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:
- UPDATED: 60-Minute Amazon Drone Delivery is Now a Reality
- UPDATED: Amazon Wants to Take a Bigger Chunk Out of Seller Profits with 2 New Fees
- Roundup: Upcoming Amazon Changes and Features
- Amazon Tries to Increase Revenue from Existing Shoppers
- UPDATED: Amazon Faces Tougher Scrutiny Under EU’s Digital Services Act (DSA)
- Roundup: New Amazon Features, Updates and Requirements
- UPDATED: Shopify Looking to Integrate with Amazon Buy With Prime
- UPDATED: Battle for Last-Mile Logistics Heats Up as Amazon Expands Same-Day Delivery Network
- Updates to Amazon Return, Refund, and Reimbursement Policy
- Amazon is Testing A New Way to Show Product Reviews
- Amazon Delays Delivery Date Based Reserve Policy for Some UK Sellers After Backlash
- Amazon Working to Bring USPS Ground Advantage to its Buy Shipping Service
- Amazon Feature Updates: 3 New Seller Tools and Product Recall Reporting Page
- FTC Proposes a New Rule to Rein In Fake Reviews
- UPDATED: UPS Workers Ready to Repeat 1997 Mass Walkout Over Pay, Work Conditions
- Amazon Offers New Fulfillment Fee Discounts on Select ASINs
- Sellers Cry Foul Following Amazon’s Decision to End FBA Small and Light
- Aggregator Shakeups and Shifts in Strategy
- UPDATED: Amazon Taps into $100B Retail Media Market, Invests in New & Cutting-Edge Ad Platforms
- UPDATED: Amazon Faces Backlash for Alleged Abusive Practices
- FTC Lawsuit Alleges Amazon of Tricking and Trapping Customers into Recurring Prime Subscriptions
- Clash of the Titans: Walmart and Amazon Battle for Dominance Intensifies
- 4 Major Changes Coming to Amazon
- 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 Acquires Deliverr and Takes Aim at Amazon’s Buy with Prime
- Amazon Warehouse Automation Increases Concerns over Job Loss and Product Selection Inaccuracy
- 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?
- Sellers Feel the Squeeze After Amazon Announces US MCF Fee Hike
- Walmart Launches New Ways to Find and Buy Products
- 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
- 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
- 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
- UPDATED: Claim Reimbursement for Losses Caused by Amazon
- 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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UPDATED: 60-Minute Amazon Drone Delivery is Now a Reality
09/21/2023 (Originaly posted 01/06/2023)
UPDATE 09/21/2023: The Federal Aviation Administration (FAA) has finally allowed UPS and Zipline to fly commercial drones beyond the visual line of sight (BVLOS) of ground operators, a landmark decision that opens up many opportunities for operators, sellers, and consumers.
What is BVLOS?
BVLOS refers to drone operations conducted beyond the direct visual observation of a spotter manning a designated delivery route. Due to safety concerns involved in flying drones outside the visual range, the FAA has set an extensive process for attaining BVLOS approval, which for months has grounded Amazon’s lofty drone delivery ambitions in the US.
Companies looking to get approved for BVLOS drone delivery must submit detailed documentation of their flight operations, including data on their unmanned aerial vehicles. The aviation rulemaking committee then reviews the application and decides whether to grant approval.
Disruptive Potential of BVLOS in Last-Mile Delivery
With BVLOS approval, UPS and Zipline can now fly delivery drones over longer distances with less manpower.
UPS’s Matternet M2 Drone, for instance, can “carry payloads of up to 2 kilograms (4.4 pounds) over distances of up to 20 kilometers (12.4 miles) over urban and suburban environments.”
Meanwhile, Zipline’s Sparrow drone has been approved by the FAA to make BVLOS deliveries without spotters in Salt Lake City and Bentonville, Arkansas. The drone model is designed to unload packages using a parachute.
“This exemption from the FAA represents a monumental shift for logistics and equitable access in the U.S. It builds the foundation for Zipline to scale to deliver food, medicine, consumer goods and other supplies to millions of Americans on-demand, and to do so in an environmentally conscious way,” said company COO, Liam O’Connor, in a prepared statement.
The FAA making widespread use of commercial drones a reality could make last-mile deliveries more efficient for everyone in the future.
For logistics companies and sellers, last-mile incurs the highest costs and consumes the most time. But drones offer the potential to automate delivery and improve wait times, thereby alleviating pressure on drivers to meet unrealistic quotas and mitigating the customer dissatisfaction associated with shipping delays.
For consumers, it could widen their options for ultrafast delivery outside of Amazon’s logistics network, potentially making deliveries cheaper.
In sum, with the aviation authority and drone operators pushing for advancement in BVLOS capabilities, drone delivery is poised to become a feasible and cost-efficient logistical solution to common supply chain issues across various sectors.
Related: Battle for Last-Mile Logistics Heats Up as Amazon Expands Same-Day Delivery Network
Prime Air, Amazon’s drone delivery service, has finally arrived in California and Texas. 🚀
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.
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.
UPDATED: Amazon Wants to Take a Bigger Chunk Out of Seller Profits with 2 New Fees
09/21/2023 (Originally posted 08/18/2023)
UPDATE 09/21/2023: In a rare move, Amazon has dropped its plan to impose a 2% fee on sellers who use Seller Fulfilled Prime (SFP). 🤯
The company had initially scheduled to initiate this fee on October 1st, in addition to the existing 8% to 15% commission it levies on all sellers.
According to documents referenced by Bloomberg, Amazon stated that it based its decision on feedback from SFP sellers, though both some sellers and media outlets finger the pending antitrust suit as a more likely motivator.
In a statement to Forbes, an Amazon rep said that “after careful consideration we’ve made the decision not to implement this program fee to ensure seller sentiment related to the fee does not impact program participation.”
The spokesperson further explained that the additional fee was intended to assist the company in offsetting infrastructure expenses. However, many sellers refused to believe that, telling Bloomberg that the new fee was “as an attempt to pressure them into using Amazon’s logistics services rather than fulfilling orders themselves,” potentially implicating the eComm giant in another anti-competitive practice.
Amazon’s logistics program has been the target of FTC’s increasing antitrust scrutiny, alleging that it is favoring its own products and sellers who use FBA/Prime and disincentivizing non-Prime sellers on its platform. The agency may file suit centered precisely on that allegation later this month, as reported by Reuters.
Related: FTC Alleges Amazon of Tricking and Trapping Customers into Recurring Prime Subscriptions, Amazon Faces Tougher Scrutiny Under EU’s Digital Acts
One week after announcing a Prime Day-like event in October, Amazon decided to spoil the fun by bringing back its seasonal surcharge and imposing an extra fee for those who use Seller Fulfilled Prime.
2023 Holiday Peak Fulfillment Fee for FBA and MCF Orders
From October 15, 2023 through January 14, 2024, a holiday peak fulfillment fee will apply to the following orders:
- US FBA
- Canada FBA
- Multi-Channel Fulfillment
- Remote Fulfillment with FBA
The seasonal surcharge rates remain the same from 2022 for US and Canada, per Amazon. But you will see that the holiday fee has the following significant increases in comparison to fulfillment fees during off-peak:
- Small standard: $0.20 more per unit
- Large standard up to 2 lbs: $0.30 more per unit
- Large standard between 2 lbs and 20 lbs: $0.50 more per unit
- Small oversize: $1 more per unit
- Medium, large, and special oversize: $2.50 more per unit
Some sellers in the comment section of the news post feel like there’s no end in sight to Amazon fee hikes. Meanwhile, others are more concerned about whether paying these extra fees will really get their inventory checked-in on time for the holidays or Amazon’s “just charging extra for the same abysmal service FCs have been providing of late.”
One seller in particular is surprised about the announcement, given that “most customers already shop at Temu for lower prices,” causing their profits to fall. However, “Amazon has not taken any actions other than charging sellers for more expensive rates.”
To minimize the impact of fees on your margins, be sure to read our white paper, Attack of the Fee Stack. This year, more eCommerce sellers and experts have been sharing practical profit-focused advice and solutions to improve margins in the face of these fee hikes.
2% Fee On Each Product Sold for Seller Fulfilled Prime
Amazon has introduced a new fee targeted at sellers who opt not to utilize its fulfillment solutions, aka Seller Fulfilled Prime (SFP). This program lets Amazon sellers sell their products with the Prime badge and offer 1 to 2 day shipping to Prime customers while fulfilling orders from their own storage facility or by teaming up with an approved third-party fulfillment service provider.
The fee hike has caught many sellers off-guard and is perceived by many as a strong-arm tactic (to get them to switch to FBA), especially in light of the impending antitrust lawsuit by the FTC against the eCommerce giant, Bloomberg reports.
In the course of FTC’s investigation, the agency has directed its attention towards Amazon’s treatment of sellers operating on its platform. Of particular interest is Amazon’s practice of punishing sellers who are shipping products themselves by favoring Prime sellers over non-Prime.
Currently, there are expectations for the agency to unleash the said lawsuit which has become almost unavoidable following the recent “last rites” deliberation between Amazon and FTC representatives.
With the FTC intensifying its scrutiny, Amazon’s decision to introduce an additional fee for sellers sidestepping its FBA services and choosing to manage their own product shipments seems rather poorly timed.
Starting from October 1st, SFP sellers will be subject to a 2% fee on every item sold. This is on top of any other applicable charges like the 8% to 15% referral fee.
Ever since its inception in 2015, SFP has enabled sellers to dispatch their products autonomously at no extra cost. However, the recently introduced 2% fee might create a compelling reason to transition towards using Amazon’s own logistics services, as they might now be cheaper than SFP.
In a notice sent to SFP sellers last week, Amazon offered a vague explanation why the additional fee was necessary.
“We’re updating our requirements for Seller Fulfilled Prime to ensure that it provides customers a great and consistent Prime experience.”
However, in communication with Bloomberg, the company stated that the levy would assist in funding the expenses associated with maintaining “a separate infrastructure and measuring its effectiveness.”
Discussing the matter without revealing their identity, an anonymous source informed Bloomberg that SFP sellers were given only a few weeks’ notice about the fee change.
This limited time frame posed challenges for the sellers to accommodate this additional cost, especially considering that they had already procured inventory for the upcoming holiday season, the source further elaborated.
Amazon taking third-party sellers by surprise with sudden policy changes and short adjustment period is nothing new. The online retailer simply has too much control over the marketplace, which is why the FTC stepping in could potentially bring about great changes in the way Amazon or the US eComm industry is regulated.
Recently, Amazon offered concessions to the UK Competition and Markets Authority (CMA) to stop an ongoing antitrust probe. However, FTC Chairperson Lina Khan opposes such legal remedies. This means if the agency wins its long-awaited lawsuit vs. Amazon, it could finally break up parts of the retail giant.
Roundup: Upcoming Amazon Changes and Features
Here’s the latest on Amazon’s suite of products and services, including upcoming changes to the FBA removals policy.
1. Set competitive prices with new Similar Product dashboard
Amazon just launched a new dashboard that allows you to compare the prices of up to 5 similar products being sold on Amazon.com. Think of it as your very own pricing advisor, empowering you to make informed choices that have the potential to boost your sales and maintain your competitive edge.
However, a few sellers question the motive behind the creation of the new dashboard saying it could just be another tool to covertly harvest product data, while others doubt that it’s as useful as Amazon purports it to be.
In the comments section of the announcement page, one seller, listed as SELLC, advises people to “pay attention” to their “desired profits to be earned”, further hypothocizing that you likely won’t see Amazon’s offerings in the dashboard and inferring that Amazon desires slow down sales for sellers by promoting higher pricing, thus encouraging them to make up for it with Amazon ad spend.
Another seller expressed their lack of confidence in the new dashboard, writing “bots are not good enough at identifying ‘similar according to humans’ without a lot of human intervention.”
Moreover, “by using this dashboard, you’ll be creating data for an AI, which Amazon will then use to (poorly) identify similar items. Then Amazon will (a) push customers to cheaper versions of your product, largely from overseas, thereby taking away your sales and further eroding the middle class and (b) require that you match pricing to poorly defined similar products in order to get surfaced on the platform.”
This new feature could be of value to providing insight into what Amazon’s AI considers similar, which may or may not provide insight into some of the other features utilizing a “similar products” method throughout the platform.
However, if the shared opinions of the sellers commenting on the announcement prove valid, this new feature could become a dwindling spiral of lost sales and profits.
If your products don’t sell because they’re not priced competitively, you’ll find yourself buying ads from Amazon to boost search visibility. So, while you’re fixated on keeping your prices slightly higher to stay profitable and managing ad campaigns, Amazon’s own brands and those others with the lowest prices continue to sell around the clock more easily.
Some fairly strong views on this feature but sellers will have to decide for themselves whether they see the value or not.
2. New end-to-end supply chain management across all sales channels
Amazon seems poised to intensify its competition with freight forwarders by unveiling a “completely automated” end-to-end supply chain management service, connecting suppliers directly to sellers through to their customers.
Introduced during this year’s Accelerate, Supply Chain by Amazon features “advanced logistics, fulfillment and transportation capabilities to keep products in stock, ship faster and more reliably, and significantly lower costs.”
The logistics giant claims a 25% cost reduction for cross-border shipping directed towards its Amazon Warehousing and Distribution (AWD) facilities. Now open to all sellers, AWD is a low-cost bulk storage solution that autonomously restocks your inventory to align with anticipated demand levels. You also have the option to distribute your inventory from AWD to multiple sales locations, including physical stores, with the help of Amazon partner carriers.
In addition, AWD is exempted from capacity limits and Amazon’s peak holiday surcharges. Storage savings are a benefit to AWD that shouldn’t be overlooked. During non-peak, AWD is 51% less expensive than standard FBA storage, and 82% cheaper than FBA holiday storage. Long-term bulk storage discounts will also be available to sellers later this year, potentially making AWD 80% cheaper than FBA.
All of this makes it sound like Supply Chain by Amazon is just the polished version of Amazon Global Logistics, because it is!
“Amazon Global Logistics is now part of Supply Chain by Amazon, a fully automated set of services that gets your products from manufacturers to customers around the world,” the company said.
However, expect that Amazon will most likely continue to subcontract a lot of the pickup and delivery services to forwarders and couriers and then take their profits, as they do with their Partnered Carrier Program.
The introduction of Supply Chain marks another strategic move in Amazon’s ongoing efforts to bolster its presence in the logistics sector. This program comes on the heels of some huge developments, including a 10-year agreement with Hawaiian Airlines to operate 10 converted A330-300 freighters and Buy with Prime integration with Shopify and the more recent Amazon Multi-Channel Fulfillment (MCF) App for Shopify.
With this latest deal, Amazon is positioning itself to become one of the premiere fulfillment providers for non-Amazon eCommerce sellers which represents a huge potential toward putting their, in recent years, over-extended logistics and warehousing network to good use and, dare we say, the road to profitability.
Overall, it’s exciting to watch this space and to see what logistics could become over the next several years.
3. Update to FBA removals policy
Effective November 1, 2023, if you’ve selected “Dispose” as your removal option within the Automated Unfulfillable Settings, the scheduling of your removal orders will be determined by Amazon’s capacity considerations. This may include immediate action following the assessment of returns.
Additionally, if you haven’t selected a removal option by November 1st, the default selection will be set to immediate “Disposal.”
While this may help streamline your removal process, one seller is concerned about the possibility of losing the ability to thoroughly check product returns that have been marked as “unfulfillable” by Amazon.
In busy and clogged fulfillment centers such as FBA, mistakes can happen. An Amazon associate could mistakenly tag your products as unsellable. Unless there’s solid proof that your product has been returned by the customer poorly or damaged by carrier, it’s always good practice to maintain some control over your returns so you could still refurbish or repair those in sellable condition.
Try to maintain a regular removal schedule, whether on a weekly or biweekly basis, by going to Automated Unfulfillable Settings, select your preferred return option, and provide a valid return address. This will grant you the flexibility to manually initiate removal orders for your (unsellable) returns at any point before your chosen automated removal date.
Amazon Tries to Increase Revenue from Existing Shoppers
Sellers may soon not be the only ones bearing the brunt of Amazon’s restructuring efforts to boost profits.
The retail giant is reportedly testing a higher free shipping minimum for some non-Prime customers and charging Prime members a fee for in-garage deliveries beyond the designated Amazon Delivery day. While this may help Amazon generate an additional source of income, they (and Amazon sellers) also risk losing customers to competitors that offer surprisingly low prices like Temu, TikTok Shop, and Shein.
Raising the Free Shipping Threshold
In a statement to CNBC, Amazon spokesperson Kristina Pressentin confirmed that the company is testing a new free shipping minimum for some non-Prime members in selected regions.
Non-Prime customers generally have to place an order with a minimum value of $25 to qualify for free shipping. But that changed for some shoppers on August 28, when Pressentin said Amazon has increased that threshold to $35, while “Prime members continue to enjoy free delivery on over 300 million items.”
The new change seems like an effort by Amazon to align its shipping minimums with that of Walmart, perhaps in hopes of attracting a larger customer base to its Prime service that offers free 1 to 2-day shipping and a host of membership benefits for an annual fee of $139 or a monthly fee of $15.
On the one hand, non-Prime customers may start comparing free shipping offers from different sales channels and decide to take their business somewhere more affordable.
On the other, this could be an opportunity for sellers to increase their sales by implementing value creation strategies that will make customers see the worth of buying add-ons or more expensive products to meet or exceed Amazon’s new free shipping minimum.
- Product bundling. Grouping related products for a slightly lower price than buying individually.
- Cross-selling. Encouraging customers to buy items that complement the product they wanted to purchase. For example, a customer adds a $25 French Press Coffee Maker in their online shopping cart. With cross-selling, you could recommend them accessories like a milk frother, coffee mug, espresso brush, or reusable straw to ensure a higher single order value.
- Upselling. Influence customers to buy pricier items or upgrades to increase their order value. Suppose a customer is eyeing that $25 French Press. In that case, you can highlight an upsell offer for a $50 coffee maker that has more advanced features.
Free to Fee: In-Garage Delivery Service
Amazon Prime members currently enjoy free In-Garage Delivery, a service that ensures packages find a secure haven inside garages equipped with Amazon Key openers (accessible via an app), safeguarding them from theft and bad weather. However, this perk is about to change, contingent on the timing of package deliveries.
Starting from October 4th, Amazon is introducing a $1.99 fee for those choosing In-Garage Delivery outside of the designated Amazon Day delivery slots.
As highlighted by reports from The Verge, discontent among members is palpable as posts circulating on Twitter reveal their dissatisfaction with this impending price adjustment, saying “Amazon Key In-Garage Delivery is by far one of my favorite services, but they’re going to charge $1.99 PER DELIVERY unless you choose the Amazon Delivery day option.”
Other customers who commented on the The Verge’s post also share the same sentiment, with one wondering if the change is “bad for Amazon? This was a “safe” option for a lot of consumers and beats dealing with potential package theft when your packages are left outside. I’m not sure what Amazon really wins here outside of trying to force more people to choose their Amazon Day shipping.”
In reply to said comment, one poster wrote “Not completely bad. Just bad for those that want deliveries outside of their designated “Amazon Delivery Day of the week”. So, are you patient or needs things ASAP? ASAP will cost money, like it should IMHO.”
Some customers speculate that the extra time drivers take to access the codes to open garages is slowing down deliveries, which can cost Amazon money.
Delivery is expensive business, so it is no surprise Amazon is trying to get as much juice from the squeeze as possible. In a study conducted by the data validation firm, Loqate, it was found that within a sample of over 140,000 online orders, ecommerce companies experienced an 8% initial delivery failure rate. These mistakes, with an associated average cost of $17.20 per occurrence, collectively incurred a substantial expense of over $193,000 among the 300 companies included in the survey.
In addition to delivery cuts, Amazon has been aggressively reducing costs through job cuts and eliminating excess warehouse space. The company has also recently brought back its holiday peak fulfillment surcharge for FBA sellers and started charging an extra fee for those who participate in the Seller Fulfilled Prime program.
All of this contributes to the effort Amazon has been making in recent years to pull up out of the post-Covid tailspin it found itself in. Time will only tell whether these changes will be good or bad news for the retailer. Unfortunately, unless you factor in the broad possibility of more financial stability for Amazon, we can’t see an angle on this that serves the customer or the seller.
UPDATED: Amazon Faces Tougher Scrutiny Under EU’s Digital Services Act (DSA)
09/06/2023 (Originaly posted 05/26/2023)
UPDATE 09/06/2023: The European Union has intensified its efforts to curb the dominance of Amazon, Alphabet, Apple, Meta, Microsoft, and ByteDance in the region. This move involves the implementation of comprehensive regulations designed to provide consumers with greater choices and level the playing field for fair competition.
According to the Commission, a total of 22 core platform services operated by these six “gatekeepers” have been designated for regulation under the Digital Markets Act (DMA).
The DMA consists of a set of rules, or “dos and don’ts,” that aims to streamline users’ ability to:
- Transition seamlessly between rival services – for example, making it possible for WhatsApp users to send messages to others without needing to be concerned about which messaging platform they are using.
- Retain control over the use of their data for personalized advertising. Gatekeepers must ensure that performance data regarding ad campaigns and pricing information for ads are accessible to business users.
- Exercise a choice in selecting their preferred search engine or web browser rather than being constrained by default settings.
“The most impactful online companies will now have to play by our EU rules,” European Commissioner Thierry Breton said on X, previously known as Twitter.
“DMA means more choice for consumers. Fewer obstacles for smaller competitors. Opening the gates to the Internet.”
This also means Amazon could soon be prohibited from ranking their own in-house brands or services higher than their competitors in search results pages, as covered in the “don’ts” section of the DMA.
The retail giant already started providing European shoppers with more choices when it settled antitrust investigations by agreeing to giving sellers equal treatment on the platform’s Buy Box and adding another “buy box” with a different delivery option or price for the same product.
To enforce compliance, fines of up to 10% of the company’s global revenue loom overhead, and there’s even the potential for the tech giants to begin to divest specific segments of their operations in order to secure their foothold in the European market.
DMA is set to take full effect in six months, during which the six gatekeepers will be required to communicate their strategies for compliance with the digital act to the Commission.
Related: Amazon Faces Backlash for Alleged Abusive Practices, FTC Lawsuit Alleges Amazon of Tricking and Trapping Customers into Recurring Prime Subscriptions
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.
Roundup: New Amazon Features, Updates and Requirements
Amazon constantly announces new seller tools and product listing requirements. Here’s our latest roundup post to keep you updated. 💪
- Track your FBA Shipments from China with ShipTrack Carriers
This announcement is for sellers who use non-partnered carriers for their China-to-US shipments, but often encounter difficulty in accurately tracking their inventory, which could be due to poor data provided by their preferred carrier.
Without reliable data providing insights into the location of your inventory, it is hard to anticipate when it will arrive at an Amazon warehouse and get checked-in, turning marketing planning and stockout avoidance into very real challenges.
To make cargo tracking from China to US easier, Amazon is now offering ShipTrack, a pickup and delivery service that offers access to a selection of company-vetted carriers and a track and trace system. Other product features include a dispatch system, proof of delivery, chain of custody, and last-mile delivery support.
Similar to the Amazon partnered carrier program, ShipTrack automatically generates the carrier and tracking information for you (and Amazon) in Seller Central. That means you may no longer be required to manually submit such information before shipping your goods from China to an Amazon fulfillment center in the US, allowing you to be more efficient in your inventory order process.
In addition, employing ShipTrack’s “reliable tracking information” greatly enhances Amazon’s ability to predict the arrival of your shipment at FBA, thereby refining the accuracy of estimated delivery dates. This elevated level of shipment tracking also empowers you to make smart restocking decisions to minimize overstock fees and mitigate losses due to stockouts.
While this development sounds like excellent news for sellers who source goods in China, it’s not well-received by some of those who make (and sell) their own original products in the US and who are often, the target of China-based counterfeiters.
“Hooray for supporting China shipments into the US. How about Amazon working harder to keep the fake sellers, bad actors off of Amazon permanently? This is where the focus needs to go stop these people from ruining honest sellers brands and accounts,” commented one seller on the news announcement page.
But alas, “the platform makes too many dollars to remove Chinese sellers or products,” another seller said in reply to the above comment.
In fact, by the end of Q4, ShipTrack will be accessible to even more sellers, specifically those who ship goods from China to Japan and Europe.
To learn more about the new cargo tracking service, go to Send to Amazon: ShipTrack.
2. Orders Older than 2 Years to be Archived Starting in September
A new file management process has been implemented by Amazon wherein customer orders older than two years will be systematically archived every month.
This move is part of Amazon’s data security measures to protect customers and their personal data from bad actors.
According to Amazon, certain data fields will be removed from the archived orders, such as the buyers’ personal information – names, contact numbers, addresses, and accompanying gift messages. Meanwhile, less-sensitive information like the date of purchase, product name, ASIN, quantity, price, tax, shipping fee, and sales channel used will be retained.
⚠️ Moving forward, if you need personally identifiable customer details to meet accounting or taxation requirements, consider developing a system of regularly downloading order files as older orders are continually being archived.
Go to Archived Orders for more details.
3. New Product Listing Attributes Required for New Listings
Starting September 12, 2023, providing these new attributes will be required when creating new listings, or else the product will not be added to your product catalog. Amazon believes that adding relevant attributes to your products can help increase sales, as they “make it easier for customers to search for product information that improves their purchase decisions.”
For example, Amazon just added the following attributes for baby bottle products so that shoppers can quickly find and buy the one that suits their specific needs. They can now search baby bottles by age range, item weight, capacity, bottle type, bottle nipple type, color, or dishwasher safety feature and listings containing any relevant details will likely show up on the customers’ search results pages.
|Product Type||Attribute Name|
Although not required, updating a listing with new attributes may be ideal to enhance your product’s visibility and discoverability on Amazon. Make sure to follow the steps correctly, e.g., provide all the necessary product information, to avoid listing suppression, which can affect sales and also lead to products getting stranded at FBA, hurting your IPI Score.
For sellers with numerous product listings, this process could be complex and time-consuming, and thus prone to error.
One seller commenting on the news post said, “Stop this new required attributes madness! I just spent the last hour trying to fix Amazon’s required attribute errors for the product I always list. I have been selling on Amazon for years. Every new Amazon update is a mine field for us sellers new and old.”
Amazon recommends visiting Error code explanations to fix listing errors. As usual, sellers are left to fend for themselves when trying to make things work after an update.
A full list of attributes can be found via Amazon’s attributes spreadsheet (instant download).
UPDATED: Shopify Looking to Integrate with Amazon Buy With Prime
UPDATE 08/30/2023: 📣 It’s official! Shopify announced on Wednesday that Amazon will release Buy with Prime in the platform’s app ecosystem, marking a ceasefire between the two eCommerce giants.
For Prime customers, this collaboration holds the potential for a more dependable checkout and delivery experience across a wider array of retail brands outside of Amazon.
For some sellers, this announcement may come as a surprise after Shopify cautioned its merchants against attempting integration of Buy with Prime on their respective online stores, citing breaches of its terms of service and the emergence of security vulnerabilities.
The subtleties surrounding this app integration provide insights into concessions orchestrated by both companies.
Customers who log into their Amazon Prime accounts on a Shopify store equipped with the “Buy with Prime” feature can choose to utilize a payment mechanism linked to their Amazon wallets. Yes, Amazon Pay will be added as another payment option within Shopify.
However, instead of Amazon Pay, the payment processing will be handled by Shopify’s checkout system, allowing the company to:
- Keep the entire or a portion of the revenue generated by processing Prime orders within Shopify Checkout. It’s unclear whether both parties entered into a revenue sharing contract, where the income made from Buy with Prime transaction fees on Shopify is split between the two companies.
- Help Shopify sellers “maintain 100% control of their brand and their customer data in Shopify’s admin,” the company said in a statement. 👏
The program rolled out on August 30, initially catering to selected sellers on Shopify’s platform. By the end of September, it will become accessible to all Shopify sellers interested in leveraging Amazon’s extensive fulfillment network, Amazon said.
With Shopify out of the way, Amazon now stands to capture more non-Amazon merchants via wider Buy with Prime adoption, while existing sellers face increasing competition and fulfillment fees.
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.
UPDATED: Battle for Last-Mile Logistics Heats Up as Amazon Expands Same-Day Delivery Network
08/25/2023 (Originally posted 3/3/2023)
UPDATE 08/25/2023: Amazon has relaunched a shipping service that it temporarily suspended during the initial phases of the COVID-19 pandemic. This move intensifies the ongoing last-mile battle involving Amazon, legacy carriers UPS and FedEx, and even major retailers Walmart and Target that are venturing further into the realm of ultrafast delivery.
What is Amazon Shipping?
Amazon Shipping offers ground delivery services from pickup to delivery for FBM sellers. This means the service will be available to items sold on Amazon.com and other online sales channels.
According to Amazon, it’s “working closely with USPS” to deliver packages in 2 to 5 days within the contiguous US. As can be recalled, the company recently announced its ongoing efforts to integrate USPS Ground Advantage (GA) with Buy Shipping, a label service where sellers can conveniently buy shipping labels for various carriers and track shipments.
Purchasing USPS GA labels through Buy Shipping can potentially help sellers save money (with Amazon’s pre-negotiated rates) and cut down ground delivery times from 8 to less than 5 days.
The relaunch also came after Amazon hit its “fastest Prime delivery speeds ever” and subsequently announced its plans to expand the number of same-day delivery facilities over the next few years.
Through the revival of Amazon Shipping and same-day site expansion plans, the retailer positioned itself to seize greater control of the delivery window, and thus offer 1 to 2-day delivery for Prime and up to 5 days for non-Prime shoppers and sellers, rivaling UPS (which has 24% of the US shipping market) and FedEx (16%).
All of this may be part of a larger effort to attract more non-Amazon sellers to its growing fulfillment network while providing existing FBM sellers with a streamlined shipping solution for their shipments. And to an extent, this holistic approach also allows Amazon to reduce its dependence on UPS, which already placed shipping limits on the company last year.
Related: Amazon Wants to Take a Bigger Chunk Out of Seller Profits with 2 New Fees
UPDATE 08/01/2023: It looks like Amazon is succeeding in trying to make same-day delivery the new norm. 🏆
During the first half of 2023, Amazon has delivered over 1.8 billion items to its US Prime members within the same or the subsequent day. That’s nearly a fourfold increase compared to what the retailer achieved over the same time period in 2019, said Doug Herrington, CEO of Worldwide Amazon Stores.
Herrington says that part of this remarkable feat is down to the restructuring of Amazon’s fulfillment model: moving from a national fulfillment network to a regionalized network model.
Approximately 76% of US orders came from their eight interconnected regional warehouses. Each of these regional warehouses has a vast selection of items to accommodate immediate delivery of customer orders in nearby areas while still being able to ship products to distant locations when necessary.
Aside from restructuring, Amazon has also streamlined its last-mile delivery process by taking same-day sites closer to bigger cities and recruiting local small businesses in rural areas as delivery partners. This way, certain products have even shorter distances to travel, allowing Amazon to offer ultrafast delivery while reducing transportation costs.
Per Herrington, “millions” of items are available for same-day delivery across 90 major US cities, with more set to follow.
To build on this initial success, Amazon plans to open more same-day sites in the next few years.
According to Herrington, Amazon’s same-day facilities “are designed for speed with smaller footprints, streamlined conveyors, and picking directly to pack stations.”
And while these hybrid warehouses are smaller than your typical million-square-foot Amazon fulfillment centers (FCs), they are filled with products that customers regularly buy.
As a result, it only takes Amazon associates 11 minutes to pick, pack, and ship customers’ orders in same-day sites, which is “more than an hour faster than traditional fulfillment centers.”
Amazon doubling down on its same-day network expansion plans only means Prime orders will come faster (e.g., from several hours down to just two hours) to customers in the near future. If living close to drone delivery centers, it may even be possible to get certain items (under 5 lbs) delivered within 30 minutes.
While this bodes well for both customers and sellers, top retailers like Target and Walmart boasting their own fulfillment network will be sensing escalating competition as their battle for last-mile dominance with Amazon rages on.
UPDATE 07/13/2023: A few weeks after Walmart introduced its new order fulfillment network, Amazon announced they’re seeking 2,500 small US businesses to join Amazon Hub Delivery. This new local delivery service appears to be another piece of the puzzle in the company’s last-mile network.
In February, the retailer opened several same-day delivery sites across major cities in the country. A couple of months later, CEO Andy Jassy confirmed Amazon has overhauled its logistics operations from a national fulfillment service model to a regionalized model to speed up deliveries and lower costs.
To improve delivery efficiency in their target regions, Amazon is currently recruiting small businesses such as dry cleaners, coffee shops, salons, flower shops, gas stations, fashion boutiques, grocery stores, and auto service centers, among others. These businesses have a profound knowledge of local roadways and neighborhoods, making them a great addition to Amazon’s existing network of third-party couriers and contractors.
Amazon aims to recruit 2,500 businesses in 23 states, specifically rural areas, by the end of 2023 and in a later phase, expand the deliveries to bigger cities like NYC, Seattle, Boston, and LA.
How Amazon Hub Delivery works
- Delivery partners will receive Amazon packages each day.
- Delivery partners will have the flexibility to make deliveries when they’re available.
- Finally, get paid for every package delivered.
Amazon is looking for partners who can deliver 20 to 50 packages every day. The exact compensation details have not been disclosed, but small business owners have the potential to earn an annual income of up to $27,000 through Amazon’s new local delivery service.
Based on a delivery partner’s projections, a company that manages to deliver an average of 50 packages per day could potentially earn around $2.50 for each package delivered. However, this amount may not be good enough for some businesses that take several hours to meet their delivery commitments.
For instance, vehicles are likely to endure significant wear and tear from driving on rough roads for up to 5 hours per day, requiring tire replacements frequently. And as more nearby businesses participate in the program, the volume of daily packages may decrease, impacting a business’s earnings adversely. Interested delivery partners should take their availability, assigned route (traffic and road conditions), and operating costs into careful consideration before joining the program.
It may be a good fit for businesses that have gaps in their normal delivery schedule. In that case, making Amazon deliveries may be a good way to subsidize income and maximize employee productivity.
It will be interesting to see how this program develops but it is a smart idea to leverage under-utilized, available resources much in the way Uber and Airbnb have done.
UPDATE 06/13/2023: Walmart may have figured out how to beat Amazon and Target in the last-mile eCommerce department – building automated compact warehouses within its physical stores.
In April 2021, Walmart announced a new order fulfillment network called Market Fulfillment Center (MFC). It is a small warehouse “built within, or added to, a store” and equipped with an automated item retrieval system called Alphabot.
Robots retrieve the products from within the warehouse and then bring them to a sorting station manned by an associate. The associate then collects and prepares the sorted items for courier delivery or customer pickup.
Presently, Walmart customers expect free 2-day delivery when shopping online. The implementation of MFCs is set to revolutionize the company’s daily order fulfillment speed and capacity.
According to the retailer, Alphabot can retrieve items 10x faster than a person, which can make the whole fulfillment process span only a few minutes, commencing from the time the order is submitted to the point at which it becomes available for the customer or delivery driver to collect.
Once deployed nationwide, MFCs, combined with a robust drone delivery system that’s currently available in 7 states and a growing driver program, could potentially put Walmart’s last-mile service on par with, if not better, than Amazon’s 1 to 2-day delivery promise.
But that is still a few years down the line, as out of 3,561 Walmart supercenters in the US, only two have an MFC built within them so far. The company piloted the program in 2019 in Salem, New Hampshire and four years later, opened its first official MFC in its Bentonville supercenter store in Arkansas.
This gives Amazon a lot of time to catch up or get ahead of Walmart’s MFCs, unless they continue to cut costs, which could delay such progress.
Overall, retail giants doubling down on their same-day expansion plans is good news for customers, as this could mean faster delivery times or more accessible pickup locations in the near future.
For sellers, this presents a better opportunity for them to explore Walmart as an additional sales and distribution channel, especially if the sellers’ goal is to reach grocery shoppers.
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 number of packages (vs. sedans). The effectiveness of these larger vehicles has been put to the test by the company, which 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.
Updates to Amazon Return, Refund, and Reimbursement Policy
08/24/2023 (Originally posted 10/01/2022)
Update 08/24/2023: Currently in invite-only beta, Amazon introduced a new feature that allows some select sellers to disable the evaluation of returns, giving them more control over the return process. This means sellers no longer have to rely on Amazon’s evaluation of a returned product’s condition, which is not always accurate.
🚩 Imagine a customer receiving a damaged or counterfeit product because an Amazon associate did not carefully check the returned item. An upset customer may choose to leave a negative review that will not only dent your reputation and Amazon order defect rate but also profits – Amazon does not reimburse customer-damaged units.
👌 By disabling returns evaluation, Amazon will automatically mark returned products as “unfulfillable,” instead of putting them back to your available inventory to be sold again. You may then create a removal order so that Amazon can return the items to your warehouse. From there, inspect the returned products yourself and decide whether to resell or dispose of them.
Note: Think twice before opting to have Amazon automatically get rid of returned orders for you. Some sellers lack confidence in the retailer’s ability to properly dispose of unwanted or damaged goods, saying that these items will somehow find their way onto pallets and be auctioned off on an inventory liquidation site or sold at a flea market.
Preserving the integrity of your brand, especially higher-end products, is crucial. The thought of these damaged goods re-entering the market troubles artisan sellers that they would rather cover the removal fees, recover whatever is salvageable, and recycle what they can.
How to disable evaluation of returns?
- Log in to your Seller Account > FBA Inventory Evaluation Settings > Click Disable
- Choose Disable Returns for All ASINs or Disable Returns for Select ASINs
- Click Update
Visit FBA Inventory Evaluation Settings or read the Terms and Conditions for Disabling Returns Evaluation for more details.
Related: Claim Reimbursement for Losses Caused by Amazon
Update 06/15/2023: In an email, Amazon announced they’re introducing a revised reimbursement policy for Multi-Channel Fulfillment (MCF) in the US.
Effective from July 15, 2023, the maximum reimbursement limit for eligible units lost or damaged during the fulfillment process will be set at $300 per item. This adjustment ensures that MCF’s reimbursement policy remains consistent with prevailing practices within the industry.
You may file your claim for reimbursement on eligible MCF orders no more than 90 days after the promised or estimated delivery date. You can monitor the status of your existing claims by going to your Amazon Fulfilled Inventory report or the Payments dashboard.
Amazon has not shared the formula for calculating a product’s reimbursement value, but per company policy, the goal is to provide a (cash) reimbursement amount that aligns with the estimated proceeds (minus MCF fees) you would receive from selling your item.
Note: In the event that Amazon stumbles upon your lost units one day, they may nullify the cash reimbursement by deducting it from your forthcoming deposit. They will also reinstate your lost units into your inventory, thereby granting you the opportunity to sell said items once again.
In cases where Amazon lacks sufficient data to calculate the estimated sale price using multiple price indicators, they will assign an approximate value based on the price of a similar product. Occasionally, an Amazon rep might also request additional information or documentation from you to assist them in determining the reimbursement value accurately.
If the value of your item exceeds the max reimbursement amount, Amazon recommends purchasing third-party insurance for additional coverage. But if Amazon frequently loses your inventory, it may be worth taking your fulfillment needs elsewhere, especially if you sell a lot of high-value items. For instance, you may want to consider fulfilling luxury goods through a different 3PL provider with better reimbursement coverage and only leave products below $300 up to Amazon MCF or FBA.
Be sure to read this blog post to learn how to minimize lost or damaged inventory.
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.
Amazon is Testing A New Way to Show Product Reviews
Amazon is currently overhauling its product reviews system amid FTC’s pending rule on fake reviews.
In a recent blog post, top-100 Amazon seller and Zulay Kitchen Co-Founder Aaron Cordovez calls to attention the new review formats that Amazon is A/B testing to possibly find a better way to display key customer reviews stats like review count (number of reviews, e.g., 1,000) and overall product star rating (ranging from 1 to 5 stars) on its search engine results pages (SERP).
As Cordovez lays out, these are the major changes being seen by some customers on Amazon’s platform.
Test #1: Removing Review Count
Amazon has always featured product review count typically expressed in complete format (2,000; 20,000; 200,000) on search. However, in one of its A/B tests, review volume was hidden, which may not be a smart move.
A high review count is an essential metric that helps paint a picture of a product’s quality and size of customer base, thereby increasing the likelihood of shoppers to purchase.
A PowerReviews survey shows 80% of customers are less likely to purchase a given product if it has zero reviews. This impression most likely impacts new (though not necessarily inferior) products on the market, possibly giving Amazon a reason to hide review count to somehow level the playing field.
Cordovez himself believes that “Amazon wants to test if there is a better way for new products to be discovered. This is a bullish sign for innovative products and more creative minds re-imagining the E-commerce space with better products.”
Removing review count may also help shift customers’ attention to “total units bought in past month,” which would be another way to create a positive first impression of your product.
Cordovez speculates that if a product with thousands of reviews from several years ago has gone stale, then letting customers rely on review count when making purchase decisions may not be a good idea.
“Number of units purchased last month gives much stronger social proof. It is taking away stale products from Amazon’s catalog,” Cordovez explained.
In terms of its impact on combating fake reviews on Amazon, there’s an upside and downside to hiding review count. On the upside, customers will be less likely to make purchase decisions based on this metric that can be easily inflated with fake reviews and review hijacking, essentially weakening the influence of these black hat tactics on consumer behavior.
On the contrary, Amazon could use this approach to make it difficult for ASIN alert tools and perhaps even antitrust watchdogs to track changes in review count during a particular period.
As previously reported, we noticed in April that on some of Amazon’s own Basics line products, hundreds of thousands of reviews were removed overnight. It remains unclear whether the reviews purge included authentic low-star reviews or false positive reviews or was in any way motivated by a desire to avoid possible pending violations and penalties in the face of the potential FTC rule change on reviews.
Test #2: Changing the Review Count Format
Perhaps seeing how removing review volume altogether may negatively impact long-term sellers’ conversion rates, Amazon seems to be considering another alternative:
- Changing the unabridged review count format to % of 4 or 5-star customer reviews
- Replacing 5 review stars rating format with a single star icon while an inconspicuous drop-down menu button is provided to enable full view of a product’s customer star ratings.
The initial version displayed products with a percentage of 4+-star customer reviews, but as currently seen on Amazon search results pages, the reviews system now shows products with a percentage of 5-star reviews instead, irrespective of product type, total units bought in past month, and overall star rating. See example below.
On the one hand, this new format gives more weight to positive customer reviews, which could potentially help you generate more clicks.
On the other, less discerning customers or those that don’t have time to read online reviews and just rely on initial information presented may be misled to think they’re buying a high-quality product with that 5-star review percentage. They may overlook the actual lower star reviews and simply focus on the 5-star %. If the new format makes some customers less likely to spend time reading online reviews, it also increases their chances of falling victim to products with fake positive reviews or falsely inflated overall star ratings.
In contrast, other customers may think that a product that has a high 5-star review % may be too good to be true, forcing them to seek out negative reviews.
Additionally, Amazon has also replaced the legacy 5 review stars format with a single star icon. At first glance, it appears you’re looking at one-star products, which some customers may find off putting.
To fully view a product’s customer star ratings (and facilitate smarter buying decisions), customers will have to hover their cursor over the small drop-down menu button next to the single star icon.
Test #3: Hiding Product Star Ratings
Product Review Rating number is hidden but the star visual presentation is retained to still provide some form of social proof.
Amazon may be testing how the star rating format (full or half stars icon) versus rating numbers (2.5, 3.7, or 4.8 out of 5) influence product preference.
This paper suggests that when looking at star ratings with a half star representing a decimal point, “consumers perceptually fill in the missing fragment by extending the yellow retained area to cover the grey cutout area.”
Interestingly, the “perceptual fill-in of the missing part of the rating unit will upwardly extend the decimal to the nearest integer [whole number, e.g., 4.0] and result in a visual rounding-up of the rating. Consequently, the non-rectangular (star) rating format will make the focal product seem more favorable.”
Test #4: Changing the Review Counter to Estimated Number of Thousands (27.2K instead of 27,220)
The review system appears largely unchanged, except for the review counter, which now displays estimates with a “K” plus indicator which means thousand(s) instead of the exact review number. One seller in this discussion board believes this downplays the significance of presenting the review count in full.
This change may again have something to do with how certain visual presentations influence customer buying decisions or simply optimizing the review stats section for improved user experience.
Sellers Weigh in on the Issue
In the comment section of Cordovez’s Facebook post regarding the matter, one seller summarizes this whole A/B testing best, “the new test version gives all the advantage to new sellers, and removes all advantages of being a long term, relevant player in your niche.”
Another seller who has products that have more than 3,000 reviews also expressed concerns about increasing competition. Someone with three 5-star reviews (which, therefore, may appear as 100% 5-star review score on search) could have a better chance of selling or landing on prominent sections of search results pages than seasoned sellers with 88% 5-star review percentage, for example.
In this Reddit post, most sellers expressed dislike toward the new formats, with some saying “conversions will drop” and they “will only benefit products with fake reviews more than others.”
One seller offers a cautiously optimistic view on the anticipated reviews shakeup, saying it is “good for new brands, but limits older brands. But if your product is good, it doesn’t matter.”
When all is said and done, according to Cordovez, Amazon could re-adopt the traditional reviews system, or perhaps just modify the review count to reflect the number of thousands. Alternatively, the company might completely revamp the system, concealing either the review count or the overall product star rating. Many sellers are sure to be well-engaged in observing how all of this unfolds.
Amazon Delays Delivery Date Based Reserve Policy for Some UK Sellers After Backlash
In response to strong criticism from UK sellers who feared potential business closures, Amazon has decided to implement its revised payment schedule gradually, the Guardian reported.
Last week, the eCommerce titan announced that it would no longer provide instant credit to UK and EU sellers upon the completion of an online sale. This is to help Amazon ensure that sellers will have enough funds to cover the cost of customer returns or claims.
Under the new arrangement, however, sellers will encounter a delay of one week between the product being delivered and the receipt of their funds, also known as Delivery Date Based Reserve.
Suppose you ship an item on August 17, and the delivery date is August 20, then the sale proceeds will be available for disbursement starting August 27. Previously, sellers faced a waiting period of around three days for the money to become available in their accounts, but because of the new reserve policy, many may have to endure a 7-day (or longer) wait after delivery before gaining access to the funds.
This rule change has triggered concerns about the viability of many Amazon businesses. For small sellers, for instance, having to wait 7 days to receive their money could lead to difficulty in paying employees and loans.
In an email sent out to affected sellers four months ago, Amazon itself acknowledged that implementing the Delivery Date Based Reserve policy may result in “a one-time cash flow disruption.”
However, according to BBC, some sellers said that “this email was not clear, or in many cases, went to their junk mail folder,” leaving them totally unprepared when the new policy finally took effect on August 3.
Consequently, some UK sellers turned to their Members of Parliament (MPs) for help. A UK government minister has reportedly started demanding Amazon for answers.
Following growing pressure from both sellers and the UK government, Amazon told The Guardian it was postponing the policy change for some sellers until January 31, 2024. The retail giant specifically said it was “extending the transition date for a small number of sellers who have contacted us and need support.”
However, one seller believes that this move only delays the inevitable and that their business could still go under, thanks to the 7-day cash flow disruption.
That said, preparation is key to minimizing the rule’s impact on your cash flow. Ensure you have sufficient funds to cover any disruption to your earnings. You may also want to consider short-term financing options, if needed, though, as always, be well-informed of the terms of any funding you accept.
It would also be wise to keep an eye on your customer orders and their actual delivery dates. Depending on carrier and shipment options (standard or expedited), it might take your carrier up to 5 days to get items delivered.
In that case, if it is under your control, calculate the difference between the cost of using same-day or next-day delivery service providers and the potential impact of cash flow disruption on your business. It might be worth paying extra for faster delivery speeds than delaying inventory orders for Christmas because you couldn’t access your funds on time, for example.
It could also be worth taking a bit more action than that as, currently, Amazon is “listening to sellers’ concerns and is in contact with those who have experienced a one-time cashflow disruption,” as reported by The Guardian.
Consider reaching out to Amazon or contacting your MP to express your concerns. A large number of complaints could force the retailer to take similar action as Etsy did. The online crafts marketplace recently had to revise a policy that held back up to 75% of some UK sellers’ earnings for 45 days to appease those that initiated a boycott against the platform. Presently, Etsy expects that the standard withheld amount will now be around 30%.
Amazon Working to Bring USPS Ground Advantage to its Buy Shipping Service
In a recent announcement, Amazon revealed its ongoing efforts to incorporate USPS Ground Advantage (GA) into Buy Shipping, a service that allows FBM sellers to purchase and print shipping labels for orders they receive from shoppers on Amazon. This service helps sellers save time and effort by integrating the label purchasing process directly into the Amazon platform.
We’ll take a deeper dive into USPS’s newest shipping solution and see how it might benefit your Amazon business, plus a few tips to help you deal with unexpected hiccups during this transition period.
What is Ground Advantage?
Launched on USPS on July 9, GA is a new service offering that rolls First Class Package Service (for letters and parcels under 1 lb), Parcel Select Ground (for packages weighing between 1-70 lbs), and Parcel Select Cubic (priced based on parcel dimensions) into one.
That means you will now be able to ship items that weigh up to 70 lbs through a single USPS ground delivery service.
Previously, USPS business customers such as Amazon FBM sellers who buy and print shipping labels with an online postage service provider had to use different service options for different types of shipments and sizes. For example, First Class for letters and lightweight parcels and Parcel Select or Priority Mail for medium and large items, causing seller confusion and indecision.
Aside from offering a streamlined shipping option, USPS also sweetens the pot by adding these benefits:
- Up to $100 insurance
- No fuel or residential surcharges
- Available for shipping hazardous materials (HAZMAT)
- Package forwarding and return-to-sender endorsements are included for all USPS Ground Advantage shipments
Pricing by Weight and Zone
For packages weighing less than a pound (previously known as First Class Package), rates will be determined at 4-oz increments (4 oz, 8 oz, 12 oz, and 15.999 oz). Rounding up to the nearest tier also applies. For example, if your parcel weighs 3.5 oz, then you’ll pay the 4 oz price.
For packages weighing over a pound, rates will be calculated in 1-lb increments, extending up to 70 lbs (aka Parcel Select Ground). There will also be dimension-based cubic rates for weights over 1 lb, previously known as Parcel Select Cubic.
2 to 5-Day Delivery Promise
USPS is also making use of its “improved service standards and modernized operational structure” to increase delivery speeds across 50 US states. GA promises 2 to 5-day delivery within the continental US, which is as fast as First Class and faster than the previous standard of up to 8 days for Parcel Select.
To provide you with greater savings, GA rates will be lower compared to its previous offerings, with the legacy carrier looking to the new ground delivery service as a way to boost profits after posting a $2.5 billion net loss and lower parcel volume in Q2 2023.
In a statement dated May 10th, USPS said that the “published prices for GA will decrease 1.4% relative to current Parcel Select Ground and First Class Package Service pricing. USPS Ground Advantage Retail prices will decrease by 3.2% and USPS Ground Advantage Commercial published prices will decrease 0.7%.”
Presented below are the changes in commercial pricing for Ground Advantage in contrast to First Class Mail Package, Parcel Select Ground, and Priority Mail services.
|Ground Advantage||First Class Mail Package||Parcel Select Ground||Priority Mail|
|Delivery speed (days)||2 to 5||1 to 5||2 to 8||1 to 3|
|Insurance||$100; you can buy additional insurance coverage up to $5,000||$0; No for letters (unless you buy certain other add-on services)||$0; but you can buy external insurance options||$100; you can buy additional insurance coverage up to $5,000|
|Package pickup||Included||Included||Not included||Included|
|Commercial Pricing as of July 9, 2023 (4 oz)||$3.59 to $4.13 (from Zone 1 to Zone 9)||Large envelope: From $1.551(4 oz) to $3.711 (13 oz)||N/A||Flat Rate Envelope: From $8.05|
USPS Mailing Box (Flat Rate): From $8.55
Your Own Box By Weight/Zone: From $8.55 to $45.07
|Commercial Pricing (15 oz, Zone 1 to Zone 9)||$5.85 to $6.78||N/A – Max weight is 13 oz||From $2.84 to $5.06 depending on destination entry||$7.64 to $18.03|
|Commercial Pricing (3 lbs, Zone 1 to Zone 9)||$7.17 to $11.43||N/A||$3.91 to $6.17 depending on destination entry||$8.43 to $37.43|
|Commercial Pricing (10 lbs, Zone 1 to Zone 9)||$9.38 to $18.73||N/A||From $4.70 to $9.02 depending on destination entry||$10.82 to $91.62|
|Pricing (up to 0.20 cubic, Zone 1 to Zone 9)||$6.32 to $8.03||N/A||$7.07 to $10.12||Large envelopes and Parcels: $8.23 to $27.59|
|Pricing (up to 0.50 cubic, Zone 1 to Zone 9)||$7.52 to $13.15||N/A||$7.36 to $13.66||$8.74 to $56.29|
|Pricing (1 cubic, Zone 1 to Zone 9)||$9.45 to $18.82||N/A||$9.30 to $17.68||N/A|
First Class (1C) and Parcel Select (PS) may be cheaper than Priority Mail (PM), but they come with certain disadvantages.
While 1C’s delivery speed is faster than PS, it offers limited shipping weight options, requiring you to shift to other services that have a higher max weight limit. You could opt to use Parcel Select for heavier packages over Priority Mail to cut costs, but you’d have to sacrifice delivery speed. Plus, PS doesn’t come with built-in USPS insurance.
By merging 1C and PS into Ground Advantage, however, USPS presents a competitive shipping alternative in contrast to Priority Mail. You could see savings of as little as $1 to as much as $43 per package, specifically in larger cubic shipments. This could be huge given how FBA fees have substantially increased in the last two years, mainly due to dimensional weight pricing and surcharges.
Not only does GA come with $100 insurance and decent delivery promise (albeit depending on destination and time of year it could be slower than 1C and PM), it also employs a pricing structure that adjusts according to weight, zone, and dimensions. That means you could get affordable rates for shipping compact packages over shorter distances.
Conversely, rates may go up for longer or larger, lightweight items like pillows and tiki torches, as they take up more space. Being charged by dimensional weight (plus any applicable non-standard size fees) rather than your product’s actual weight can lead to higher shipping costs that can cut into your profits, unless you implement a price hike or resize your packaging to get to a lower size tier.
Another workaround is to buy USPS labels through Amazon, Shopify, ShipStation, or Pirate Ship to potentially save on fees. These online shipping label providers offer negotiated rates that are typically lower than the published rates.
Amazon, for instance, recently announced it’s now offering the lowest commercial USPS rates available, with an average of 35% off USPS Ground retail rates.
Pirate Ship boasts even bigger savings. Its USPS Commercial Pricing offers discounts “up to 89% off what you’d pay at the Post Office.”
Check out the full USPS price list here.
A Few Caveats
While some sellers may like the fact that they can now ship heavier packages without having to go the Priority Mail route, which is more expensive, others may not be happy about:
- Slower delivery times. The 2 to 5-day delivery speed may be too slow for time-sensitive parcels or when trying to get your goods delivered on time during peak season. So, be sure to factor these variable into your process. Alternatively, you may also use Priority Mail for urgent shipments.
- Transitioning issues. On June 30, USPS experienced some technical issues in preparing its system for the shift from First Class and Parcel Select to the new Ground Advantage shipping service.
“Our IT teams are currently investigating the issues and plan to resolve these issues on July 2, 2023. Display issues on other eVS reports related to USPS Ground Advantage instead of First-Class Package Service, will be resolved as a part of the July 9, 2023 Release.”
A few days after GA went live on eBay, however, several merchants reportedly run into some problems. For example, the USPS scanners failed to recognize the QR codes for the new shipping service, the listing form on the seller side displayed inaccurate pricing, and the vague wording of eBay’s announcement left many sellers confused about the steps they need to take to update their listings with the previous USPS services to Ground Advantage.
It would be very concerning if these technical issues continue through Q3 because that’s when most sellers start to prepare for BFCM and the holiday sales period. Sellers want to make sure that there are no delays when shipping a large volume of packages during the busiest time of year. Exercise prudence by meticulously reviewing all facets concerning USPS shipping and billing, particularly as soon as Amazon launches GA, to preempt any potential issues during crunch time.
Many Amazon sellers are also not happy about the fact that it’s taking Amazon so long to enable Ground Advantage on its Buy Shipping platform, as this means they’re still stuck with the slower Parcel Select service and paying the additional insurance. Worse, a couple of sellers reported that their First Class parcels were refused by their local postal office locations, one stating that “USPS in my region is refusing to accept any First Class packages. They are rejecting all package with a First Class label printed from Amazon.”
Unfortunately, no official launch date has been released yet by Amazon. But according to USPS, it will still accept all First Class and Parcel Select services without penalty until September 30, 2023, allowing for an easier transition.
While Amazon is still playing catch up (perhaps working through some implementation issues), consider buying GA shipping labels from other service providers to be able to enjoy the mentioned benefits. If you’d like to stay with Buy Shipping, continue using the outgoing legacy services for your orders in the meantime. Just make sure to inform Amazon of any postal offices that refuse to accept parcels with First Class or Parcel Select labels to resolve the issue immediately.
All things considered, Ground Advantage seems to be a welcome improvement over First Class Mail with the max shipping weight limit expanded from 13 oz to 1 lb (plus insurance), Parcel Select with the faster delivery speeds and built-in $100 insurance coverage, and, with significantly lower rates, over Priority Mail as well.
Amazon Feature Updates: 3 New Seller Tools and Product Recall Reporting Page
Over the last two weeks, Amazon has made a series of announcements introducing new features and dashboards for Amazon sellers. Let’s recap.
- View Insights on Your FBA Returns (UK)
Introducing a fresh addition to UK Seller Central is a dedicated page that shares comprehensive insights into your FBA customer returns. Find out the reason behind the return, customer feedback, grading disposition, and return status updates, so you can take action on returns that may be eligible for reimbursement.
Amazon has established clear guidelines concerning customer returns and associated refund processes. Should a return fail to align with these guidelines, sellers may request a refund reversal for the amount that Amazon debited from their account.
For instance, you may have a return request with “Customer refunded” status, but the customer never sent the item back. Or, Amazon reps themselves mistakenly accepted a return with missing parts or approved a return and refund request past the 30-day return period.
In that case, file a reimbursement claim with Amazon 60 days (and no later than 18 months) from when the customer refund occurred.
Visit FBA Returns to learn more.
- Brand Tailored Promotions to Customize Promo Codes
Just in time for the second Prime Day in October, Amazon introduces a new marketing tool that lets you to create and send discount codes to various types of customers.
Called Brand Tailored Promotions, you can use this free tool to entice potential new customers, brand followers, repeat shoppers, big spenders, and cart abandoners (those who have added some of your products in their cart but haven’t bought in the last 90 days) with discounts ranging from 10% to 50%. Offering discounts will not only help you to expand your customer base but also encourage recurring transactions and boost customer retention.
Here’s how to get started:
- Go to the Advertising tab in Seller Central and click on Brand Tailored Promotions.
- In the drop-down menu, choose the brand and audience type you want to create the special offer for. The discount will be applied to all ASINs within the selected brand and each eligible shopper can only redeem the discount on a single purchase.
- Fill out the Promotional Details section with your preferred promo name, discount percentage, budget, and promo start and end dates.
Note that unlike Amazon Tailored Audiences, Brand Tailored Promotions do not allow email messaging your existing customers. Instead, the tool showcases your promotional discount to your target audience type(s) on your product listing, search result pages, and Amazon’s dedicated promotional shopping pages.
Visit Brand Tailored Promotions to learn more.
- Free 20,000 Transparency Codes for One Year
Every new product enrolled in Amazon’s Transparency program by December 31, 2023, entitles brands to receive free 20,000 Transparency codes for a duration of one year.
Distinctive for each product, a Transparency code is an alphanumeric, non-sequential barcode. When affixed to your product’s packaging, it means that the product is authentic, thereby protecting customers against counterfeit or inaccurate product variations, such as differences in compatibility, color, materials, language, and regulatory compliance.
Before enrolling in the program, be aware that applying a Transparency code to each qualified unit requires a bit of work.
One seller commented that they have to “scan each transparency code” and “upload it to each and every order”, and thus, “should get reimbursed for the hassle, time and extra training we have to give to all employess to do this.”
Given this, the benefits of Transparency are generally found with businesses prone to counterfeiting or unauthorized sellers.
If the Transparency program fails to meet your expectations, you may reach out to Brand Registry Support to unenroll products. However, withdrawing participation from the program may be challenging, and sometimes unsuccessful, according to some sellers.
To make an informed decision, learn more about this special offer by contacting Amazon or checking out this presentation.
- Recalls and Product Safety Alerts Page
On July 26, Amazon launched a new page that provides customers with details about recalls and product safety alerts related to their orders.
This means Amazon customers will no longer need to go hunting for information about recalled products on various news outlets or relevant government websites such as recalls.gov, National Highway Traffic Safety Administration (NHTSA), US Food and Drug Administration (FDA), and the US Department of Agriculture (USDA). They can simply go to “Your Recalls and Product Safety Alerts” page within their accounts. Furthermore, any recall or product safety announcement will also be dispatched to customers via email.
Amazon is also making efforts to provide accessibility to this new system for third-party sellers as well. Sellers in the US will have the option to participate in Amazon’s Recalls Logistics Service (RLS).
By opting in, sellers can effectively communicate with their customers who have purchased items that are subject to recalls. Meanwhile, Amazon will take on the responsibility of handling refund issuance on behalf of sellers and overseeing the intricacies of return logistics.
However, a limitation of this system lies in its focus on US sellers and its reliance on an opt-in model. A considerable portion of Amazon’s marketplace sellers operate from overseas locations, often within regions that lack the same rigorous safety standards found in the US.
This discrepancy has led to instances where hazardous products from third-party sellers have found their way into the hands of American consumers.
A CBS News investigation in 2019 highlighted examples like unsafe children’s toys entering the market through Amazon. The retailer has since removed said products from its eCommerce site. A Product Safety Team has also been put in place to keep an eye on the products sold on Amazon.com and investigate product safety concerns.
The team normally takes their information from public recall alert websites, manufacturers, and sellers. And when they learn of a recall, they may:
- Remove the product from Amazon.com and hold any available stock in FBA.
- Reach out to sellers and manufacturers for more details about the recalled product or its potential safety hazards.
- Add a warning label to the product detail page.
- Inform relevant government agencies of any product safety complaints or incidents.
- Contact customers that purchased recalled or potentially hazardous products to tell them the next steps to take, such as refund, return, or repair.
In this way, Amazon hopes to make its platform a safer, more trustworthy retailer for consumers, assuring that they will not get their hands on items that don’t meet the standards set by the Consumer Product Safety Commission (CPSC).
FTC Proposes a New Rule to Rein In Fake Reviews
On June 30, 2023, the Federal Trade Commission (FTC) published a new proposed “Rule on the Use of Consumer Reviews and Testimonials,” or Part 465, which aims to illegalize certain customer review practices and authorize courts to impose a civil penalty of up to $50,000 per violation.
Factors that Compelled the FTC to Take Action
The success of a product frequently hangs in the balance of online reviews, as retailers and search engines prominently display them. This is done to aid customers in making smart decisions, but recent studies suggest that some of these reviews might be deceptive and misleading.
In fact, unreliable reviews have become so prevalent that 85% of customers believe what they read online is sometimes or often fake or fraudulent.
On Amazon.com alone, 42% of 720 million reviews analyzed by Fakespot were deemed fake in 2020. Many of the bogus reviews are the work of AI bots, strategically aimed at manipulating product ratings. Additionally, some third-party sellers have reportedly resorted to unethical practices, such as incentivizing positive reviews through cash payments or free or discounted products.
Conducted in the UK, 10,000 shoppers were presented with five identical products.
During the experiment, certain participants were exposed to fake reviews, inflated star ratings, or a combination of both. The insightful findings revealed that these unreliable testimonies had an impact on consumers’ wallets, causing them to spend an additional $0.12 for every dollar spent.
The study also found that individuals exposed to such deceptive information were six percentage points more likely to end up purchasing a flawed product.
Notably, the influence of star ratings was also brought to light. The paper disclosed that a mere one-star increase in a product’s rating led to a substantial surge in demand, driving it up by 38%.
Lastly, it was revealed that providing people with warnings and educational sources on the topic of review manipulation, though not thoroughly effective, could potentially curtail the adverse effects by 44%.
This study sheds light on the importance of transparent and genuine feedback in the decision-making process of consumers, as fake reviews undercut honest businesses, tarnish brands, erode trust between sellers, customers and platforms, and overall lead to bad shopping experiences – all of which can have emotional and economic repercussions.
As for the efforts marketplace platforms take in policing these reviews, the FTC itself received comments from three individuals dedicated to fighting fake reviews – the Transparency Company, Fake Review Watch, and Fakespot. All three commenters claimed that “the strategies that are currently being used by review platforms are insufficient.”
All this contributed to FTC’s move to take action, in an effort to finally capture a wider swath of malicious customer review practices in the US.
FTC’s Efforts to Address Rampant Fake Reviews
The newly added Part 465 has undergone an extensive development process, as is customary for any federal regulatory body.
In 2019, FTC pursued legal action against a merchant for disseminating deceptive information and engaging in the purchase of counterfeit reviews. Prior to that, the FTC had also addressed the issue of “influencer marketing,” where endorsers failed to disclose their financial ties to products they were promoting.
Now, the agency is poised to implement a comprehensive provision based on rules initially presented in November 2022.
Part 465 is the culmination of years-long research and extensive dialogue with various stakeholders, including businesses, consumers, and advertising trade organizations.
Interestingly, despite Trustpilot not supporting the rulemaking and certain trade groups urging the FTC against rigorous enforcement on this thriving fake review business, the agency remains resolute in its pursuit.
Product Review Practices Prohibited Under the New Proposed Rule
FTC’s proposed rule would stop businesses or sellers from utilizing the following malicious review and endorsement methods.
- Fake customer reviews, customer testimonials, or celebrity testimonials. Engaging in the fabrication, production, sale, purchase or solicitation of reviews by a reviewer who meets any of the following criteria is considered a violation.
The reviewer does not exist. For instance, bad actors using automated buyer accounts or bots to boost positive reviews for their clients and downvote positive reviews for their rivals.
The reviewer did not use or have any genuine experience with the product, service, or business being reviewed or endorsed. For example, using AI chatbots like ChatGPT to generate fake glowing reviews and then creating multiple dummy accounts to be able to spam a listing with those reviews.
The reviewer significantly distorts their experience with the product, service, or business being reviewed. Additionally, the rule would also restrict people from acquiring reviews or spreading such testimonials if they were aware, or should have been aware, of their fraudulent or deceptive nature.
- Honest negative review suppression. Making genuine negative reviews disappear or threatening individuals to prevent or delete their poor feedback is called review suppression. FTC has recently undertaken its first case targeting a company’s deceptive practice of withholding negative reviews, and it has now come to a $4.2 million settlement with Fashion Nova, LLC, a fast-fashion retailer based in California.
Per FTC, Fashion Nova purportedly integrated a third-party review management system that enabled the company to post specific reviews automatically, while holding back others pending their approval. The fashion retailer allegedly employed this system between 2015 and 2019 to instantly publish favorable four and five-star reviews, while deliberately choosing not to display any of the numerous reviews that rated below four stars. This means Fashion Nova misrepresented the opinions of all customers who contributed feedback on its website.
- Review hijacking. Businesses would be prohibited from using or repurposing an existing listing or product page (often with excellent reviews), then updating the product’s details with those of a considerably distinct product.
For example, the Variation Relationship feature on Amazon organizes reviews from diverse product variations into a unified collection. Certain product offerings have multiple options, such as various shapes, sizes, colors, and more. However, Amazon only allows one consolidated set of reviews to cover all these distinct variations.
Imagine a selection of 4 different colors of Apple Watch Series 8, each available in aluminum finishes, along with an additional choice of 2 different wrist sizes. Despite these numerous options, customers will provide reviews for the watch as a whole, rather than separately for each variation. This ensures a comprehensive assessment of the product’s overall quality and performance, but certain sellers have found a way to exploit this particular feature.
Their intention is to artificially inflate the number of reviews for their products. To achieve this, they resort to hijacking unrelated listings and incorporating them as product variations. As a result, the reviews from these stolen listings get merged with the genuine reviews of their own product, leading to a deceptive increase in the product’s overall rating. While these reviews might indeed be authentic and written by real individuals, they were originally intended for a completely different product altogether.
- Biased reviews from insiders like employees. The forthcoming regulation aims to impose restrictions on corporate execs and managers, preventing them from authoring reviews or testimonials for the products or services offered by their own company, unless they explicitly disclose their affiliations. It also seeks to disallow businesses from promoting testimonials provided by internal personnel without transparently revealing any existing relationships.
Additionally, the proposed rule will address specific instances where company officers or managers seek reviews from their employees or relatives, and whether the businesses were aware or should have been aware of such connections, to determine whether such solicitations are permissible.
- Company-controlled review websites. An outright prohibition would be imposed on businesses like Yelp, TrustAdvisor, and Trustpilot aiming to establish or exercise control over websites claiming to offer unbiased viewpoints concerning a specific category of products or services, which coincidentally include their own offerings.
- Selling fake social media indicators. For example, businesses that sell or buy fake followers or views to gain prominence or “misrepresent their importance for a commercial purpose.”
- Incentivized positive or negative reviews. This approach deceives shoppers looking for authentic feedback on a product or service and undercut honest sellers. Amazon itself updated its Community Guidelines to ban this malicious practice in 2016, while making an exception for its Vine program.
Companies Subject to the Proposed Rule on Fake Reviews
The new proposed rule would encompass all businesses, defined broadly as “an individual, partnership, corporation, or any other commercial entity that sells product or services.”
However, internet service providers like Amazon, Google, Yelp, Tripadvisor, and social media sites where thousands of fake review brokers recruit reviewers may not be directly held accountable, the Washington Post reports.
That’s because Section 230 of the Communications Decency Act states:
“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
Therefore, these companies may opt to assert immunity under Section 230, making it difficult for the Commision to file complaints against them.
Per FTC, “Amazon did not state support for or opposition to the rulemaking.” The retailer already has existing policies and initiatives to combat fake reviews and counterfeiters on its site.
In 2021, Amazon invested over $900 million and employed a dedicated workforce of more than 12,000 individuals in safeguarding its customers and store from fraud and abuse. Notably, in 2022, Amazon proactively put an end to more than 200 million suspected fake reviews.
Amazon also reported the existence of over 16,000 social media groups involved in buying or trading misleading reviews. Consequently, social media sites such as Facebook, Twitter, and Instagram removed groups that had amassed over 11 million members. In response to this issue, Amazon took legal action and filed a lawsuit against more than 10,000 Facebook groups in 2022.
These efforts and FTC’s proposed rule may not be enough to completely wipe fake reviews off of Amazon and other platforms, but they do hold the potential to bring about some much-needed relief.
Related: A Purge Could Be Coming For Fake Reviews on Amazon, Amazon Highlights ‘Frequently Returned’ Products You Should Think Twice Before Buying, Amazon Hopes to Restore Consumer Confidence with $1.2B Anti-Counterfeit Initiative
UPDATED: UPS Workers Ready to Repeat 1997 Mass Walkout Over Pay, Work Conditions
UPDATE 07/25/2023: 💪UPS and Teamsters have just set a higher labor standard for the logistics industry after reaching an agreement.
Described as “historic” and “overwhelmingly lucrative” by the union, the five-year tentative contract includes pay raises for all 340,000 workers, additional full-time positions, and several workplace safety improvements.
Each UPS union worker is set to enjoy a $2.75 per hour salary hike during the present year, followed by a series of gradual wage increases totalling $7.50/hour over the subsequent five years. These increases will push UPS’s average top rate for its unionized full-time drivers to $49 per hour, making them the highest paid delivery drivers in the US.
Part-time employees, comprising half of the workforce, will see their starting wage rise to $21 per hour, marking a significant improvement from the current starting hourly rate of $16.20, albeit lower than the $25 an hour advocated by a group of part-timers. But through general wage increments, plus longevity bonuses of up to $1.50 per hour, part-timers may still be able to reach their desired hourly rate over the next five years.
Another significant win was claimed by UPS and Teamsters with:
- The establishment of 7,500 new full-time positions, which will provide part-timers with more opportunities to transition to full-time jobs.
- The addition of Martin Luther King Day as a paid holiday and putting an end to forced overtime on off days.
- Removal of the two-tier wage system. All second-class drivers, or 22.4s drivers (see article below), would be reclassified to Regular Package Car Drivers and promoted based on seniority.
- Enhanced working conditions for UPS drivers. Starting from January 1, 2024, UPS will be installing air-conditioning units in all of its new delivery vehicles. Moreover, to guarantee optimal ventilation within the cargo compartments, UPS will also install two fans and air induction vents in all of its vehicles.
According to Teamsters, over 60 total changes and improvements were made to the National Master Agreement.
“UPS has put $30 billion in new money on the table as a direct result of these negotiations. We’ve changed the game, battling it out day and night to make sure our members won an agreement that pays strong wages, rewards their labor, and doesn’t require a single concession. This contract sets a new standard in the labor movement and raises the bar for all workers,” said union President Sean O’Brien.
On July 31, representatives of the UPS Teamsters locals will meet to review and recommend the tentative offer. The endorsed agreement will then be put to a vote by the union members from August 3 to 22.
UPDATE 07/19/2023: A UPS protest on August 1 remains possible, as no agreement has yet been reached between the carrier and Teamsters.
On July 5, contract talks collapsed, with both parties accusing each other of walking out of the bargaining table.
Teamsters reportedly refused to take UPS’s “unacceptable offer,” while the logistics giant denied it ended the negotiations.
According to the union, “UPS refused to give the Teamsters a last, best, and final offer, telling the union the company had nothing more to give,” adding it has “repeatedly made clear that UPS members will not work beyond the expiration of the current contract.”
Two weeks after talks broke down, UPS announced it will re-engage in negotiations with Teamsters, presenting an improved offer. The primary objective behind this move is to prevent the looming threat of a potentially detrimental strike scheduled for August 1st.
“We are prepared to increase our industry-leading pay and benefits, but need to work quickly to finalize a fair deal that provides certainty for our customers, our employees and businesses across the country,” UPS said in a statement.
UPS accounts for nearly a quarter of all parcel shipments within the US. That makes the company second only to USPS with 32% and ahead of Amazon with 23%, according to global shipping and mailing firm Pitney Bowes.
This means any widespread disruption to its operations may not only delay UPS deliveries in the country but also overwhelm other carriers left to pick up the slack.
A huge financial loss may also result. A new report from the Anderson Economic Group shows that a 10-day strike at UPS could cost the US economy over $7 billion, with customers and small businesses themselves losing roughly $4 billion.
If that happens, it would be the costliest work disruption in a century, and the largest protest (over 340,000 workers) against an employer in the country’s history, the economic group found.
But amid disagreements and roadblocks, many transportation analysts remain optimistic that a deal will be struck between UPS and Teamsters well before the deadline. The underlying reason for this positive outlook is the interdependence that exists between both sides.
“Both sides are going to suffer if there is a strike and there is no revenue flowing to the company and no wages to the workers. They’re both going to lose in the end, because some shippers will shift to other carriers and not come back. And there will be other challenges to disappointing your customers that rely on you,” Paul Bingham, Director of Transportation Consulting at S&P Global Market Intelligence, told Transport Topics.
Amazon Taking Measures Ahead of the Potential UPS Strike
Amazon has recently installed same-day sites in major cities and is actively recruiting local businesses in rural areas as delivery partners for improved Prime delivery speeds. This could help minimize the impact of the looming strike on their logistics operations.
However, there could be some delays for sellers and customers in areas that heavily depend on UPS, experts warn.
“Amazon’s delivery service providers, the Amazon vans, those are more for denser urban areas where you have a lot more package density,” supply chain expert Jason Miller explained.
“So your Amazon shoppers in rural areas, and just in general areas that have less customer density, they’re the ones that are most likely to be affected.”
Amazon sellers that handle their own fulfillment and delivery “could also take more time since there’s a good chance that they could be using UPS.”
🪧 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
Amazon Offers New Fulfillment Fee Discounts on Select ASINs
📣 ICYMI: Amazon quietly introduced a new discount program Sufficient Inventory Level Promotion. This limited-time offer grants eligible sellers reductions on forthcoming fulfillment fees.
To unlock these cost-saving benefits, you must have ASINs that meet Amazon’s eligibility requirements for the program and send in the suggested unit quantities for those products during specific time frames.
Are your products eligible?
Enrollment in this promotion is limited to specific ASINs only, determined by several factors including forecasted demand.
Unit Demand Forecast is Amazon’s FBA restock tool for high-velocity products.
The graph above shows two main prediction levels: optimistic forecast model and mean prediction level, which Amazon describes as:
If the forecast shows you’re likely to stockout during the next quarter for example, you may receive a new recommended minimum that you should send in by a given ship date. Not only will this help you to stay in stock, but also qualify for a discount.
Amazon may want to incentivize efficient sellers because keeping a good amount of inventory at FBA allows the company to bring products closer to customers and therefore, fulfill orders faster.
Note: If you’re using a third-party inventory forecasting platform or Economic Order Quantity model, you may notice your own forecasts may differ from Amazon’s depending on the restock recommendation settings used.
For example, SoStocked helps you generate a more accurate inventory forecast by allowing you to include in many variables not factored into most basic forecasts, such as adjusted daily velocity (accounting for stockout days to avoid under-ordering), sales spikes, lead times, future marketing plans, and more. This is a feature that Amazon’s tool currently doesn’t have so its forecasts may be inaccurate when compared to a more sophisticated inventory management software.
That means you may end up ordering too much or too little inventory and as a result, incurring additional fees, possibly canceling out the benefits of the promo offer.
Read this blog post to learn more about Amazon’s restock algorithm.
To see which ASINs are eligible for the promotional fee discount, you have a couple of options.
- Go to the “Fee Discount (New)” column on the Restock Inventory page or utilize the Send to Amazon workflow.
- Download the Restock Inventory Report or use the Fee discount filter on the Restock Inventory page, which provides a list of ASINs that qualify, along with the corresponding fee discounts and ideal minimum units.
Discount Period Dates
Qualify for the fee discounts by shipping the recommended minimums to FBA during these three “goal periods.”
- May 15 to June 14 (Past)
- June 15 to July 14 (Current)
- July 15 to August 14 (Upcoming)
After each goal period concludes, expect a processing time of two to four weeks for Amazon to verify whether you have met the requirements and the subsequent application of discounts as reductions in your future fulfillment fees.
According to Amazon, discounts will be applied to all of your eligible ASINs, not just to the ASINs that met the minimum-units requirement.
Let’s say one of your eligible ASINs earned a $40 discount for meeting the replenishment goal in May-June. Instead of applying the discount on that single ASIN, Amazon may apply a one-time $40 fulfillment fee discount across all your ASINs.
However, it is unclear where the discounts (pick and pack, referral, etc.) will be applied specifically. The policy just states:
“Your goal status, total units received, and discount earned will show on the Restock Inventory page and Restock Inventory report within two to four weeks after each goal period.”
What happens if you don’t meet the minimum threshold?
If you sent in some units but didn’t meet the minimum threshold, no partial or prorated discount will be given to you – for example, splitting a single shipment into smaller batches to try to earn a partial discount each time you ship one batch in.
Moreover, surpassing the recommended minimum for the specific goal period will not result in higher discounts.
Fortunately, you can try to increase your chances of earning fee discounts by:
- Getting your inventory checked-in early with these tips.
- Avoiding these critical mistakes sellers make when shipping to Amazon FBA.
- Negotiating for a better lead time with your supplier or freight forwarder.
Related: How to Automate Amazon Inventory Forecasting, 4 Ways to Improve Your IPI Score, Pros and Cons of Amazon Inventory Placement Service, How to Avoid Delays in Purchasing Inventory, 11 Benefits of Amazon Inventory Trackers
Sellers Cry Foul Following Amazon’s Decision to End FBA Small and Light
Amazon just found more pennies to squeeze out of sellers! 💰
On June 29, 2023, the etailer announced they will be replacing US FBA Small and Light (SnL) with a new program that will, in some ways, be similar to the current SnL program and in other ways much different.
The first strange thing to note about this change is this, back in January, the SnL price cap for eligible products increased from $10 to $12. Now, 7 months later Amazon will be sunsetting SnL and shifting to this new program called Low-Price FBA, effective from August 29, 2023.
This change, however, sets the price threshold back to $10. That means although the new rates may still offer financial advantages to qualified items, they, for the most part, do not match the substantial benefits that the new 2023 SnL provided.
Per Amazon, general estimates suggest that:
The above messaging is a bit of Amazon sleight-of-hand. They lead with the benefit to sellers not currently enrolled and boast an average $0.77 savings on these products. However, these products should already have been getting this savings anyway but if they were not enrolled, they missed out.
And while it is true that Low-Price qualified products will save significantly over standard rates, a majority of those currently enrolled in the SnL program will actually see their fees increase and by an average $0.30 per unit by Amazon’s estimation, a significant impact to the under $10 product segment with already razor thin margins.
Others in the $10 – $11.99 range will be fully priced out of their current discounted rate starting August 29th.
Check out the table below to see the price changes in detail (SnL vs Low-Price FBA vs Standard FBA) and their potential impact on your margins.
|Size Tier||Shipping Weight||SnL Rates (as of January 17, 2023)||Low-Price FBA Rates excluding apparel (Starting August 29, 2023)||Standard FBA Fulfillment Rates (2023)|
|Small standard||4 oz or less||$2.47||$2.45||$3.22|
|4+ to 8 oz||$2.54||$2.63||$3.40|
|8+ to 12 oz||$2.61||$2.81||$3.58|
|12+ to 16 oz||$3.15||$3.00||$3.77|
|Large standard||4 oz or less||$2.66||$3.09||$3.86|
|4+ to 8 oz||$2.77||$3.31||$4.08|
|8+ to 12 oz||$2.94||$3.47||$4.24|
|12+ to 16 oz||$3.77||$3.98||$4.75|
|16+ oz to 1.5 lb||$4.42||$4.63||$5.40|
|2+ to 2.5 lb||$5.19||$5.33||$6.10|
|2.5+ to 3 lb||$5.40||$5.62||$6.39|
|3+ to 20 lb||$6.40 + $0.16/half-lb above first 3 lb||$7.17 + $0.16/half-lb above first 3 lb|
|Small oversize||70 lb or less||$8.96 + $0.42/lb above first lb||$9.73 + $0.42/lb above first lb|
|Medium oversize||150 lb or less||$18.28 + $0.42/lb above first lb||$19.05 + $0.42/lb above first lb|
|Large oversize||150 lb or less||$89.21 + $0.83/lb above first 90 lb||$89.98 + $0.83/lb above first 90 lb|
|Special oversize||Over 150 lb||$157.72 + $0.83/lb above first 90 lb||$158.49 + $0.83/lb above first 90 lb|
While it appears that Low-Price FBA is indeed cheaper than standard FBA, it generally still has higher rates than Small and Light. 🤔
Suppose you have an SnL product that weighs 1.5 lbs and retails for $11.99. Under SnL, shipping would only cost you $4.42 per unit, but once Low-Price takes effect, your per unit FBA fee would move to standard rates, jumping to $5.40. That’s a $0.98/item increase – enough to potentially make products under $11.99 unprofitable.
The other strange thing is that, while, with SnL, eligibility capped at 3 lbs or less, Amazon has eliminated the weight and size restrictions from the Low-Price FBA program which allows both Large Standard products over 3 lbs as well as oversize products.
The joke here is that those heavier products have to be priced at under $10. So, while the product types newly included in this program can technically qualify, the fees almost certainly guarantee that the product, after Amazon fees, will be losing money.
For a bit of solace in the face of this change, what makes up for the higher fees, according to the retailer, is the faster fulfillment speed which “customers love.”
SnL may have the lowest fees, but the program also provides slower shipping times than standard FBA. And given how the last-mile battle among eComm giants has been heating up lately, Amazon getting rid of SnL to offer customers faster delivery speeds across all product types and sizes might be one way to maintain edge – to say nothing about increasing their bottom line.
For some sellers, the trade-off may be worth it, but for those who make just enough money or are struggling to stay afloat amid rising inflation, losing SnL may result in a substantial change to their business economics.
As previously mentioned, Low-Price FBA only applies to products under $10. Without SnL, ineligible sellers might be forced to:
- Absorb the fee increase and consequently, operate with thinner margins
- Resize product packaging to achieve a lower size tier and to be able to ship as many units per carton/pallet as possible, thereby reducing shipping and storage costs
- Implement a price hike
- Reduce their prices to meet the new Low-Price threshold
- Stop selling small and light products that don’t meet the new price limit
- Ditch Amazon for a more affordable sales channel
What’s worse is that SnL sellers only have a little over a month left to prepare for this (unwelcome) change. Those who have inventory that’s scheduled to arrive after August may have to adjust their strategy now to account for the potential fee increases.
What Sellers Are Saying
Amazon’s decision to decrease the cap from $12 to $10 was understandably met with dissatisfaction among sellers, who expressed their discontent.
A comment by one seller emphasized the importance of reevaluating the products falling within the $10-$12 price range.
Another seller said that this change is “another example of Amazon taking a bite out of 3rd party sellers profit. If anything the price should have increased from $11.99 to 12.99, not gone backwards. Many customers do not care about delivery times like they used to obsess over it.”
One suggests “If Amazon brought it up to $20, I would lower my prices to under $20 and I think the volume increase would be a triple win – Amazon, customers and our business.”
In summary, this news may catch sellers with products enrolled in SnL off-guard, as Low-Price FBA could have a significant adverse effect on a substantial number of customers, causing negative repercussions for everyone involved, including Amazon itself. Most items under $12 will likely see a retail price increase of up to $5 due to this change, further reinforcing the association of Amazon with higher prices.
As what many sellers suggest, it would be best for Amazon to reconsider and either maintain the $12 threshold or, better yet, raise it to a more favorable price point. Otherwise, the upcoming SnL replacement and the noticeable increase in prices may drive many Amazon customers towards competing eComm platforms and social commerce sites.
Aggregator Shakeups and Shifts in Strategy
Online sales growth is slowing after a huge spike during the pandemic, driving Amazon aggregators, or aggs, to implement various strategies to combat funding slowdown and declining revenue.
In 2021, investors injected more than $12 billion into a new generation of startups that set their sights on acquiring Amazon marketplace sellers. However, beginning the first half of 2022, the flow of funding has considerably diminished, and the once-vibrant landscape of dealmaking has come to a near standstill.
“The private market almost shut down,” said Riccardo Bruni, Co-Founder of UK-based aggregator Heroes, in a statement to the Financial Times.
“For a certain period of time access to capital became impossible.”
The slowdown can be attributed to cooling demand amid inflationary pressures and recession fears – a confluence of events that has overall sparked caution among investors, leading to a more reserved approach.
As a result, several aggregators find themselves compelled to make the following measures to foster margin improvements.
Boosted Commerce, a California-based company, made the decision to downsize its workforce by 20% earlier this year. Similarly, Thrasio, a leading aggregator, had to lay off an undisclosed number of employees in 2022.
Thrasio’s new CEO, Greg Greeley, revealed in an interview with Forbes magazine that the company had mistakenly assumed that the demand for eCommerce would remain at pandemic-era levels. As a result, Greeley emphasized the need for Thrasio to readjust its expectations, ensuring that excessive inventory is not held and that acquisition prices are not set too high.
Putting Acquisitions on Pause
As brick-and-mortar stores reopened, eCommerce demand slowed, making small sellers less appealing to potential buyers. Consequently, the estimated valuations of these smaller sellers plummeted, leading some aggregators to halt their acquisition efforts.
According to industry insiders who spoke to the Financial Times, the number of major aggregators actively pursuing new sellers has dwindled to less than ten. In the past, these aggregators were even willing to incur significant debts, often accompanied by steep interest rates of around 18%, all for the sake of finalizing acquisitions.
These acquisitions, in some cases, were completed at multiples as high as 7x the sellers’ adjusted valuation or earnings before interest, taxation, depreciation, and amortization (EBITDA). However, by Q1 of 2022, these brands were not performing as well as aggs had expected, primarily because for the first time in history, in-store shopping grew faster than eCommerce. That means aggregators have paid inflated prices for a large portion of those brands.
With sales and funding shrinking dramatically in 2022, aggs have come to realize that relying solely on acquisitions for growth is not always a sustainable approach. As a result, some companies are opting to launch their own brands instead of acquiring existing ones.
For instance, Amazon aggregator Upexi is cautious on acquisitions spending 90% of its time building the business organically and 10% of its time on Mergers & Acquisitions (M&A).
Strategically Buy Up Quality Brands at Lower Prices
The long-term value of established aggregators may decline if the products they offer are considered common commodities. In a highly competitive market, only those who offer unique products are likely to survive.
So, while some aggs had to stop dealmaking completely, others have shifted their focus from doing rapid acquisitions to selectively “buying great assets at 20%-30% lower prices.”
Thrasio, for example, has expressed its growing involvement in emerging sectors that pose greater challenges for market entry.
In an interview with Modern Retail, Thrasio President Danny Boockvar said that the company is actively expanding its portfolio by acquiring brands that they identify as a growth category, such as cleaning. These particular categories present higher barriers to entry (gated or regulated) due to the complexities associated with manufacturing products involving various chemical components.
Olsam, a European aggregator, disclosed to Modern Retail its strategic expansion into uncharted territories of patents and intellectual property, moving beyond conventional performance indicators such as seller ratings and product reviews.
Smaller aggs such as Heroes, Cap Hill Brands, and Gravitiq have also taken steps to streamline their operations and concentrate on a narrower range of categories.
Foundry Brands, in particular, exemplifies this trend by prioritizing quality over quantity as part of its aggregation strategy. Since its establishment in 2021, the company has strategically acquired fewer than 10 brands in total, emphasizing a selective approach.
Simultaneously, the prevailing economic conditions have presented an opportunity for aggregators to acquire high-quality brands at more affordable prices compared to the previous years.
Consolidate through M&A with other Aggregators
Facilitating strategic alliances and synergies is one way to create growth in times of austerity. From buying up online sellers, aggregators pivot to purchasing each other.
- Acquisitions. To navigate the challenges, aggs have started acquiring one another, often expanding their reach globally. In a recent acquisition, Berlin-based SellerX purchased Elevate Brands, headquartered in Austin. By taking over Elevate Brands, SellerX will now oversee 80 Amazon marketplace brands, generating an impressive annual sales figure of $426 million. This also gives the heavily Euro-focused agg a better foothold into the US Amazon marketplace.
Other noteworthy acquisitions took place in 2022 when Olsam acquired Flywheel Commerce and Marketfleet, and in April 2023 when Razor Group snapped up Stryze.
- Mergers. Two smaller US aggregators, Suma and D1 Brands, recently merged to form a consolidated entity known as The Ambr Group. This unified business now manages a portfolio of over 30 enterprises, amassing a substantial annual revenue exceeding $100 million.
Less accomplished aggregators looking for cash in these tough economic times, however, could face the pressure of liquidation.
What’s Next for Amazon Aggregators?
Aggregators interviewed by Modern Retail believe that it’s not all bad news. There’s still a lot of growth opportunities in 2023, whether that means finding growth through M&A with other aggs, exploring beyond Amazon, or applying a more selective aggregation approach.
As Forum Brands CEO Brenton Howland puts it, “For sellers who are out there and want to know what the future state of the Amazon ecosystem is, as it relates to acquisitions, its continued health and activity. It may not be quite at the rate at the level that we saw in 2021. In 2023, we’ll see a healthy return to normalcy for business models that from a fundamentals perspective are outstanding and will continue to be that way.”
UPDATED: Amazon Taps into $100B Retail Media Market, Invests in New & Cutting-Edge Ad Platforms
06/30/2023 (Originally posted 05/19/2022)
Update 06/30/2023: Amazon just rolled out two new advertising features and revealed plans to add an ad-supported tier for Prime Video to boost its booming retail media business!
- Add videos to sellers’ listings. EU Announcement. If you’ve been an Amazon seller for three months or more, you now have the opportunity to enhance your product pages by incorporating video content, such as product demos, installation guides, and setup tutorials. The addition of videos can significantly amplify your sales and reduce returns. Visit Amazon’s video upload page to get started.
- 3D product pages with Hexa. Amazon has collaborated with Hexa, a Tel-Aviv based 3D visualization platform, to enhance its product pages with 3D images. Leveraging the power of AI, Hexa’s innovative tech transforms the conventional 2D product images provided by merchants into lifelike 3D models. These 3D images can be seamlessly integrated into websites, social media platforms, and augmented reality (AR) applications.
Notably, these models offer an interactive experience as users can effortlessly maneuver and explore the product from various angles using their cursor. Hexa further assists its users by offering comprehensive services such as storage, management, distribution, and analysis for the 3D models they create.
- Ad-supported tier to Prime video. According to Axios, Amazon is considering launching an ad-supported tier for its video service to boost revenue and attract more subscribers through less expensive subscription plans. The launch date, however, remains unclear.
The move comes as more ad dollars shift from traditional TV to streaming platforms. Video streaming rivals Netflix, Disney+, and HBO have recently introduced their own ad-supported tiers. In its favor, while some rivals have only recently established their ad products, Amazon already has an established advertising team and other ad-supported video products, such as Freevee. This should play a significant role in guiding and enhancing the tech giant’s efforts in this area.
Amazon’s ad business is growing rapidly, with Q1 2023 ad revenue reaching $9.5 billion, a significant surge compared to the previous year. The company is also expected to capture 40% of new search ad dollars in 2023, per Insider Intelligence. It is possible that these figures may skyrocket even further once the new features roll out more widely and ads were to be introduced on Prime Video.
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.
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
UPDATED: Amazon Faces Backlash for Alleged Abusive Practices
UPDATE 07/26/2023: A win for UK sellers! 🇬🇧💪
Amazon on Wednesday offered concessions to the UK Competition and Markets Authority (CMA) to settle an open antitrust probe.
In 2022, an investigation was launched by the CMA against Amazon, with claims asserting that the retail giant was engaging in practices that exploited its dominant market position, particularly concerning its marketplace operations.
The focal points of the British regulator’s inquiry revolve around three key aspects.
- The questionable methods employed by Amazon to gather and utilize data from third-party sellers, and whether the company uses this intel to gain unfair competitive advantage in deciding what products to sell (for its own brands, for example) and how to set prices.
- The investigation also centers on scrutinizing how the eligibility criteria for selling under the Prime label are established. Prime offers certain benefits, such as free and fast delivery, that are only available to Prime members, putting non-Prime users at a disadvantage.
- Amazon’s “secretive and self-preferencing” process for selecting products in the “Buy Box.” The company uses a set of (undisclosed) criteria to determine which products are granted the coveted position of being the first choice in the “Buy Box.” For customers, this box holds prime real estate on product pages, offering convenient “Buy Now” or “Add to Basket” options exclusively from a particular seller, which could be Amazon itself.
To address these concerns, Amazon has offered to:
- Restrict its use of data concerning marketplace sellers. By doing so, the retail giant aims to prevent any unfair advantage for its own retail business over other sellers within its marketplace.
- Treat all products equally when Amazon decides which ones will be featured in the Buy Box. This proposal, if accepted, will grant sellers a fair opportunity to have their product offers prominently showcased in the coveted box, even when contending with Amazon’s own product offerings.
- Allow sellers to directly negotiate their preferred shipping rates with Prime delivery service providers so that they can offer affordable delivery fees to customers.
- Together with CMA, appoint an independent trustee to conduct regular compliance monitoring.
The CMA is currently engaging in a consultation process regarding Amazon’s offers, prior to reaching a final decision on their acceptance. If accepted, Amazon would dodge yet another big antitrust case in Europe.
In December 2022, Amazon reached a final deal with the European Commission over similar antitrust investigations into its use of seller data, Buy Box algorithm, and eligibility criteria for Prime, thereby avoiding a fine of up to 10% of its total revenue.
Amazon may have survived these EU antitrust cases unscathed, but a bigger threat looms over its US eCommerce operations with the Federal Trade Commission (FTC) finalizing a lawsuit that could break up the company. See report below.
UPDATE 06/29/2023: Amazon could soon face a major antitrust lawsuit as the Federal Trade Commission (FTC) inches closer to taking action. 🥊
FTC chair Lina Khan and her team of investigators have dedicated months to finalizing a complaint against the dominant eCommerce firm. The complaint alleges that Amazon manipulates its influence by favoring third-party sellers who utilize its logistics services while penalizing those who opt not to, as reported by Bloomberg.
The agency is also currently conducting an inquiry into an algorithm responsible for selecting brands to feature in the highly sought-after “Buy Box” on Amazon.com. This means that if there are multiple offers on the same listing, one seller’s offer is given priority over others, allowing consumers to effortlessly add to cart in a single click, streamlining their shopping experience.
The anticipated antitrust lawsuit is similar to a 2020 report presented by a subcommittee within the US House, in which Khan was listed as a team member. These allegations also align with a concurrent antitrust lawsuit in Europe, accusing Amazon of granting preferential treatment to sellers utilizing its fulfillment services and leveraging sellers’ sales data to bolster its own retail operations.
In the event that the Commission successfully provides evidence of Amazon engaging in deliberate market manipulation within an industry where it possesses monopolistic influence, it opens the possibility for advocating for the company’s dissolution or restructuring. This stance also indicates Khan’s reluctance to accept concessions from Amazon – something that the company did to resolve the EU antitrust case.
Amazon reportedly reached a settlement where they agreed to modify their Buy Box practices and impose limitations on the utilization of data obtained from 3rd-party sellers on their online EU marketplaces.
However, when it comes to the US market, Khan has expressed clear opposition to adopting similar compromises. During her testimony to a Senate committee last year, she firmly stated that the FTC would strongly oppose and disapprove of such legal remedies.
This forthcoming lawsuit is not the first encounter between the FTC and Amazon.
Over the past couple months, the agency has initiated three distinct and unrelated cases against the eComm giant.
- Amazon resolved the first accusation, which involved claims of unauthorized surveillance on customers through its Ring brand doorbells.
- The company faced allegations of violating child data privacy laws with its Alexa technology.
- In a separate instance, the FTC filed a new case last week, accusing the retailer of engaging in deceptive practices concerning its subscription services.
Amazon Braces for the Massive Antitrust Case
When Khan took over the FTC in 2021, she initiated a new approach to the agency’s antitrust probe of Amazon. She actively contributed to formulating key interrogative points for the investigative team, personally selected John Newman as co-lead investigator, and re-interviewed nearly 30 individuals employed by the retail giant.
Khan’s stringent stance and handling of the Commission earned her the ire of Amazon, accusing her of showing bias, and thus must recuse herself from the case. Amazon also tried to derail antitrust investigations by allegedly launching an offensive against the tech-focused antitrust legislation proposed by Congress, a source told Bloomberg.
In 2022, Amazon and other big tech firms invested $20 million in lobbying efforts, alongside initiating an ad campaign and mobilizing sellers in the home states of lawmakers to publicly resist the proposed bills.
Aside from criticisms, Amazon has also poached former FTC employees to gain intel, the NY Post reported.
According to informed sources, the former FTC officials who left the organization to pursue opportunities at Amazon have been greatly influenced by Khan’s distinctive managerial style.
Khan’s leadership approach has generated discontent among FTC employees, with certain staff members characterizing the 34-year-old chair as an authoritative figure with a management style that is deemed “tyrannical” and “abusive” according to the above referenced article.
“If people are displeased with leadership, it makes you more inclined to listen to offers,” former FTC chair William Kovacic told the NY Post.
While the ex-FTC employees are prohibited from working on the case, they can share insights into “key players, who is making decisions, the mood of the agency, prevailing attitude of enforcement, overall sense of how stretched an agency is in using resources, and many people they can deploy on a given matter,” Kovacic said.
All of this shows Amazon’s profound concern regarding the challenges posed by the FTC. The anticipated antitrust case accusing Amazon of playing favorites, in particular, holds the potential to have significant ramifications for the company. The outcome of this legal battle has the power to change the eCommerce landscape moving forward.
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. 🚀
FTC Lawsuit Alleges Amazon of Tricking and Trapping Customers into Recurring Prime Subscriptions
Right on the heels of Amazon’s 2023 Prime Day announcement, the Federal Trade Commission (FTC) has filed a complaint accusing the tech giant of duping customers into signing up for Prime and “knowingly” making it hard for them to opt-out.
What are the details of the complaint?
According to FTC, for years Amazon has employed what is being described as “manipulative, coercive, or deceptive tactics” in an effort to steer customers towards signing up for Prime, even if the customers may have harbored reservations at enrolling. Subsequently, these subscriptions were set to auto-renew, resulting in a monthly charge of $14.99 or an annual fee of $139.
Prime holds a major role within the tech giant’s retail empire, as its members tend to exhibit heightened shopping activity and expenditure. As of 2020, Amazon had a total paying Prime members of 200 million.
However, the current FTC lawsuit claims that a portion of these subscribers may have been acquired through deceptive means.
What are Dark Patterns?
Coined by British User Experience (UX) designer Harry Brignull, dark patterns are “deceptive user interfaces” designed to get people into performing an action that they didn’t mean to. Common types of dark patterns include:
- Disguised ads – The individual, under the false impression, assumes they are interacting with an interface element or genuine content, unaware that it is, in fact, a cleverly disguised ad. For example, popular software download site Softpedia features a conspicuous download button that bears a striking resemblance to the genuine download button for the desired software. Consequently, users inadvertently fall prey to this deceptive design, mistakenly clicking on the ad thinking that they are initiating the actual software download.
Another example of this type of dark UX may be observed in Amazon’s search results. The Washington Post reveals that unbeknownst to many Amazon users, the initial search results they encounter when looking for a product are primarily comprised of advertisements rather than organic listings. This exposes Amazon’s questionable tactics, as the company compromises the trust placed in its search results in order to generate additional revenue.
- Bait and switch – When deceptive data or false information is presented, it revolves around the user’s interests and triggers their curiosity. Once the user expresses interest and proceeds by clicking, the information or data undergoes a complete transformation or shift. Bait and switch tactics are commonly employed by businesses to attract more clicks.
Such a strategy enables site owners to generate additional revenue from ad impressions, while advertisers enjoy the advantages of enhanced click-through rates, potentially leading to increased sales.
- Hidden subscription – The covert scheme of hidden subscriptions works by utilizing sneakiness and misdirection. Users are led to believe they are making a one-time purchase, unaware of a concealed legal provision that commits them to an ongoing subscription. After signing up, the service operates discreetly, refraining from sending any emails or notifications to remind users about the recurring payments. This lack of communication ensures that payments go on for an extended duration. Additionally, this tactic is commonly coupled with the hard-to-cancel deceptive pattern.
- Hard-to-cancel subscriptions – Signing up is easy but canceling is difficult. More on that later.
- Buried terms or hidden costs – Companies entice consumers by advertising only a fraction of the product’s total price while conveniently omitting any mention of mandatory fees until the later stages of the buying process. In a notable case involving LendingClub, the FTC accused the online lender of utilizing prominent visuals (design elements like art, text, and color that grab attention) to deceptively assure loan applicants that they would receive a specific loan amount and encounter “no hidden fees.” However, the mention of mandatory fees was cleverly tucked away behind tooltip buttons and inserted amidst more conspicuous text.
- Tricks to obtain user data – These deceptive tactics often disguise themselves as granting users the power to make decisions regarding their privacy preferences or data sharing. However, their true intention is to deliberately guide users towards the choice that surrenders the greatest amount of personal information. According to FTC, smart TV manufacturer VIZIO was accused of facilitating default settings that enabled the company to gather and distribute consumers’ viewing habits to third parties. Only a small number of consumers received a brief notice regarding this practice.
Trick and Trap Tactics Allegedly Used by Amazon
FTC’s case involving Amazon focuses on the company’s hidden subscription and difficult-to-cancel tactics. By employing these devious mechanisms, Amazon has presumably violated the FTC Act and the Restore Online Shoppers’ Confidence Act.
FTC says throughout Amazon’s online checkout process, customers encountered multiple instances where they were presented with the chance to become Amazon Prime subscribers at a monthly cost of $14.99.
Often, it proved challenging for customers to find the option of buying items on Amazon without subscribing to Prime. Additionally, in certain situations, the button provided to finalize the transaction did not explicitly indicate that by choosing that option, customers were also agreeing to enroll in Prime for a recurring subscription.
To strategically dissuade members from leaving, especially after raising membership fees from $119 to $139 annually, Amazon has implemented a laborious opt-out process called the “Iliad Flow.” This process draws parallels to Homer’s epic poem about the decade-long Trojan War. In other words, if customers wanted to unsubscribe from Prime, it will take them ages to effectively do so.
In a blog post published September 2022, market analyst Dr. Pierre-Nicolas Schwab shares how Amazon used two dark pattern mechanisms to discourage members from terminating their Prime subscriptions.
- Make it difficult to find Prime in the menu.
- Put in place multiple confirmation prompts.
Allegedly, Amazon deliberately obscured the cancellation process, making it challenging for customers to locate. Upon discovering the cancellation flow, they were then directed to a series of pages enticing them with various offers, such as discounted subscription rates, the option to disable auto-renewal, or the choice to retain the service. It was only after navigating through these pages that members could ultimately proceed with canceling the service.
Based on internal Amazon documents reviewed by Insider in early 2022, it is believed that the company possessed knowledge of customers being involuntarily enrolled and encountered difficulties when attempting to opt out of Prime. And yet, the execs reportedly neglected to tackle these concerns until they were notified of FTC’s investigation.
Worse, FTC’s lawsuit also alleges that Amazon made deliberate efforts to delay the Commission’s investigation on several occasions.
In an email to The Verge, Amazon spokesperson Heather Layman told the media outlet that the claims put forth by the Commission were entirely unfounded both in terms of factual accuracy and legal basis.
“The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership,” Layman explained. 🤔
It is worth noting that the Commision recently proposed a new provision requiring sellers to make unsubscribing as easy as signing up. So, it looks like the FTC wanted to make an example of Amazon by filing suit.
“The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.” said FTC Chairperson Lina Khan.
If proven guilty, Amazon may find themselves paying up to $50,120 in civil penalties per violation of an FTC rule. Considering how quickly these penalties can add up, now’s the best time for the tech giant to review their business practices to ensure FTC compliance.
Clash of the Titans: Walmart and Amazon Battle for Dominance Intensifies
06/21/2023 (Originally posted 09/15/2022)
Update 06/21/2023: Following in on Amazon’s footsteps, Walmart just launched an inventory distribution program called Inventory Transfer Services (ITS).
“Our new solution allows for the seamless and efficient transfer of inventory to Walmart fulfillment centers, optimizing supply chain logistics and enabling faster delivery to customers,” said Jaré Buckley-Cox, VP of Walmart Fulfillment Services, in a LinkedIn post.
According to Buckley-Cox, ITS aims to enhance the availability of sellers’ inventory across Walmart fulfillment centers, cut down on inbound shipping costs by consolidating goods at a central hub, and provide faster shipping options.
The launch comes after the retailer announced they’re building small warehouses within their existing supercenters and four next-gen fulfillment centers (FCs) over the next few years. These high-tech FCs will be equipped with “a powerful combination of people, robotics, and machine learning,” allowing Walmart to take their 12-step fulfillment process down to just five.
With improved fulfillment speed and capacity, these next-gen FCs “could provide 75% of the US population with next- or two-day shipping on millions of items, including Marketplace items shipped by Walmart Fulfillment Services.”
When combined with traditional Walmart FCs and store locations, the retailer can reach 95% of US shoppers with 1 to 2-day shipping and 80% of the population with same-day shipping.
By contrast, Amazon has FCs within one hour of 77% of the US population. And given how both of these retail giants have many products with similar prices, customers will likely prefer the one with the fastest delivery.
No wonder Walmart is making huge strides in setting their stores and FCs up to fulfill online orders. Not only will these upgrades allow them to keep up with increasing demand for same-day shipping but also potentially to outdeliver Amazon.
🆚 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. 💪
4 Major Changes Coming to Amazon
Stay in the know! Amazon has recently announced the following changes that sellers should prepare for.
1.INFORM Consumers Act: Amazon Threatens Non-Compliant Sellers with Account Deactivation
What is the INFORM Consumers Act and why should you care?
In the Consolidated Appropriations Act of 2023, an extensive bill governing federal government expenditures for the upcoming year, an important addition called the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act, also known as the INFORM Consumers Act, was included.
On December 29, 2022, this Act was officially enacted into law. Its primary objective is to eradicate organized retail crime syndicates from online marketplaces through the authentication of seller identities. The Act additionally seeks to establish the responsibility of eComm platforms in preventing the sale of fake goods.
In accordance with the INFORM Consumers Act, online marketplaces like Amazon are now obligated to collect, verify, and divulge specific identification details relating to “high-volume third-party sellers.”
These sellers are classified as individuals who have completed more than 200 transactions and generated revenues exceeding $5,000 within a span of 12 months. If you’re eligible, you will be required to provide Amazon with your:
- Personal Information (name and phone number)
- Government ID
- Tax ID
- Business Address
- Bank Information
Severe consequences await those who fail to adhere to this legislation. The Act empowers the FTC to impose hefty fines of $46,517 per violation, applied to each instance where an online marketplace neglects to gather, verify, or disclose the necessary information. Moreover, state attorneys general are granted the authority to initiate legal proceedings against non-compliant online marketplaces if their respective state suffers adverse consequences.
In order to adhere to the INFORM Consumers Act, online marketplaces must establish and implement policies, procedures, and controls by June 27, 2023.
With the deadline fast approaching, Amazon is intensifying their efforts, much to the dismay of sellers, to provide the required information within a short period of time.
The company has sent out an email blast to sellers who are at risk of account deactivation because they have some missing information. To ensure compliance ASAP, sellers are advised to click on and execute the action items enumerated in the email.
Things can get complicated if your information is fraudulent, outdated, or simply does match with Seller Central’s records. If outdated, promptly update your details in Seller Central.
It is unclear whether Amazon will let sellers who rely on a blend of personal information or personal bank accounts for their business operations to continue without encountering potential issues down the line. Be sure to check your Account Health Dashboard for verification status updates or contact an Amazon representative to learn more.
After June 27, sellers who neglect to comply might encounter a temporary suspension of their payments and potentially face account deactivation.
2. Amazon Replaces Inventory Overview Page with FBA Dashboard
In a Seller Info email, Amazon revealed that the trusty Inventory Overview Page, aka Planning Page, will bid farewell on June 5, 2023, making room for the brand new FBA Dashboard.
Embracing innovation, the FBA Dashboard takes the foundation laid by Inventory Overview and enhances it further. It presents a comprehensive and “unified view of your FBA business,” encompassing vital data such as the Inventory Performance Index score, inventory age, shipment information, and expert inventory management recommendations.
Head over to FBA Dashboard for more details.
3. Marketplace Web Service Migrating to Selling Partner-API
UK/EU Announcement: Sellers who have utilized Amazon’s legacy Marketplace Web Service (MWS) API program to develop tools to interact with the marketplace are required to switch over to Selling Partner (SP) API by August 31st in order to avoid any disruptions to their business automation.
Previously, through MWS, sellers were able to build apps for their own or others’ seller accounts. These applications facilitated various tasks such as searching for products to sell, retrieving orders for fulfillment, confirming shipments, and generating reports.
However, starting from August 31st, 2023, sellers must transition from MWS to SP-API. Alternatively, they can opt to replace their current application with a 3rd party app that supports sections that will soon be discontinued, namely Merchant Fulfillment, Orders, and Reports API sections.
In addition, effective April 1, 2024, Amazon will shutdown all other remaining MWS API sections.
In their recent announcement, Amazon emphasized the benefits of using SP-API, which includes a more streamlined and consolidated authorization process, more granular data access controls, and the ability to access information for both seller and vendor accounts.
To assist sellers in this transition, Amazon recommended reading this migration guide or exploring the Selling Partner Appstore, where they can find reputable 3rd party apps that have been vetted and deemed of high quality, serving as suitable replacements for the company’s existing MWS integrations.
Sellers who have never developed their own applications using Amazon APIs to exchange data between their systems and Amazon’s systems need not be concerned about these changes.
4. Heavy and Bulky Items No Longer Eligible for Amazon Vine
This announcement is for Amazon Vine users in the UK.
Effective immediately, the option to create new Amazon Vine enrollments for heavy and bulky items will be unavailable in an effort to enhance FBA’s fulfillment process. However, if you have already enrolled such an item, it will remain eligible for reviews until the end of your enrollment period.
Amazon considers products weighing more than 30 kg (66 lbs) or 1.5m in length as heavy and bulky. This might be yet another cost-cutting move given that these oversized items take up more space and usually have special handling or delivery requirements (e.g., using larger trucks). Therefore, they cost a lot to ship, which not only eats into Amazon’s profits but also sellers’.
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.
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? 🤔
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. 👀
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.
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?
“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.”
“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.
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.
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.
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.
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. 🤔
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. 💪
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.
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.
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.
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.
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.
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.
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.
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.
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.
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! 😉
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!
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 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? 🤔
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.
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?
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.
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.
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.
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.
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. 🤔
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.
- 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.
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.
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.
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.
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.
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.
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.
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. 👀
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.
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.
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.
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.
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?
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.
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
|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.
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.
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). 🤔
- 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!
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.
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. 🚀
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
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.
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.
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! 💪
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.”
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.
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
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. ⚠️
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.
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.
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