also need to provide Amazon with proof of this insurance by uploading the certificate into your Seller Central account.
Do this by going to Settings > Account Info > Business Insurance and then following the steps to submit your proof of insurance.
Now, if you’ve already had a certificate of insurance created for Amazon in the past, that likely will not be valid as Amazon has changed it’s requirements for what may be listed on the additional insured certificate. If you do not have the name listed correctly, your proof of insurance will be rejected.
The name to be listed on the certificate is:
“Amazon.com Services LLC., and its affiliates and assignees”
Anything else will be rejected. You also need to meet the minimum requirements for coverage. For full details on exactly what you need, check out Amazon’s insurance requirements page.
You can usually just send this list of requirements to your insurance provider and they can provide you with what you need. But move quickly as, since this policy took effect on September 1st, 2021, so you technically have until September 30th to submit your insurance before your account or selling privileges are at risk.
For most sellers who already have this insurance, getting a certificate is usually quite easy, taking only a matter of hours to receive from your provider via email.
But for those who need a new policy, this may prove challenging, especially as all other sellers on Amazon are likely attempting the same just now.
You may, however, try using the new Amazon Insurance Accelerator program where Amazon has teamed up with insurance providers to make the process of acquiring insurance smooth and easy for sellers.
It has always been good business for any company to be properly insured, now Amazon makes it a verifiable requirement. For more on what types of insurances might be valuable to eCommerce sellers, check out our blog post on Amazon Seller Insurance Tips.
Amazon Plans to Hold 2nd Prime Day in October
Leaked files seen by the Business Insider (BI) show that Amazon may be planning a second Prime Day in the fall to boost growth.
Amazon Is Looking to Replicate Prime Day 2022 Success
Prime Day 2022 results are out, and Digital Commerce 360 estimates that the eComm giant made $12.09B globally during the 2-day extravaganza that ran from July 12 through 13.
That’s up 8.1% from last year’s $11.19B, and is considered as the “biggest” in history. Based on Numerator Prime Day 2022 Insights, most purchases were basic must-haves, such as household items, consumer electronics, and health and beauty.
Rising costs did impact customers’ buying decisions, though. The report shows that 58% of products sold for under $20, while only 5% sold for over $100, as many tried to beat inflation by prioritizing their needs over wants.
Moreover, 34% of Prime Day 2022 customers said they waited for the event to buy a specific product at a discounted price, while 28% ignored a good deal because it wasn’t a necessity. Inflation also forced 22% of customers to compare prices with stores outside of Amazon before placing an order.
This spending habit may continue through to Q3/Q4, as the Fed continues to raise interest rates and inflation is likely to remain above target until 2024. Therefore, people may be looking to use Amazon to stock up on essentials or buy holiday items at discounted prices before they get even more expensive by Q4.
Prime Early Access Sale
The next 2-day sale event that will be held in October is reportedly being named the Prime Early Access Sale. The exact date is yet to be determined.
“This event is one of the best deals events of the year and Prime members would be crazy to miss it,” one document said.
The BI report also says that the eComm giant has already started asking sellers to send their special promotion deals for the event, which is expected to feature promotions for sneakers, TVs, and other basic items. Prime members may also be given early access to such deals, specifically Prime-eligible Lightning Deals on Amazon.
Prime Early Access Sale may be Amazon’s way to preserve its growth through economic uncertainty and regulatory pressure.
Q2 2022 earnings results show that while the company exceeded Wall Street expectations for the second quarter with a reported revenue of $121.2B, up 7% from last year and well above the $119B projection, it did suffer a loss once again, this time for $2B in Q2.
By holding another mega sales event in October, Amazon could drive more sales. It may also help them to attract more subscribers to its Prime program.
What Does this Event Mean for Sellers this Black Friday/Cyber Monday (BFCM)?
A Prime Day-like event in October may throw a wrench into your BFCM plans. It means bracing yourself for:
- Added competition. Competitors may use this Prime Early Access Sale to launch their products into top ranking positions before the holidays.
- Potential shipping delays. More packages will keep fulfillment centers and carriers extremely busy as early as October, making the supply chain situation worse.
It would be best to have a plan that will help you to stay flexible on the days leading up to and during BFCM. Consider monitoring Prime Early Access deals and see if you can make adjustments to your own BFCM deals to capitalize on lessons learned during that preview. You might also want to start launching your BFCM promos earlier than your target date (e.g., first week of November) to benefit from the sudden shopping rush that Prime Early Access Sale may create.
Related: Amazon FBA Freight Forwarder Tips to Avoid Stockouts and Reduce Costs
UPS Shipping Limits for Amazon Threaten to Delay Holiday Deliveries
⚠️ Brace for potential delivery delays in Q4 as UPS places shipping limits on Amazon to pursue more profitable shipments, such as B2B.
Sudden Drop in eCommerce Parcel Volume
After experiencing a surge in revenue and parcel deliveries in 2020 and 2021, the average US daily volume for UPS dropped 4% during the second quarter of 2022. The unexpected drop was greater than expected as eComm delivery growth has finally slowed.
“The fear is that, after a strong 2-year period, UPS could see revenue growth waver thanks to high inflation. We can expect parcel volumes to decrease in line with consumer spending,” said Senior Analyst at Third Bridge, Patrick Donnelly.
The company’s decision to put limits on Amazon’s package volume also contributed to the decline, according to CEO Carol Tome. The eComm giant is UPS’s largest customer, accounting for 13.3% of its total revenue in 2020 and 11.7% in 2021. However, by throttling Amazon’s delivery volume, it will now only make up 11% of UPS revenue by Q4.
“We’ve contractually agreed on what makes sense for us versus what makes sense for them. That means that the volume and revenue for Amazon is coming down,” said Tome.
The shipping restrictions also came after Amazon launched Buy with Prime, which allows non-Amazon sellers to leverage 1- and 2-day shipping through its own fulfillment empire. Although Amazon’s logistics service is expanding rapidly and could potentially surpass UPS, the eComm giant still relies on the legacy carrier to carry out millions of last-mile deliveries for them.
In addition, with fewer parcels coming in, UPS has more Q4 capacity it can use to “go out and win’’ new customers.
Therefore, entering into a mutually beneficial agreement on what Amazon parcels UPS delivers versus what is fulfilled in-house definitely makes a lot of sense.
Putting More Focus on B2B Deliveries
Despite the decline in its core domestic unit, UPS’ per-package revenue grew 11.9%, thanks to price hikes and putting limits on discounts usually given to bulk customers.
UPS also plans to focus on B2B shipments to make up for the eCommerce slowdown. In 2019, the carrier’s B2B delivery volume grew 3.4%, representing an important growth area for the company. However, in 2020, its growth stalled when stay-at-home orders were implemented across the country to mitigate Coronavirus transmission. Since most office buildings were unoccupied, and thus a reduced need for essential business items and shipping services, buyers had to cut back on spending.
But as COVID restrictions ease up across the globe, UPS expects more and more B2B buyers will revert back toward spending on services.
Effects of UPS Shipping Restrictions on Sellers
- Shipping delays. With limited UPS services available to Amazon sellers, we might see shipping delays during the Prime Early Access Sale in October, Black Friday/Cyber Monday in November, and the holiday season.
- Sellers might have to seek alternative options or backup carriers such as 3PLs or Shopify’s Shop Promise to continue offering speedy shipping to customers. While Amazon has sunk a lot of dough into its warehouse and transportation this past year to keep up with demand, it still depends on UPS to deliver millions of packages to homes. So, without UPS in their back pocket, Amazon might find it difficult to handle shipping during the holiday rush.
- Amazon might bring back restock limits even if mildly. Amazon does have a lot of storage space that they invested in, but congestion may become an issue in Q4 due to these shipping concerns. Hence why, placing inventory restrictions on sellers before the holiday rush may be utilized as a means to control the influx of inventory into their fulfillment centers. This is a long shot based on what we know about their new, bolstered warehousing network but something not to be ruled out based on their faltering shipping infrastructure.
💡 To prepare for potential shipping delays, consider keeping some buffer stock in your 3PL warehouse or with your supplier and sending additional stock into FBA as needed. You could also switch over to FBM in order to fulfill orders yourself or use Amazon Upstream Storage to circumvent restock limits if imposed. Securing early delivery appointments with FBA is also crucial to avoid check-in delays, so be sure to discuss your options with your 3PL or preferred carrier.
Shopify Shares Down By 14% After Laying Off 10% of Their Employees
Shopify suffered a major blow as shares of the company dipped by 14% on Tuesday. 📉
Earlier that day, Shopify founder and CEO Tobi Lütke sent a heartfelt memo to the company about the immediate changes regarding their personnel.
“Shopify has to go through a reduction in workforce that will see about 10% leave by the end of the day,” Lutke wrote.
⚠️ The company’s global workforce of more than 10,000 will now be downsized to around 9,000, as most of their staff with hiring, support, and sales functions will be let go. Those found to have redundant and extremely specialized roles and teams that had functions not closely related to product development but were still previously helpful for the company – will also be laid off.
A Costly Miscalculation
Lütke admitted that he made the wrong bet regarding Shopify’s manpower expansion.
In the same memo, he explained that based on the available data before the pandemic started, they made a bet that the ecommerce boom would persist and the money going to e-commerce than traditional retail stores would surely shoot up by 5 or 10 years.
To match their forecasted exponential growth, they expanded and hired more employees. But now, the data shows otherwise.
The line graph on his memo shows the growth of e-commerce adoption descending to “where pre-Covid data would have suggested it should be at this point.”
“Ultimately, placing this bet was my call to make and I got this wrong,” he wrote.
The New Reality
The Canadian ecommerce company joins the 140+ American tech companies who have collectively laid off more than 30,000 of their employees so far this year.
Tech – which is one of the industries that emerged as a winner during the pandemic – is now one of the hardest hit sectors of 2022.
The continuous lockdowns during the first two years of the pandemic plus the health scare caused by a novel virus forced consumers to conduct their day-to-day activities within the confines of their own homes.
The demand for tech products like laptops and tablets used for online schooling and remote work, and services like live streaming and online shopping skyrocketed, prompting the tech companies to rapidly expand to cope up with their anticipated, long-lasting growth. As a result, the stock prices of these tech companies also ballooned.
That explosive growth is now showing signs of decline as the world is transitioning back to face-to-face classes and work. Travel restrictions are being lifted and consumers are allowed to shop in malls again.
LinkedIn’s principal economist Guy Berger shared his observation with Yahoo Finance last week.
“Tech just kept hiring and rising and rising at least through the end of last year. Now [tech] is coming down much faster. It’s almost like a boomerang in that it went up faster and is coming down more sharply.”
As Infrastructure Capital Management CEO Jay Hatfield points out, “It’s a liquidity and pandemic-driven bubble.”
The layoffs happening across the sector seem to show that the companies that enjoyed initial success early on in the pandemic (and quickly expanded as a response to that) may have overestimated the duration of that success, not to mention their ability to sustain their growth.
Now, there is a need for them to recalibrate as the new reality continues to evolve.
Reasons for the Layoffs
The spike in layoffs during the mid-year may have something to do with the tech companies wanting to sort out their plans and resources before Q3 ends. 🤔
The high-risk stocks of these tech giants have also been battered by significant macroeconomic factors such as the incessant lockdowns in China, Russian invasion of Ukraine, Federal Reserve’s doubling of interest rates, record-high inflation, and fears of a recession.
In addition, some tech companies also cited the current macroeconomic environment and their goal to prudently manage their expenses are the reasons why they are trimming down their workforce.
In the case of Shopify, their recent $2.1B acquisition of Deliverr – an eCommerce fulfillment company – may be another reason behind the layoff. It is likely that the company is downsizing to reshuffle their resources towards their fulfillment network so they can compete better with Amazon’s Buy With Prime.
In all fairness to Shopify, they are not the only company to miscalculate and overestimate their projections regarding the e-commerce boom during the pandemic.
eCommerce giant Amazon made the same bet (and mistake) when it increased its employees to 1.7 million, only to lower it to 1.6 million in the next quarter.
Amazon stock prices also dropped by 10% after the company reported a $3.8 billion net loss – its first loss since 2015 – in April this year. Amazon CEO Andy Jassy shared the loss is attributed to the pandemic and ongoing war in Ukraine, though how that latter could be is unclear.
There’s no way to fully predict what will happen next in the tech sector, but one thing’s for sure: these companies need to remain agile and strategic if they want to withstand and overcome these inflationary economic shifts. 💪
SoStocked Joins the Carbon6 Family Shortening the Timeline to Future Innovations
It’s been a challenge keeping this under wraps but we’re finally ready to announce that SoStocked has recently become a part of the Carbon6 family. The SoStocked team and leadership aren’t going anywhere. In fact, several SoStocked execs and I are even stepping into advisory roles within Carbon6 to help to bring more value across the entirety of the Amazon seller journey.
Our roadmap and vision for SoStocked haven’t and won’t change. This will only help us to get there faster. I have always held fast to the mission to change the face of operations and profitability within the eCommerce industry. With Carbon6 we can do that. They truly stand behind and support our vision and can provide the team and resources to help us go further. Big things are coming!
I can’t divulge much quite yet, though I have hinted at such things in the past, but know that our focus on profit optimization and recovering margins won’t stop at reducing stockouts and holding costs.
Helping sellers to succeed by staying in stock and keeping more of the money you make is a major goal shared by both SoStocked and Carbon6.
Our new partnership also comes with a new look:
We truly believe in Carbon6 and what we can accomplish together. I’ve personally developed a strong relationship with their core executives, especially their CEO, and have had deep insight into their mission, road map, and team.
At the heart of Carbon6 are entrepreneurs who believe in empowering entrepreneurs. The mentality of being seller-first and team-oriented, coupled with the eComm advisors, industry-leading software tools, and passionate SaaS founders who have come on board are really what made it a great fit for us.
Believe me, there are many SaaS tools, major thought leaders, and top sellers that you know and respect joining this mission; several that have not even been announced yet. I’m excited for what’s coming. They truly have assembled a dream team.
You can look forward to a smarter, more integrated, efficient and profitable way to run your ecommerce business, something that we’ve needed for a long time now.
Much more will be revealed soon. It’s going to be a game-changer, and I’m eager to see all sellers benefit from our coming together.
Exciting times ahead,
CEO & Co-Founder, SoStocked
Shopify Introduces YouTube Shopping Integration to Compete in Live Commerce
Canadian tech giant Shopify continues to challenge Amazon’s dominance over the US eCommerce market, from acquiring Deliverr to offer 1- to 2-day shipping to recently teaming up with YouTube to allow merchants to directly link their stores and sell products on the video platform.
Shopify Gets on the Live Commerce Trend
On July 19, Shopify launched YouTube Shopping to make it easy for sellers to manage and sell merchandise across their YouTube channels. 💪
Key features include:
- Connect your Shopify store to Youtube.
- Display your merchandise on YouTube in three different ways: livestreams, on-demand videos to show products in the end screens or in a product shelf below your videos, and a dedicated store tab to feature all your shoppable content.
- Access to live shopping tools that will allow you to tag and pin products at key points during a livestream.
- YouTube Shopping API automatically syncs your inventory data with Shopify so that shoppers can see whether a product is in-stock or out of stock in real time.
- If eligible, you may opt to enable on-site checkout so that shoppers can buy items directly from your YouTube channel. Read Buy on Google to learn more.
- Manage YouTube Shopping orders, returns, and payments, as well as monitor your key performance metrics for your live streams directly from your Shopify account.
As of July 2022, YouTube Shopping is available to Shopify sellers worldwide. However, they will need a minimum of 1,000 subscribers to use it.
👉 Check out the full list of requirements to see if you’re eligible.
A Move to Compete With Amazon
Shopify has been steadily merging live shopping elements into its platform over the last few months.
Back in March, the company launched Linkpop, a link-in bio tool for influencers. This tool allows people to promote links to their own website, YouTube channel, and other pages and simultaneously advertise their Shopify products that their followers can buy without leaving the link-in bio page instead of clicking on a separate URL that directs them to a different website.
One month later, Shopify acquired Dovetale, an influencer marketing tool that helps sellers recruit and manage their own brand ambassadors and influencers. The eCommerce giant had also recently hired Yeezy General Manager, Jon Wexler, to lead its Creator and Influencer Program.
These recent moves suggest that Shopify wants to position itself as the main live commerce platform for both sellers and content creators, rivaling Amazon Live, which potentially is now the biggest competitor after TikTok canceled its live commerce expansion plans in the US and Europe due to poor sales.
Live commerce is booming in China with sales expected to reach $423B by 2022, but only $11B in the US in 2021 and $25B by 2023. Nevertheless, these surveys show that there’s a growing interest in live shopping among US consumers. 🤔
And so, the two eComm giants are fighting to grab a share of the growing market that’s seen as the future of retail by Facebook, Twitter, among other social media sites.
However, Amazon is reportedly struggling to be the first to make live commerce happen in the US due to its lackluster content (not entertaining enough) and poor online presence (little or no interest from shoppers), according to Marketplace Pulse Founder and CEO, Juozas Kaziukėnas.
Perhaps Shopify could succeed where Amazon failed by using a live commerce-focused platform like YouTube Shopping coupled with robust influencer marketing efforts that include Dovetale and Linkpop. Sellers would be able to easily find and manage their influencers on Dovetale, offer an easy checkout process via Linkpop or YouTube’s on-site checkout, and host livestreams on YouTube, for example.
YouTube already has a captive video-viewing audience, whereas Amazon is trying to retrain their customers to consume video content that is somewhat hidden on their site. It’s been an uphill battle for AMZ to try to shift the platform to being more social whereas Shopify is going straight for the jugular with YouTube and link-in bio plays.
That said, it’s a very exciting time for consumers, but challenging for sellers, as they attempt to spend a lot of resources trying to create an attractive product selection, provide a seamless live shopping experience, and produce engaging content with influencers. Luckily, Shopify could potentially make all of that easier with their suite of live commerce apps and partnership with YouTube. 🔥
Amazon Continues to Dominate B2B While Shopify Plays Catch-Up
Seven years after its launch in 2015, Amazon Business has grown to be the leading B2B online marketplace for business buyers. 🚀
In its first year, the eComm giant made $1B from selling office supplies. In year three, the annual sales reached $10B, which drew the attention of Bank of America securities analyst Justin Post.
“While Amazon Business is just beginning to establish itself, Bank of America projects there is a total addressable market for e-commerce B2B of $1.4 trillion by 2021, which is nearly double the firm’s estimated $761 billion market for consumer e-commerce. Essentially, the market potential for Amazon Business is about twice the potential for its core retail business,” Post said in a statement to CNBC in 2019.
This massive growth estimate represents a great opportunity for Amazon. Bank of America projects that the company will hit $41.B in 2022 and potentially double that with around $83.1B by 2025. 🤯
If Amazon stays on track, it would singlehandedly account for the rapid growth of online B2B marketplace sales, essentially cementing its claim to be the go-to B2B channel for corporate buyers, resellers, schools, hospitals, governments, and institutional markets (e.g., non-profit organizations).
Amazon’s Plans for B2B eCommerce Success
In a blog post published by the US Chamber, Rob Green, Director and GM for AMZ Business, shares how Amazon plans to dominate the US B2B procurement market:
- Take the fundamentals of the customer experience – pricing, selection, convenience, and bring this to business procurement.
- Provide a wider selection of B2B goods by introducing new product research tools to help selling partners to find high-demand products that businesses look for but are currently not available on Amazon.
- Simplify the buying process by introducing a variety of payment options, B2B pricing optimization, supplier consolidation tools, and exclusive business pricing and discounts on 5 million products.
- Offer Business Prime and free one- or two-day shipping.
- Provide access to advanced analytics and purchasing policy control tools.
Recent Efforts to Attract More Business Buyers
On July 18, Amazon launched a marketing campaign “Buy smarter. Dream bigger.” demonstrating its capabilities to track essential business items for corporate buyers who rely on these goods to keep their businesses (and workforce) up and running, whether it’s paper products, pens, printers, ink cartridges, face masks, disinfecting wipes, or pantry goods.
While essential, procurement of these items has been difficult over the past few months due to the impacts of the pandemic on the supply chain.
With Amazon’s improved B2B arm, however, it would provide a platform where buyers can efficiently manage the complexities of procuring and shipping by tracking spending, purchase orders, and inventory levels all in one place. This essentially makes Amazon Business a one-stop-shop for a company’s needs for office supplies from multiple merchants.
But long-time rival Shopify wants to challenge that with its new B2B eCommerce tools and features.
Shopify Enters B2B to Grab a Piece of the Pie
Shopify announced on June 22 that it will be focusing on B2B commerce, primarily to compete with Amazon and increase revenue after losing $1.5B in the first quarter of 2022.
The Canadian eComm giant will introduce new tools designed to make it easier for wholesalers to sell in bulk and manage procurement in one place. These tools will also allow them to easily integrate with their own enterprise resource planning software.
In a statement told to Financial Times, Shopify President, Harley Finkelstein, sees this move as an opportunity to fight for a bigger market share and to not just “go after Direct-to-Consumer businesses, big and small, but to now go after wholesale business, which is a huge untapped market.”
With this move, Shopify stands toe-to-toe with Amazon Business, which takes the competitive rivalry between the two tech giants to a new level. As previously reported, Amazon launched Buy with Prime to open its fulfillment services to non-Amazon sellers, taking aim at Shopify’s customer base.
In response, Shopify acquired Deliverr to be able to offer 1- to 2-day shipping to merchants. The Canadian company also recently rolled out YouTube Shopping to enable sellers to upload their stores onto YouTube and set up live shopping videos, allowing them to compete with Amazon Live.
🤔 Curious to see how all of this will unfold! Amazon may already be too big to fail at this point, but it would be great if Shopify could shake things up a bit to make the market more competitive for sellers and consumers.
Freight Disruption at Port of Oakland as California Truckers Protest AB5
Watch out, folks! 📢
More shipment delays may be expected as more than a hundred protesters – composed of truck drivers who own and operate their own rigs – descended upon the Port of Oakland on Monday to challenge the California Assembly Bill 5 (AB5).
The protests prevented other trucks from entering the port, resulting in port congestion and halting operations for one of the busiest ports in the US. And disruptions may continue until the U.S. Supreme Court grants judicial review of the controversial state law.
What Is AB5?
The California Assembly Bill 5, also known as the gig worker law, is a law signed by Governor Gavin Newsom last September 2019 affecting independent contractors doing business in California. The law took effect four months later, resulting in countless independent contractors or workers belonging to the gig economy to be reclassified as employees.
The law aims to prevent companies from exploiting workers who categorize their staff as independent contractors instead of employees, and thus, withhold from them their mandated rights and benefits such as receiving minimum wage and paid sick leaves, among others.
The law intends to regulate companies that employ independent workers in huge numbers such as app-based delivery and ride-hailing service providers like DoorDash, Lyft and Uber. These companies opposed AB5 from the start, and with the support of more than half of California voters, succeeded in overriding it with Proposition 22, which designates their drivers and workers as independent contractors and not employees.
Why Are The Independent Truck Owner-Operators Against It?
Under AB5, trucking companies must reclassify and treat all their drivers as their employees. This is problematic for the independent truckers who value the flexibility of the current set-up: trucking companies deal with the port and all the paperwork and the independent drivers just procure and deliver the goods.
As independent service providers, the only way they can still make use of their rigs is for them to establish their own trucking company and deal with all of the legalities, paperwork, and headaches of running a trucking business.
Given this unfavorable situation they are in, the strike may be their last-ditch effort to express their disagreement over the new law. On June 28, the U.S. Supreme Court declined to listen to the challenge raised by the California truck drivers regarding AB5.
How Will The Strike Affect Sellers?
The Port of Oakland ranks among the top ten busiest container ports in the United States, where over 99% of the container goods headed for Northern California are loaded and shipped out. The protesters account for 90% of the port’s business, highlighting the scale of the disruption their strike has on the economy of the state.
As a result of the port being extremely congested – authorities were able to negotiate with the protesters to let ten trucks enter the port every half hour – the supply chain of affected businesses suffered greatly.
For the countless business owners who rely on the trucks to deliver their stock, the strike is very bad news for their operations and ultimately, their bottom line.
Delayed arrival of goods translates to delayed shipping of orders, poor customer experience, negative seller reputation, and potentially lower sales – not to mention capital tied up for a longer period of time. Marketplace sellers are also facing an increased risk of stockout as the strike hinders the usually smooth passage of goods and quick replenishment of supplies.
As every business owner knows, a delay in one part of the supply chain will have a domino effect along the rest of the line. It will take a significant amount of time before the port gets decongested and its operations resume as normal.
Related: How to Ship To Amazon FBA (And Speed Up Check-In Times)
What Can Be Done To Alleviate These Supply Chain Challenges?
While waiting for the authorities and the independent truck owner-operators to arrive at a resolution, you may want to go into solution mode and research ways to minimize your risk for these shipping delays.
Choosing a reputable 3rd-party logistics (3PL) provider could offer you more flexible and cost-effective delivery methods.
Preparing air freight, while more costly, could help you to avoid stockouts that could hurt your rankings.
What Else Can We Expect?
While AB5 applies only to the state of California, companies and business owners from other states who hire independent contractors may want to keep themselves updated about any legislative developments concerning the gig economy and gig workers. For example, the states of Illinois, New Jersey, and New York may enact similar laws in the near future so there certainly is a risk that this problem could spread if things go that way.
Amazon Reduces Their Private Label Catalog Amid Mounting Regulatory Pressure
Amazon is reportedly reducing the number of items and categories under its private label (PL) business by more than half due to poor sales, and as we assume, the impending antitrust bill. 🤔
Inflation Takes its Toll on Amazon and Consumers
The decision to scale back Amazon’s PL selection came after a profitability review by Dave Clark, former head of Consumer Business for Amazon. While the PL segment offers a wide range of products to customers at affordable prices, it only accounts for 1% of the company’s total retail sales, a stark contrast to the 10% target set by former CEO, Jeff Bezos, a few years ago.
Clark also wanted the PL team to focus on better-selling essential items instead of products that didn’t meet the profit threshold. And this proved to be a good strategy, as Prime Day 2022 customers kept much of their purchases to basic goods, such as household items, health and beauty, and consumer electronics.
⚠️ In fact, Numerator found that 5% of Prime Day products sold for over $100, while 58% sold for below $20. Additionally, a little over a third of customers waited for Prime Day specifically to buy a certain product at a much lower price, while 28% passed on a great deal because it wasn’t essential, indicating that people would rather prioritize their needs than wants, a shopping behavior that may continue through to Q4.
Amazon’s reported $3.8 billion net loss in the first quarter of 2022 (their first loss since 2015) may have also been one of the deciding factors. Amazon CEO, Andy Jassy, has attributed part of the company’s shortfall to reduced online consumer spending, Rivian’s shrinking valuation, and added costs in the form of excess fulfillment and transportation capacity.
Increasing Pressure from Antitrust Regulators
According to Wall Street Journal (WSJ), the eComm giant may also exit the private label business altogether to address regulatory pressure and possibly to avoid potential hefty fines ahead of the impending US antitrust bill targeting Big Tech.
Although Amazon has denied this in a statement to WSJ, it’s not beyond the realm of possibility for them to close their PL business or at least make a concession (e.g., end data grabbing), considering they recently offered to stop anti-competitive practices in Europe in an attempt to halt two investigations.
In the US, Amazon’s private label business has been under scrutiny from lawmakers (and third-party sellers) since its launch in 2009.
Amazon has flooded the marketplace with 243,000 products across 45 different PL brands, allowing them to directly compete and even prioritize their own offerings over third-party sellers’ by manipulating the search algorithms to drive customers toward AmazonBasics and other in-house brands.
In one of its investigative reports, WSJ also revealed that some PL employees spied on sellers and collected their sensitive data to develop their own brands that resembled original items, thereby undercutting sellers on Amazon.
Under the proposed antitrust law, S.2992, these practices would be considered anti-competitive, and therefore subject to injunctions and penalties.
As sellers, perhaps we could take Amazon’s move to reassess their PL business to reduce regulatory pressure as a win and a step toward leveling the playing field. 💪
Related: Why Amazon Wants You To Lobby Congress: What is S.2992?
Discounts on EU/UK Amazon Partner Carrier Fees
Possibly some good news for UK/EU sellers… 🇬🇧🇪🇺
From July 2022 to April 12, 2023, you can take advantage of the following fee reductions:
- Average 20% decrease on partner carrier fees for Small Parcel Delivery (SPD) and pallet shipments in the UK. For instance, shipping parcels with a partner carrier like UPS from a local address in the UK to a UK fulfillment center.
- Average 50% discount on partner carrier fees for pallet shipments and SPDs sent to FBA in France, Germany, Spain, and Italy.
The fee reductions sure sound attractive, especially with the recent increases in shipping and FBA fulfillment costs.
🤔 Why the sudden generosity? This move might be Amazon’s attempt to:
- Encourage sellers to use partner carriers versus non-partner carriers to recover the money they sunk into infrastructure following the logistics dumpster fire that was 2020. Amazon reportedly suffered a massive US$3.8 billion loss in Q1, which was partially driven by US$6 billion in added warehouses and transportation costs. This is the first down quarter Amazon has reported since 2015.
- In addition, based on the discounts more sellers who were fulfilling by FBM may be enticed to sign up for the partner carrier program due to the savings discounts, which may also help Amazon to fill underused warehouse space in Q3 and Q4.
- It could also help soften the impact of fee hikes on sellers, and in return, prevent them from raising their product prices too quickly, something that Amazon may be mindful of based on the slower sales growth in 2022.
All this aside, however, UK sellers who have done mock shipments tell a different story. Instead of getting a lower shipping fee, they saw a considerable price increase due to the high fuel surcharge.
To cover their bases, Amazon did mention that the final fee may vary depending on the shipment quantity, packaging weight and dimensions, and other applicable rates, and that rates are subject to change. So, I guess the sellers complaining about increased prices fall under the “subject to change” category then. 🤷♀️ Essentially, the conclusion becomes that your shipping fee could still stay the same as before, could go down, or unfortunately, go up substantially from the last time you used the program. 🤦♀️
Read the Amazon Partnered Carrier Program Overview to learn more.
💡 If you need to reduce shipping costs to stay profitable, try to keep your packaging compact by removing excess air from your products, minimizing their cubic dimensions, using lighter materials, avoiding excessive amounts of internal packaging materials, and more.
Lastly, use our Master Carton and Pallet Calculator to determine your optimal carton/pallet load capacity and reduce your total cartons and pallets per order.
Amazon Intros New Hack to Find High-Demand, No-Competition B2B Products
Want to expand your catalog with new B2B products? 💰
Amazon just launched a new ASINs Recommendations Page for its selling partners in the UK. Designed to help you find your next best seller, the page offers a list of products that many business customers are looking for but aren’t currently available on Amazon.
It also provides you with recommendations that are specific to your store’s product category, allowing you to add new versions of existing products or simply add new items that align with your brand. Not all categories will be represented, of course, as it is B2B-focused.
😩 From there, you’d of course have to find suppliers for your target B2B products and may even have some Amazon-imposed restrictions to overcome, such as compliance requirements and brand approval, especially items that belong to certain gated categories.
As this is a new feature that hasn’t yet been mainstreamed into the seller community, and if the tool does what Amazon claims it does, you could become the first (and for a time only) seller to spot a gap in the market and come up with an offer to fill that gap, which is a step toward market domination. 🏆
Go to ASINs Recommendations to get started.
Software Updates For July 2022
We hope everyone is having a fantastic and profitable summer so far and getting ready for Prime Day! We have some big, exciting changes coming to SoStocked very soon so be sure to follow along with our updates. Here’s what we have this month…
With this new feature you can merge multiple shipments together into one. Logistics and shipping plans can change fast, so we’ve got you covered. It used to be that if you had separate shipments that needed to be merged you would have to delete them and rewrite a new order.
Now you simply select a PO, Edit Order, go to Merge Shipment and you can select which shipments (or POs) you would like to merge.
You can even choose to merge all products from the PO or select which specific products you wish to merge!
Improved Automation of Seasonal Sales Spikes
For those who haven’t used the new automated seasonal spikes feature, this allows you to set automatic seasonal ups and downs month to month, bi-weekly, or even weekly, based on past sales curves. SoStocked will find the annual average daily sales for the product, indicate which time periods extend above or below that average, and then allow you to input trend settings above or below those projections.
This algorithm is always looking for a “new normal” or an average velocity to compare your seasonal ups and down to. However, there was an anomaly occurring where if you turned this feature on when your product was having an abnormally slow month (or for example, you have a new product you just launched) then it was presenting a crazy high velocity as your future seasonality projection. So our dev team solved the problem by creating an exception in that first month. There’s a bit of math involved, so get more details on this exception see this video here.
To learn more about the seasonality feature see this tutorial.
SP-API – Amazon Far East Marketplace Integration
You might have heard about this new API around the Amazon community. Just in case you don’t already know what it is, here is a brief explanation.
First, API stands for Application Programming Interface. In layman’s terms, this allows 2 applications or softwares – like SoStocked and Amazon – to talk to each other.
SP-API is a new type of API for Amazon. The SP part stands for Selling Partner. SP-API is the next generation or new version of API for Amazon. They have been using MWS (Marketplace Web Service) for years and now they are launching SP-API as an evolution of MWS. The new SP-API is needed for SoStocked to connect with the newer marketplaces such as Australia, India, Japan and Dubai.
Here at SoStocked, we are ready for the new global API. Our international currency and exchange rate options (find out more here) along with this new SP-API, will create a streamlined SoStocked experience for selling across the globe.
We have been patiently (or not so patiently) waiting for Amazon to do what they need to do to allow us to integrate with the new SP-API system. We heard positive confirmation that they have a deadline to get this done by July 31st. So get ready folks, it’s almost here!
Subtle Improvements to Make Your
🛠 Improved warehouse and 3PL filters added to the Inventory page
We improved the filtering on our Inventory page, specifically for warehouses.
This means you can now filter out warehouses that you want to exclude from bulk actions, such as transferring inventory, adjusting inventory levels, and more.
⏳ Improved bulk upload speeds
Now when uploading a spreadsheet back into the system it will be faster and easier.
ICYMI: FEATURE SPOTLIGHT
Vote For or Add New Suggestions
Archive an Old Vendor With Products Assigned To It
If you have a vendor with products assigned to it, you can now archive the vendor without having to jump through the extra hoops of unassigning all products. Just click on the hamburger menu next to the vendor name and click “Archive”. A window will then open up giving you the option to bulk unassign the products from the vendor.
Change a Vendors Lead Time Without Affecting Your Custom Lead Times
If you change a vendor’s lead time, SoStocked gives you the choice between changing the lead times for the products or leaving the products with their current custom lead times.
Need more information?
- Send Message: We typically reply within 2 hours during office hours.
- Schedule Demo: Dive deeper into the nuances of our software with Chelsea.
- Join Live Upcoming Webinar: New to Amazon inventory management? Learn three inventory techniques you can implement right away.
Amazon’s Recent Ban on Mylar Bags and Other Potentially At Risk Products
Amazon just announced that multicolored and non-transparent Mylar bags must be pulled out from their store effective August 5, 2022. 😲
Affected FBA sellers with leftover stock of these bags in Amazon warehouses are advised to file a request for removal no more than 30 days after the announcement was made in order to have their unsold Mylar bags returned to them.
Mylar Bags Affected By the Ban
Mylar bags – resealable foil pouches commonly used for food storage – come in clear, single color, and multicolor options.
⚠️ The ban only applies to Mylar bags that are non-transparent or multicolored, as these items fall under Amazon’s list of “Products associated with drugs and controlled substances.”
Transparent and single-color Mylar bags are still allowed to be sold in the store.
This can be a big blow to affected sellers as they will also have to shoulder the new (and much higher) removal fees issued by Amazon earlier this year on top of dealing with unsold inventory. 😟
Amazon didn’t share any details on how these types of Mylar bags ended up on their list of prohibited drug-related products, but it probably has to do with the 2017 case of Stashlogix.
These multi-compartment storage bags with odor-proof features and UV-proof jar containers were seized by the federal government after classifying it as drug paraphernalia. Mylar bags are also smell-proof, which make them suitable containers for marijuana and other illegal substances. 🤔
Mixed Reactions From Sellers
The general sentiment among sellers regarding this vague policy is confusion. Amazon didn’t even specify whose “regulatory requirements” they are following in implementing this ban and why. Some sellers believe Amazon is simply looking out for itself and lessening its risk for legal issues arising from the misuse of the product.
Other sellers think the government is to blame for this sudden ban, while some sellers see this policy as illogical, asserting that banning these bags is not the solution to drug abuse and that how people choose to use these bags is completely up to them.
A few sellers have also expressed their concern as to which product will be targeted next by Amazon. 🚨
In 2018, seemingly innocuous products like Safe Cans (for hiding small items like keys), Stash Car Key Safe (with a secret pill box), and boxer shorts (with secret pockets) were removed from Amazon UK, because some buyers reportedly used these items to smuggle illegal drugs into festivals. 😓
With that in mind, if you’re selling products cleverly designed to store small valuables, you may want to evaluate your catalog and perhaps hold off sending too much inventory to FBA to protect yourself from paying hefty removal fees should Amazon suddenly decide to ban them in the future.
Related: Amazon Compliance Reference Tool to Ensure Products Meet Requirements
Reduce Losses Due to INR Scams with Amazon’s Signature Confirmation
Have you ever issued a refund to a false Item Not Received (INR) claim? 🤔
INR scam, or Lost Parcel scam, is when an abuser submits false claims for a refund or replacement order – for example, claiming that the product they bought online did not arrive (although it did), which gives them a reason to ask for a refund.
Unfortunately, sellers bear the cost of refunds and/or replacements. And to add insult to injury, abusers may also leave a negative review, which can put a ding on their Order Defect Rate report.
So, to help reduce lost parcel claims, Amazon launched a new service called Signature Confirmation.
Starting June 23, 2022, you can pay for this service in Buy Shipping when you choose shipping for items at risk of being reported as “lost” or “not received”.
Signature Confirmation Core Capabilities
- Amazon spots orders that qualify for signature confirmation by assessing the value of the item ordered, delivery issues, and delivery address.
- Orders that are likely to be reported as lost will show up on your account’s Manage Orders page > Order Status > Signature Confirmation Recommended. This recommendation feature comes free of charge.
- Should you decide to follow Amazon’s recommendation, an additional fee, between $3 and $6 per order, will be applied to your shipping cost to cover the implementation of the service.
- Signature-confirmed orders reported as INR or lost parcel will undergo additional checks by Amazon. If the buyer can’t prove otherwise, he or she won’t get a full refund or replacement order. However, if a refund is granted without your involvement and you disagree with Amazon’s decision, you may file an appeal to resolve the issue.
Downsides of Signature Confirmation
While Signature Confirmation serves as an extra layer of protection from abusive claims, some sellers think that Amazon’s current shipping services already provide the coverage they need for delivery issues.
With rising shipping costs and Amazon fees, it is perfectly understandable why some would be reluctant to pay for another service. Unless, of course, the buyers themselves feel the risk of loss justifies the cost of the additional signature confirmation fees.
However, a few sellers are worried about receiving complaints or negative feedback from customers who don’t want signature confirmation on their orders, either because it is inconvenient (delivery point might be too far from home or they weren’t at home) or it prevented those with malicious intent from carrying out their INR abuse scheme, so they might retaliate by leaving a 1-star rating. Although you can do something about the negative feedback, Amazon may still refuse to delete it.
What the eComm giant could do to deal with this fairly is to:
- Give sellers the option to cancel orders identified as high risk without it affecting their account health.
- Set a specific minimum dollar amount for orders that must have signature confirmation to ensure seller INR protection so as not to require signature confirmation on lower value items.
- If a buyer is identified as a high risk, obligate them to pay for signature confirmation.
- Automatically notify high-risk buyers of their signature confirmation requirements. This way, sellers won’t have to message them directly and risk sending/receiving messages too late, causing an upset buyer and ultimately negative feedback.
- Protect sellers from INR claims and negative feedback without the need for appeal.
There’s no denying that the new service could benefit third-party sellers, in that it would help reduce INR claims by identifying high-risk orders and allowing them to add signature confirmation to those orders. 👏
However, it is not cheap and it doesn’t 100% protect you from customers who might blackmail you with negative feedback if you refuse to remove signature confirmation. Your metrics might even take a hit if you cancel orders. 😓
Until these concerns are addressed, it would be best to limit the use of signature confirmation to extremely high-value items for added protection.
Amazon Implements Size Normalization to Ensure Consistency Across Detail Pages
In yet another move to provide customers with a more consistent shopping experience, Amazon has standardized the size and quantity information format for several product types.
What is Size Normalization?
It is about making sure that data types like the size and quantity information of a particular product sold by different sellers are organized to appear similar across all search and detail pages, i.e., each data type has the same content and format.
As a result, it reduces inconsistencies and buyer confusion that usually lead to cart abandonment. After all, there’s a saying that goes, “the confused person never buys.” 👌
So, the thought process behind this is that size normalization may help to increase sales, and would create a more positive customer experience.
It could, however, have the opposite effect on your sales if you are priced high within your market. I personally know that I often use the price per quantity, i.e. price per ounce, etc, to help inform my own buying decisions, so as a consumer, I do see this as a good thing but can see, as a seller, how it might cut both ways.
How Size Normalization Works
Amazon applies normalization rules to your products to reformat “Size” details whenever possible.
Suppose there are two sellers who have listings for the same quantity of soda. However, each seller uses a different value on “Size” – one offer being 24 Count and the other 24 Count (1 Pack).
In that case, Amazon’s Size normalization rules will instead identify (and display) the more accurate information based on this formula:
’unit_count’/’number_of_items’ + < unit_count.type >
(“Pack of” + number_of_items)
Therefore, if Unit Count = 24 Count and Number of Items = 1, Amazon will determine the size value as “24 Count (Pack of 1).” This standardized version of the ‘Size’ for this product will be visible to buyers.
Make sure to update the quantity information for all of your products to prevent Amazon from removing “Sizes” that don’t conform to the new format or appear inaccurate.
👉 Go to Size Normalization FAQ Page to learn how to update your products with the required attributes.
Why Amazon Wants You to Lobby Congress: What Is S.2992?
When corporate tech giants like Amazon come directly to the sellers to try to get them to lobby Congress for or against something, it’s time to take a closer look at their ulterior motives.
With every piece of news that comes from Amazon, I always like to ask, “What’s in it for them?”
Well, this one had my alarm bells blaring! 🚨
I had to dig into all the dirty details of this news announcement, so here’s what’s happening and what I think is really going on… 🕵️♂️
What is The American Innovation and Choice Online Act (S.2992)?
Passed by the Judiciary Committee on January 20, 2022, The American Innovation and Choice Online Act is the newest antitrust legislation with bipartisan support (Republicans and Democrats sponsor a bill together for the common good). It targets Big Tech firms, such as Amazon, Meta (formerly Facebook), Apple, and Alphabet (parent company of Google) for potential antitrust and consumer choice violations.
The bill is sponsored by Senate Judiciary Committee Antitrust Subcommittee Chair, Senator Amy Klobuchar (D-MN), and full committee Ranking Member, Senator Chuck Grassley (R-IA).
It is also co-sponsored by Senators:
- Cynthia Lummis (R-WY)
- Lindsey Graham (R-SC)
- Josh Hawley (R-MO)
- Steve Daines (R-MT)
- John Kennedy (R-LA)
- Cory Booker (D-NJ)
- Richard Blumenthal (D-CT)
- Mark Warner (D-VA)
- Dick Durbin (D-IL)
- Mazie Hirono (D-HI)
The fact that S.2992 is a bipartisan effort co-sponsored by an ideologically diverse group of Senators is a sign that there’s a growing momentum in Congress for antitrust violations to be punishable under federal law (if enacted).
The bill poses a challenge to the ecosystem business model of Big Tech firms that encourages users to utilize an interlocking suite of products or tools owned by the same company. In a report released by the Judiciary Committee, it showed that these tech giants regularly conduct anti-competitive practices to maintain monopoly or control over their respective industries.
A good example would be Amazon accessing and exploiting your seller data to create and launch competing products for their own brand. 😓
To Whom Does the Bill Apply To?
S.2992 applies to any “website, online or mobile application, operating system, digital assistant, or online service” that:
- Allows a user to generate or interact with content on the website
- Facilitates online selling among third-party sellers or customers, e.g., Amazon
- Or, one that enables user searches that show huge amounts of information, e.g., Google
But as of June 2022, the current draft is only limited to the biggest online platforms, also known as covered platforms, with:
- At least 50 million US-based monthly active users (or 100,000 US-based business users)
- Annual US net sales greater than $550 billion
- Tech platforms that serve as a “critical trading partner” for its business users
Therefore, this bill would certainly apply to Amazon, Apple, Alphabet, and Meta.
What Happens When it’s Passed into Law?
If enacted, federal antitrust agencies, Federal Trade Commission (FTC) and Department of Justice (DOJ), would have the authority to enforce the violations below and issue injunctions and penalties against the guilty party.
Under the bill, it would be unlawful to give “preference to the products, services, or lines of business of the covered platform operator over those of another business user on the covered platform in a manner that would materially harm competition,” the Justice Department explained.
For instance, Amazon could be found in violation of this law if they had algorithmically placed their branded products in more prominent places in the platform or if Amazon was found guilty of stealing your supplier information to create a knock-off version of your product.
The bill could also prohibit Amazon from exploiting the Buy Box feature, which they could use to promote their own products and directly compete with resellers. Many of us have been affected by the online retail giant essentially breaking its own rules to maintain dominance in the marketplace that they currently share with us.
Clearly, both wholesale and private label sellers feel the hurt of Amazon’s anti-competitive behavior. But if the bill is passed into law, it would potentially squash that. This could be one of the biggest reasons why Amazon would want to call out for sellers to lobby against it – though, it may be against sellers’ best interest and in Amazon’s interest more than not. ⚠️
Under Section 3: Unlawful Conduct, the bill would also create the following violations:
- Limiting another business’s products or services to compete against the covered platform’s. This means Amazon cannot apply their policies unfairly against sellers that rely on the platform to do business with customers. For example, if a new private label brand was eating into Amazon’s market share, the bill would prohibit them from selectively implementing some policy to ban it from the marketplace.
- Carrying out the covered platform’s Terms of Service (ToS) in a discriminatory way among similarly situated business users. We had a competitor “review stacking,” which means they were adding (completely unrelated) reviews from “dead products” to their own product listing. For a kitchen product, there were reviews about dog leashes, DVDs, books, and even exercise equipment that were added to the listing. Not only did this increase the total number of reviews on the listing, it also changed the total star rating from 4 to 4.5 stars!
The seller was essentially stealing sales from us by lying about his review status. 🤦
We reported this violation numerous times and each time the seller would get the reviews stripped and then a few days later, his listing would be “stacked” all over again. He would never get shut down for violating ToS, and it was a vicious cycle. And yet other sellers’ listings were suspended for much less inflammatory violations.
- Restricting the capacity of business users to utilize different platforms’ hardware, software features, or operating systems. This provision most likely applies to Google and Apple with their suite of interoperable devices. For example, Apple AirPods are fully interoperable with iPhones through a chip that supports Siri, a communication feature that’s exclusive to the Apple ecosystem, and Bluetooth. Via Bluetooth connection, Samsung, Sony, and other smartphone brands are fully interoperable with AirPods. However, according to tech expert Aurelien Portuese, 1st-party devices (AirPods to iPhone) will always be more interoperatable than 3rd-party devices with operating systems. Therefore, under this bill, other smartphone manufacturers could use interoperability issues with Apple and Apple refusing to open up their platform to make 3rd-party devices more interoperable, as potential grounds for litigation. Unless perhaps, the restriction is absolutely necessary (see #6), e.g., to protect Apple’s trade secrets and patented technology.
- Conditioning access to the platform or preferred status or placement on the platform on the purchase/use of other products or services offered by the covered platform that isn’t exclusive to the covered platform itself. This violation could impact Amazon’s Prime shipping, a service that makes FBA products eligible for free 1-2 day shipping. The bill would mandate the eComm giant to allow other carriers to fulfill Prime orders. Amazon says such a mandate would make delivering on their 1-2 day shipping promise “difficult” and “potentially impossible in practice,” possibly because they wouldn’t have full control over carriers outside of their own shipping network.
But then again, Seller-Fulfilled Prime already exists for those who are not using FBA, so Amazon is full of it if they are trying to claim opening up Prime to other carriers would be a tragedy.
Last time I checked, the Seller-Fulfilled Prime program was still operable and has not been canceled. If it had been canceled due to lack of success, then, there might be an argument to be had there. The sheer fact that Seller-Fulfilled Prime is still in operation is essentially an admission that this point can actually be adhered to. In my view, this is a disingenuous play from AMZ to try to gain support from sellers. 🙄
- Using internal data obtained from the activities of a business user, including interactions with customers, to boost the sales of the covered platform’s own products. According to the National Association of Wholesaler-Distributors, Amazon gathers vast amounts of competitively sensitive data from third-party sellers, including product details and transaction data around product prices and customer information. The eComm giant then exploits this sensitive data to launch their own competing products to undercut sellers on the platform.
- Restricting or prohibiting users from uninstalling applications that have been pre-installed on the covered platform or changing default settings on the website that geared customers or users towards products offered by the covered platform, unless necessary.
- Retaliation against business users or customers who raise concerns with antitrust authorities about any potential violations.
If found guilty, the violator could face a financial penalty of up to 15% of its US revenue. 😲 No wonder Amazon and other Big Tech CEOs themselves have descended on Washington recently to influence the members of Congress to oppose the bill, CNN reports.
Supporters of the Bill
Bill sponsors, industry groups, and other supporters of S.2992 argue that the antitrust legislation would address many long-held problems with tech companies allegedly committing restrictive, self-preferencing practices online.
It would also ensure:
- Entrepreneurs and small businesses still have the opportunity to succeed in digital markets (Sen. Klobuchar)
- Large online platforms and other tech companies will be held accountable if they behave in a discriminatory manner (Sen. Grassley)
- Help level the playing field for small business owners, i.e., prohibiting Big Tech from using the intel data they collect from users on their websites, apps, or platforms to create unfair competitive advantages. (Sen. Lummis)
By combating these anti-competitive practices, covered platforms and their business users would be able to provide customers with better user experience and more product offerings with competitive prices.
Groups and Critics Who Oppose the Bill
Amazon, Apple, and other pro-tech groups such as the Information Technology and Innovation Foundation (ITIF), Chamber of Progress, TechNet and the Computer & Communications Industry Association oppose the bill – as expected, so no surprise there!
The opponents of the bill argue that it is:
Vague and overly broad with multiple ill-defined legal terms
For example, covered platforms are allowed to take “narrowly tailored” actions as an affirmative defense, which means the restriction committed was reasonably necessary for legal reasons, to protect user privacy and data security, or to maintain or improve the “core functionality” of the platform. However, the term “core functionality” isn’t well-defined in the bill. This could lead to disputes as covered platforms develop or already have existing products and services that they may claim are “core” to their business model.
Industry groups have argued that S.2992 has not received the traditional hearing process that other antitrust-related bills have in the past (e.g., giving the members and the public an opportunity to debate the impacts of the bill before advancing it to the floor for the Senate to vote for its rejection or approval).
Carl Szabo, Vice President and General Counsel at NetChoice said that “rather than opening the floor to public input, the bill’s sponsors rushed through legislation. Lawmakers should stop this backroom wheeling-and-dealing and instead take the input of economists, experts, and businesses to better understand the impact of this rushed legislation.”
This is something that I personally can’t disagree with. It is unfortunate that if the bill passes, it may embroil Amazon in a world of unnecessary legal battles that we may see the financial brunt of. But if it fails, I wonder when we might ever find another chance to advance some of these pro-seller actions.
Still, both majority and minority floor leaders took advantage of the bipartisan support (thus getting a 16-6 vote) for the bill to pass it during the committee markup, the final step a committee takes to push the bill to the Senate chamber.
It will hurt American consumers
The Chamber of Progress recently said that the bill would “break popular consumer products,” specifically Amazon Prime, as it could become illegal due to the bill prohibiting Amazon from giving preference to those sellers who use their services–for example, displaying a Prime badge on certain products could create an unfair advantage over non-Prime items. (But, again, Seller-Fulfilled Prime should be able to combat this argument.)
To influence the public and lawmakers, the industry group has also been running an online ad saying “Senator Klobuchar wants to erase Amazon Basics,” according to Reuters. However, if Amazon was not worried about Amazon Basics not “playing fair” they wouldn’t be running these ads. This is a sure sign that we have Amazon’s number when it comes to their true motives toward lobbying sellers against this bill. 😏
A representative from Amazon wrote that the bill also threatens to destroy two of the things consumers love the most about Amazon:
- The wide selection of products with low prices made possible by opening the eComm platform to third-party sellers. However, this argument does not hold water, as the bill doesn’t seem to aim at the heart of the 3P sellers, but rather Amazon’s own offerings. As previously discussed, the bill would prohibit Amazon to prioritize their own store branded products that they typically offer at cheaper prices. Unless, of course, this is a veiled hint that Amazon would rather become the sole seller on the platform.
If that was the case, I’m sure this could create one hell of a vacuum that would splinter Amazon’s business to (1) another buying platform that included 3P sellers and (2) Amazon would become nothing more than a giant Amazon brand website. It is an empty threat by the online retail giant, but an interesting road to hypothesize down.
- The promise of fast, free shipping through Amazon Prime. Again, FBA isn’t the only way to offer Prime shipping. Seller-Fulfilled Prime also offers 1-2 day shipping, unless Amazon suddenly stops offering this program to force sellers to go back to using FBA. But wouldn’t that be considered an anti-competitive behavior under the S.2992 bill?
Amazon reps also claim that putting these restrictions on only the biggest covered platforms gives “preferential treatment to other large retailers that engage in the same practices.”
They argue that the bill targets only one retailer, Amazon, by requiring an annual US net sales of at least $550 billion to qualify for regulation. Therefore, it would not cover Walmart and Target. But perhaps, that’s likely the point. I personally haven’t heard of Walmart and Target doing what Amazon has been doing. Perhaps when they get closer to the $550B mark, they’ll start thinking about taking the dark turns that Amazon’s been winding down. However, IMO, it would be good to lower that threshold to rope them in as well.
Many Sellers Refuse to Rally Behind Amazon’s Call to Oppose the Antitrust Bill
Dharmesh Mehta, Amazon’s Vice President of Worldwide Selling Partner Services, took to Seller Forums to encourage everyone to reject the antitrust legislation that could “harm small businesses, American consumers, and Amazon.”
However, the lobbying didn’t appear to go as intended. Many sellers replied to the announcement saying they support the bill. 👏
Third-party sellers account for 60% of Amazon’s total retail sales. But in the last few years, they’ve expressed frustration over the fees they pay to sell on the platform, fear of being suspended for little or no reason, and the platform’s inability to eliminate returns scams and bad actors (e.g., fake reviews and listing theft).
No wonder many sellers felt the need to take back control by supporting a bill that could shake up Amazon. 💪
- “Yes, I’m going to oppose that Amazon will be prohibited from undercutting, manipulating the buy box, and instituting restrictions on certain listings that unfairly bar me from selling an item. Yup, writing to my senator right now.”
- “Any informed seller is going to support massive action taken against Amazon in the antitrust arena. I am personally sick of the condescending posts by Amazon management directed at us. We are not morons and know how to read and think for ourselves.”
- “This bill is 100% pro seller. I am definitely going to call my representatives and ask them to please pass the bill! It is not going to jeopardize our ability to sell on Amazon. It’s going to give us sellers a fair shake and restrict Amazon from purposely prioritizing their products over ours. Amazon is trying to do to us what they did to those who wanted to unionize.” 👌
- “If Amazon wants my support, it will have to level the playing field, be fair, be honest and most of all be good to its workers and sellers. I oppose this email because it urges sellers to go against the creation of laws that will help level the playing field. I support better laws for Amazon, Amazon Workers Unions and Sellers.”
- “As much as we love Amazon, there must be regulation and oversight at some point. If this is passed it doesn’t mean 3P sellers will be hurt, but that Amazon and big tech cannot favor themselves 100% of the time. Small businesses struggle to keep up with low costs offered by big box stores so anyone agreeing S. 2992 is a good thing is looking out for small business and their fellow sellers. Big tech should not be favored 100% of the time.”
But obviously, not every seller expressed support for the bill. Two commenters said that the proposed legislation could hurt them just by jeopardizing the marketplace.
- “I can’t predict the future, and so neither can the gang in Washington. I can tell you that this bill is bad news for Amazon, bad news for Amazon customers, and if you think that doesn’t mean bad news for Sellers, then you must not be a third-party Seller.”
- “I understand the sentiment, but being permanently put out of business would probably hurt you more. There is a time and place to air our grievances with Amazon. They deserve it plenty. But this is not that time. Let’s not cut off our nose to spite our face.”
Another seller believes that Amazon isn’t really against S.2992.
- “Read the post and read it again. Bottom line is Amazon wants the law to also cover its physical competition – WalMart. That may be a fair criticism, but stop the hysterical nonsense. Ironic to see Amazon whining about a law intended to prevent it from unfairly taking small seller data to create competing products to wipe out the small seller is bad because it doesn’t prevent WalMart from doing the same.”
You can read the entire discussion here.
Playing the Waiting Game
There are faults with the proposed law and it’s not black and white but there are serious reasons for AMZ to be concerned and they absolutely aren’t altruistic. This law could be a major shake-up and none of us can say whether that would be in a good or bad way. 🤔
But the idea that Amazon would shatter their cash cow – third-party business – is a naive one. While they are threatening it, they know that to do so would destroy them, too.
It could mean more fees funneled down to us sellers to try to squeeze some of us out, though. Anyone who understands economics even a little bit knows that costs trickle down and any costs Amazon incurred would likely find its way down to us and to consumers, but would the benefits outweigh the risks? Who knows. 🤷
In closing, the bill is fundamentally good for 3P sellers, but there’s not going to be a clean line on this thing.
We’ll have to take the good with the bad if this ends up passing and, maybe only one thing is for certain, it’s going to make for an interesting time if it does.
If that’s the case, I suggest we all buckle up!
New EPR Compliance Obligations for Amazon Germany Begin July 1st
This announcement is for UK/EU sellers with listings on Amazon.de (Germany). 🇩🇪
In a move to comply with the upcoming changes to the Extended Producer Responsibility (EPR) Packaging Law in Germany, Amazon has started checking seller compliance with this environmental policy. 👀
Effective July 1, 2022, all packaged goods distributed in Germany, including those available for purchase on Amazon.de and other eComm marketplaces, must be registered in the LUCID Packaging Register. This process enables you to put your product packaging (see infographic below) into circulation and share the costs of recycling them.
Previously, this registration requirement only applied to sellers subject to system participation, a process that requires them to enter into an agreement with a Producer Responsibility Organization (PRO) who will collect their packaging from customers and take care of its sorting and recycling for a fee.
⚠️ IMPORTANT: If you fail to register, your listing will be blocked on Amazon.
Note: As of June 15, 2022, the eComm giant has already started blocking non-compliant listings to ensure it doesn’t violate the amended EPR Law that comes into force on July 1st. You can view your listing status on your account’s Manage Inventory page>Inactive (Blocked). Read on to learn how to become EPR-compliant.
What is EPR?
EPR is an environmental protection strategy to reduce waste from a product and its packaging by making all producers, including online sellers or importers, responsible for the entire life cycle of the packaged goods they sell, from introduction to the market through to disposal, including waste collection and recycling of cartons, bubble wraps, foam fillers, among other packaging materials.
How to Comply with the EPR Packaging Law?
EPR guidelines differ by product category: (1) packaging and (2) Electrical and Electronic Equipment such as batteries. This article focuses on your compliance requirements for packaging, which under Germany’s updated EPR law, you must:
Register in the LUCID Packaging Register
Register as a “producer” and enter the requested information to get a LUCID number. You can do this process yourself through this link (free of charge) or sign up for a paid service called Amazon Solutions for EPR Compliance.
After completing registration, you will receive a LUCID number that you’ll need to submit to Amazon (see Step #2). You’ll also need this registration number to enter into a system participation contract with a PRO in Germany, if necessary (see Step #3).
Again, a PRO is a company who will act on your behalf to administer an EPR-compliant waste recycling program, including calculating the costs incurred for the collection, sorting, and recycling of your product packaging.
Send Your LUCID Number to Amazon
Once registered, make sure to submit your LUCID number to Seller Central.
Amazon may also contact you for further verification or additional information. For instance, if your packaging is subject to system participation, a representative may reach out to validate your LUCID registration details.
If Required, Enter into a System Participation Agreement
In Germany, packaged products that accumulate as waste with consumers after use are subject to system participation.
If you’re responsible for items that are subject to system participation, you need to pay a fee for the recycling of your waste materials. The rates depend on the type of packaging material (typically a few cents per kilogram).
Work closely with your packaging suppliers, FBA representatives (if fulfilling via FBA), and PRO to accurately identify your packaging volumes. Consider using this Packaging Volume Calculator to determine your fees.
⚠️ IMPORTANT: If system participation is required, packaging volume and fee calculations may take a few of weeks (up to 20 days for some sellers). Amazon also needs 5 business days to verify your LUCID registration details during this process. So, if you haven’t registered yet, act now to prevent getting your listings blocked.
Conversely, if your packaged goods are not subject to system participation, you don’t need a system participation contract. However, you’ll still need to register in LUCID.
Read this checklist to learn more.
Report Your Packaging Volumes
Send your packaging data reports and pay fees to your designated PRO regularly.
Go to EPR Requirements: Packaging in Germany for more details.
♻️ Compliance with the EPR Packaging Law is a move toward more sustainability in eCommerce. It is going to be an added expense that your business will have to absorb or offset elsewhere. I suggest checking out our master carton calculator to see if there are ways you can optimize efficiencies elsewhere to help to recover profit in other parts of your business to make up for the added costs of EPR.
It may also be a good time to see if reducing your product packaging can help to reduce your potential PRO fees.
On the brighter side, the EPR law helps to lessen your environmental impact, and can also offer good business opportunities. Marketing your product as eco-friendly can help you to stand out among your competitors, thereby attracting new (eco-minded) customers and potentially driving more sales.
Software Updates For June 2022
Continuing to be the best inventory management software is our passion! We’re always open to your suggestions and to making our tools more useful for you. With that being said, here is what is new and improved this month. Let’s dive in!
Granular Automation of Seasonal Sales Spikes
The new automated seasonal spikes feature is officially up and running, available to all accounts. You find it in your Forecast page under the forecasting settings.
With this feature, you can set automatic seasonal ups and downs month to month, bi-weekly, or even weekly, based on past sales curves. SoStocked will find the annual average daily sales for the product, indicate which time periods extend above or below that average, and then you can input trend settings above or below those projections.
Did you launch a new product and you have no month to month sales pattern data on which to base your sales projections? No problem! Select historical seasonal trends for other products within your catalog and use those same trends for your new product. Group together multiple seasonal product trends for more intricate forecasting. Our new seasonality feature will find an average of that grouping to apply to your new SKU.
You can also set different seasonality for each marketplace separately, US, EU, etc. to create the most accurate forecasting for every product in every marketplace.
SP-API – Amazon Far East Marketplace Integration
You might have heard about this new API around the Amazon community. Just in case you don’t already know what it is, here is a brief explanation.
First, API stands for Application Programming Interface. In layman’s terms, this allows 2 applications or softwares – like SoStocked and Amazon – to talk to each other.
SP-API is a new type of API for Amazon. The SP part stands for Selling Partner. SP-API is the next generation or new version of API for Amazon. They have been using MWS (Marketplace Web Service) for years and now they are launching SP-API as an evolution of MWS. The new SP-API is needed for SoStocked to connect with the newer marketplaces such as Australia, India, Japan and Dubai.
Here at SoStocked, we are ready for the new global API. Our international currency and exchange rate options (find out more here) along with this new SP-API, will create a streamlined SoStocked experience for selling across the globe.
We have been patiently (or not so patiently) waiting for Amazon to do what they need to do to allow us to integrate with the new SP-API system. We heard positive confirmation that they have a deadline to get this done by July 31st. So get ready folks, it’s almost here!
It has been a lot of work getting all of the details aligned to integrate Shopify into our system. But the SoStocked development team has continued to work with our beta testers to get this platform into action. There have been some major changes to the software on the back end that will support the new SP-API coming up as well as integration with Shopify and other stores, so you will be able to track sales, shipments and inventory levels for your off-Amazon forecasts too! So stay tuned!
Subtle Improvements to Make Your
🛠 Tool Tip Definitions For All Columns On The Inventory Page.
Tool Tips are the little grey boxes that pop up and tell you what each feature means. Now on the Inventory Page, every column has a Tool Tip so you can take any guesswork out of your reporting. Simply hover your mouse over the column title and the Tip will pop up and tell you what the column means.
💵 We Added Cost Per Unit and Shipping Costs Columns and Filters to Work Orders Page
On the Work Orders page you can turn on columns for Shipping Cost and Cost Per Unit. You can also sort through your Work Orders quickly by using newly added filters to find any items with a specific cost per unit or Shipping Cost.
☝️ Upgraded Entire System Framework To Improve Performance
This is like saying that we just released the new iPhone 15 pro. This new system framework will help the SoStocked system to more seamlessly integrate the next exciting improvements coming down the pipeline.
💨 Improved Document Export Speed For Reports
Get all of the reports you need in a hurry without unnecessary export time. Because ain’t nobody got time for that!
ICYMI: FEATURE SPOTLIGHT
Vote For or Add New Suggestions
Vote For or Add New Suggestions For Our Future Updates Using Upvoty
We have a new tool for future development using an app called Upvoty. It allows you, the user, to vote for, add or expand upon new suggestions for our future updates.
This is vital for our development because as we grow, we get a ton of suggestions. We have to be systematic and democratic about what we assign our developers to, otherwise, they will be “chasing squirrels” and we could miss vital updates and features.
One of our most important resources is you, the seller, and your feedback is extremely valuable to us. Having an organized approach to feature updates by gathering your insights into what is most important to you and exactly how you’d like the features to work means we can build it right the first time and you can more quickly improve your inventory, logistics and profitability processes.
To participate in the future development of SoStocked:
- Log into your SoStocked account
- Using the account menu button on the lower, left, go to “Development Roadmap” and click.
- This will open a new tab where you can vote for your favorite new features, or create a new request.
WATCH THIS HOW-TO VIDEO
We have combined Warehouses and Prep Centers functionally as the same type of vendor for simplicity
For ease of use we combined warehouses & prep centers into one vendor type. This will make your lead times and tracking much more simple. It takes away unnecessary additional columns and any eliminates guesswork out of creating lead times.
Need more information?
- Send Message: We typically reply within 2 hours during office hours.
- Schedule Demo: Dive deeper into the nuances of our software with Chelsea.
- Join Live Upcoming Webinar: New to Amazon inventory management? Learn three inventory techniques you can implement right away.
Amazon Adjusts Fees For Remote Fulfillment With FBA
US NARF sellers, brace yourselves for another fee adjustment! 😁
Those who participate in Remote Fulfillment with FBA, also known as North America Remote Fulfillment (NARF), will see a rate increase starting June 30, 2022. This move is in response to the rising costs of storage, fulfillment, transportation, and customer service across the US, Canada, and Mexico.
😤 The new fee adjustment will also include dimensional weight (DIM weight) to reflect the latest FBA fee structure. This means the greater of the unit weight (aka actual weight) or DIM weight will be utilized to determine your shipping weight and fees for all product size tiers.
Updates to the Remote Fulfillment with FBA Fees
The Table of Fees below shows the latest fee changes:
Based on the new fee structure, here’s how DIM weight pricing will impact your margins.
Let’s assume your large standard size product only weighs 3 lbs, but the dimensional weight is 9 lbs. In that case, you are going to be charged CAD $13.90 + $0.80/lb above first 3 lbs (x6) or CAD $18.70/unit. Before the update, you would only have paid CAD $12.79/unit.
So, with DIM weight pricing, you’re paying Amazon CAD $5.91 (approx. $4.70 USD) more than you’d paid previously. 😦
Using the previous example, shipping a large standard size unit that weighs 3lbs, but the DIM weight is 9lbs is now going to cost you MXN $224.07/unit versus the previous rate of MXN $159.70 (based on unit weight), a MXN $64.37 increase – or approximately $3.30 USD.
Although Amazon says that these rate adjustments are not above industry-average increases for fulfillment services, we all know that being charged based on DIM weight is quite a big deal for sellers with thin margins. 🤔
And as we’ve previously reported, some sellers within our SoStocked community have reported seeing their FBA fulfillment fees climb by $1 per unit. One seller even saw a 94% increase in fulfillment fees. So, if you’re already dealing with slim margins, increases like these can quickly make your products unprofitable.
Related: How to Increase Your Profit Margins
Beware of Automatic Enrollment in Remote Fulfillment With FBA
Amazon may start automatically enrolling sellers into its Remote Fulfillment program. 😦
On the news announcement page, some sellers reported receiving a notification about “Automatic Enrollment in Remote Fulfillment” on the Seller Central home page with the option to opt out before the service goes live.
If you don’t opt out before the start date, your products will most likely become available for sale on Amazon.ca (Canada) and Amazon.com.mx (Mexico), which means added fees!
This auto-enrollment might be a gradual roll out, but it’s crucial to be aware of these things as early as now. Forgetting to opt out of a paid service you don’t need or want could result in Amazon eating into your profits, which is pretty similar to what’s happening with their aging inventory removal services.
In case you’re not aware, Amazon has recently increased their removal/disposal fees, and in April, they said that they will automatically dispose of aging inventory to make room for Prime Day. What’s suspicious about this is that around the same time Amazon raised their removal order fees, they also applied stricter automatic removals, including adding an additional surcharge on aged inventory. 🤔
Overall, Amazon FBA fees continue to climb despite many sellers reacting strongly against the price hikes. I recommend implementing some profit recovery strategies to protect your margins, if passing those fee increases on to your customers isn’t an option right now. 💪
Make sure to also read our blog posts that mention these profit recovery strategies to learn more.
Related: Master Carton Calculator to Optimize Packaging and Reduce Shipping Costs, FBA Fee Calculator to Calculate Profitability, Inventory-Minded Marketing for Amazon Sellers, How to Reduce Excess Inventory
Amazon Removal Order Fees Get More Expensive
In case you missed it, Amazon recently adjusted its Removal and Disposal Order Fee Structure in response to the rising costs. 😩 The price increase took effect on January 18, 2022, but it kind of slipped through the crack for some, as sellers were all up in arms over the impacts of the new FBA dimensional weight fulfillment fees on profit margins. So, that gave a really good distraction to the removal and disposal order fee adjustment.
💡 Let’s shed some light on the significant changes we’ve seen in the new removal order fee structure, which actually go hand-in-hand with the new FBA fulfillment fees changes.
First, let’s take a quick look at this side-by-side comparison of the old and new removal order fees.
As you can see, the updated fee structure is fairly straightforward. There’s a column for size tier, shipping weight, and the corresponding rates – the same details we’ve had years before, except prices have obviously increased at the rate of between 44%-61%. Still, you can come into the page and easily understand the costs associated with removing your inventory from FBA, right? Not so fast!
We wanted to take a closer look because we had a suspicion all wasn’t as it seemed, and, sadly, we were right.
According to the FBA Removal Order Fees page, Amazon uses your product’s Size Tier to calculate your removal or disposal fee per unit.
For removal orders, there are only two product size tiers – Standard Size and Oversize/Special Handling Items.
Here’s where it gets a bit sneaky. Each tier is based on unit weight, product dimensions, and, you guessed it, the dimensional weight of your packaged item. Amazon now factors dimensional weight (DIM weight) into its product measurement categories, a change that directly impacts your removal order fees, which is quite a big deal. And unfortunately, disposal fees are also charged in the same way.
DIM weight pricing is applied when the product’s DIM weight is greater than the unit weight. Packaged items with larger dimensions occupy more trailer space, which carriers could use to fit in more boxes, so they wanted to be compensated for that. That means you’re essentially paying for the amount of space your package takes up when the DIM weight is greater than the actual unit weight.
Suppose your standard-size product weighs 3 lbs, but the DIM weight is 6 lbs. In that case, you’re going to be charged $1.51 + $0.63 per lb above 2 lbs (x4) based on the new fee structure. 😦
Here’s a quick calculation:
$1.51 + ($0.63 per lb x 4) = $4.03 per unit removed
With dimensional weight in this example, you’re paying $1.89/unit more than you would pay just using unit weight.
Indeed, removal fees are getting much more expensive!
Before the price increase, it would have only cost you $0.67 + $0.35 per lb or $1.02 to remove a standard-size item based on unit weight. That is an almost 300% increase in removal fee costs!
The fact that they rolled this out at the same time as releasing the new DIM weight fulfillment fee structure that made so many products unprofitable and then made it so painful to remove that inventory is pretty mind-boggling!
Another thought is that they may be pushing sellers to use liquidation versus removal as the fee structure certainly incentivized that course of action. More on that below.
This is also another reason for sellers not to send all of your new product inventory to FBA immediately. If you are not confident that you will be able to sell through that inventory, holding the bulk of it at a 3PL may be the best move for you. Perhaps that’s exactly what Amazon had in mind with this policy change, making it unbelievably uncomfortable for you to hold dud inventory at FBA. Restructuring your inventory strategy just got that much more vital.
Bottom line is, being charged based on DIM weight could lead to a considerable cost increase for some sellers.
Within the SoStocked community, for instance, some sellers have reported seeing their FBA fulfillment fees increase by $1 per unit. One seller even reported a 94% increase in fulfillment fees. These types of increases are quite substantial for sellers with slim margins.
Think Twice Before Removing Your Inventory
If you have enabled automatic removal of your aging inventory, you might not be aware of the new rates that Amazon is charging you. Interesting that around the same time Amazon increases the removal order fees structure, they also implement more stringent automatic removals. 🤔
Amazon is just whittling away at our profit every way they can. First, these dimensional weight changes. Then, they hit sellers with a 5% fuel and inflation surcharge in April. A few weeks later, they implemented a surcharge on aged inventory. ⚠️
These fee increases are getting out of control. Unfortunately, it’s these tiny little things that will end up really taking a bite out of your profits and making some products unprofitable.
So, before going through removal orders or automating your inventory removals, make sure you’re aware of these new fees so you can run some numbers first. Sometimes, it makes more business sense to try to recover some profit by liquidating your dead stock rather than just shipping it back to you.
Profit Recovery Strategies
If your excess units or slow sellers are still in sellable condition, consider the following profit recovery options:
- Running a flash sale such as Amazon Lightning Deals or Amazon Outlet Deals
- Liquidating slow sellers through the FBA Liquidations Program, which only charges $0.25 to $1.90 (+ $0.20 per lb above first 2 lbs) processing fee per unit, plus 15% referral fee.
However, if none of these options are worth the effort, then your next best move is to create a removal or disposal order for your excess inventory.
Other Ways to Keep Costs Low 💰
If you need to cut costs to offset the added Amazon fees, try to rethink your packaging and shipping practices. It would be best to keep your product packaging compact by downsizing your jar sizes, vacuum sealing to size-down bulky items or in other ways reducing packaging size in order to achieve the smallest dimensions possible.
Then, use our Master Carton Calculator to find your optimal carton and pallet load capacity per order to reduce shipping costs across several different facets of your supply chain.
And if you’re planning to replace your slow sellers with new, more lucrative products, use our FBA Calculator to determine their profit potential. This calculator includes the 2022 Amazon Fulfillment Fees Policy to calculate DIM weight and select the greater of unit weight or dimensional weight, thereby ensuring the accuracy of your fee calculations based on the latest Amazon policies.
Related: Inventory-Minded Marketing for Amazon Sellers, Amazon Restock Limits Tips and Updates, 6 Causes of Amazon Unfulfillable Inventory and How to Fix Them
Amazon Implements Surcharge on Aged Inventory Starting May 15th
⏰ Time to move your slow sellers out of Amazon FBA!
Effective May 15, Amazon will impose an additional storage fee on inventory that has been sitting in its warehouses for 271-365 days. This surcharge will be applied on top of your regular monthly storage fees. Previously, aged inventory fees were charged after 365 days, so this 271-365 day fee window is a new, unwelcome addition for sellers.
Here’s how the aged inventory surcharge will bring about more fees (and burden):
The fee increase may seem small, but when combined with the recent fulfillment fee changes and 5% fuel surcharge, the total costs could be large enough to put an uncomfortable dent in your profits.
With less than 2 weeks until the new surcharge hits sellers, it’s probably best to either put your excess units on sale or use Amazon’s FBA Liquidations Program to recover 5%-10% of its average retail price.
Although you won’t be able to recoup all of your money, liquidation is better than having your excess inventory disposed of or returned to you at an extra cost if you have no means to sell them on other eCommerce platforms.
Most importantly, adopting a system we call Inventory-Minded Marketing can help you to ensure you do not have overstock emergencies at day 271.
Moving forward, try to minimize your storage costs by keeping an eye on all your SKUs in Amazon, specifically slow sellers. Consider using the new Manage Inventory Health report (formerly known as the Inventory Age Report) or your SoStocked dashboards to efficiently manage your FBA inventory. They all provide more up-to-date information than Amazon’s previous reporting systems, namely the Inventory Health, Inventory Age, and Excess Inven