Key Updates on Coupons, FBA Fees, Supply Chain by Amazon, and Payment Options
In our upcoming Amazon feature roundup, we’ll delve into several key updates that could impact sellers.
Amazon has adjusted the maximum duration for coupons, offering more flexibility in promotional strategies.
Additionally, there has been a reduction in FBA fulfillment fees for domestic and Pan-European small oversize items, which could lower operational costs. We’ll also cover the latest update to EU VAT establishment determination, which affects how VAT is managed across European markets.
Amazon is introducing a “fully managed” supply chain solution, promising to streamline operations for sellers. Another noteworthy change is the update to full truckload and intermodal trailer seal policies, aimed at improving logistics security.
Lastly, the ecomm giant is enhancing its payment options with a new integration with PayPal, coinciding with a rise in Buy with Prime usage.
Read on to explore how these updates could benefit and streamline your selling experience on Amazon.
1. Amazon Updates Coupon Durations
On September 5, 2024, Amazon announced a major change in the maximum durations for various types of coupons, aiming to refine promotional strategies and enhance their impact.
This update revises the maximum durations as follows:
- Standard coupons will now last 30 days (from 90 days).
- Reorder coupons will extend to 180 days.
- Subscribe & Save coupons will be valid for 365 days.
Coupons that were issued before this date will retain their 90-day validity, offering a transitional grace period for existing promotions.
The rationale behind these adjustments is to better distinguish between different types of promotional offers and incentivize timely usage. The new limits are designed to drive immediate consumer action and improve the effectiveness of each coupon category.
What Amazon’s Coupon Update Means for Sellers
For sellers, the new changes bring a balance of growth potential and complications.
The reduced duration for standard coupons means that sellers will need to plan their promotions more strategically, especially for key shopping seasons like the holidays. The new 30-day window could compel customers to make quicker purchasing decisions.
A seller noted, “The less certainty the buyer has about the coupon’s availability, the more likely they are to purchase now rather than delay.” This could lead to increased urgency and potentially higher conversion rates for time-sensitive promotions.
However, the shift could also create logistical challenges. Sellers will need to regularly create and manage new coupons if they want to maintain long-term promotions. This could lead to increased administrative work if not managed effectively.
For those accustomed to the previous 90-day standard coupon duration, this change may require a shift in strategy, including possibly setting up new coupons in advance or duplicating existing ones.
The extended durations for reorder and Subscribe & Save coupons might offer some relief, allowing for longer-term incentives to retain and attract repeat customers. However, the overall reduction in flexibility for standard coupons could affect sellers’ ability to plan and execute long-term promotional strategies effectively.
Overall, while Amazon’s update on coupon durations is designed to spur more immediate purchases and create a sense of urgency, it also requires sellers to adapt quickly. Sellers should leverage the new structure to enhance the immediacy of their promotions while being prepared for the additional management responsibilities that come with shorter coupon lifespans.
2. Amazon Reduces Domestic and Pan-EU Small Oversize FBA Fulfillment Fees
On September 16, 2024, Amazon reduced EU domestic and Pan-European (Pan-EU) Fulfilment by Amazon (FBA) fees for small oversize products. The reduction, ranging from 12% to 30%, is aimed at making it more cost-effective for sellers to offer a broader selection of small oversize items across major European markets, including the UK, Germany, France, Italy, and Spain.
What’s Changing?
Amazon is lowering FBA fulfillment fees for small oversize products (items up to 61 cm x 46 cm x 46 cm and weighing no more than 1.76 kg) in several key European stores:
- In the UK, France, Italy, and Spain, fees for all four small oversize size bands will be reduced by 12% to 30%.
- In Germany, fees for two small oversize size bands (up to 1.26 kg) will be reduced by 22% to 28%.
This fee reduction translates to a savings of up to €1.87 (£1.60) per item, which could make a significant difference for sellers looking to expand their offerings of larger items that previously came with higher fulfillment costs.
All other domestic FBA fee rates in these markets will remain unchanged, making this reduction particularly impactful for sellers in the small oversize category.
How Will this Help Sellers?
The reduction in fees presents a clear opportunity to reduce costs and improve profit margins on small oversize items. Sellers who previously hesitated to list larger items due to the high cost of fulfillment may now find it more feasible to do so.
With the new lower fees, sellers can pass on some of these savings to customers through competitive pricing or use the increased margin to bolster their bottom line.
Suppose you’re shipping a small oversize product like a compact kitchen appliance. Before the fee reduction, you may have faced higher fulfillment costs that made the item less profitable or priced it out of competition. Now, with a potential 28% reduction in fulfillment fees, you can either lower the product’s price to attract more buyers or enjoy a healthier margin.
Pan-EU Advantage
The fee reduction also benefits sellers utilizing the Pan-EU FBA program, allowing them to ship products across multiple European markets from a centralized inventory. The lower fees, particularly in the UK, France, Italy, and Spain, encourage sellers to expand into these countries without being burdened by high fulfillment costs. This is particularly helpful for sellers targeting customers across multiple EU markets, as they can now scale their operations with fewer financial barriers.
Challenges to Consider
While the fee reduction is good news for many, it’s essential to remember that it only applies to small oversize items. Sellers offering products outside this size tier will not see any cost savings with this change.
Additionally, although the reduction helps lower the financial burden of fulfillment, sellers must still manage other operational costs, such as storage fees, shipping to FBA warehouses, and VAT compliance across different countries.
Furthermore, sellers should carefully monitor their inventory levels as pricing more competitively could lead to higher demand for small oversize products. Stockouts during key selling periods, such as the holiday season, could put a damper on the benefits of lower fulfillment fees.
If you’re a seller offering small oversize items, now is the time to review your pricing strategies and inventory management to ensure you maximize the benefits of this new fee structure.
Related: Navigating Amazon’s Increasing Fee Stack, Tools and Tactics to Dominate Amazon’s Fees
3. Amazon Updates EU VAT Establishment Determination for B2B Sellers
On September 11, 2024, Amazon updated its European VAT calculation services for Business-to-Business (B2B) sales to ensure that Value Added Tax (VAT) is applied more accurately, based on a seller’s country of establishment.
This new approach, which takes into account information from tax authorities rather than relying solely on the registered business address provided by sellers, could have a major impact on how VAT is managed, especially for businesses operating across multiple European markets.
Key Changes
Previously, Amazon’s VAT determination for B2B sales relied heavily on the registered business address that sellers submitted.
Starting with this update, Amazon will instead prioritize information received directly from the relevant Tax Authority—such as the format of your VAT registration number or your official address—to determine whether a seller is established or non-established in a particular country.
For instance, if a Tax Authority provides information suggesting that a seller is “non-established” in a specific country, the non-resident domestic reverse charge rule will be applied. In such cases, tax responsibility does not lie with the non-resident seller but with the domestic buyer. In this case, no VAT will be charged on domestic sales, in contrast to the local VAT rate, which would typically be applied if a business is considered established.
How This Helps Sellers
- Streamlined VAT determination: Amazon’s update aims to simplify VAT calculations, ensuring compliance with local tax laws across the EU.
- Use of accurate data: Amazon will now rely on information from tax authorities, reducing the likelihood of VAT errors that could lead to fines, delayed filings, or audits.
- Simplified tax management: Sellers no longer need to worry about inconsistencies between their VAT registration number format and registered business address.
- Help for cross-border businesses: This change benefits sellers with complex supply chains or those operating across multiple European markets.
- Reduction in VAT complications: Sellers facing VAT issues in countries like Spain, Italy, or the UK may experience fewer complications thanks to the new process.
- Reverse charge mechanism: If a tax authority deems a seller “non-established,” the reverse charge rule applies, helping sellers avoid unnecessary local VAT charges.
Potential Challenges for Sellers
- Need for Accurate VAT Registration Details: Ensure that VAT registration information is current and aligns with tax authority records to avoid incorrect VAT determinations.
- Disruptions for Sellers with Outdated Information:
- Sellers who rarely review their VAT status or operate in multiple European countries may face disruptions if their VAT details are outdated.
- Incorrect VAT records may lead to errors in tax treatment, complicating the VAT filing process.
Adapting to the New VAT Rules
- Review VAT registration details: Sellers should proactively check that their VAT registration details are accurate and align with the information held by tax authorities.
- Consult with a tax advisor: It may be beneficial to consult a tax advisor or use tax software to ensure VAT compliance across multiple countries, especially with the new updates.
- Stay informed on tax authority changes: Sellers must remain updated on any changes from tax authorities, as these will directly influence how VAT is applied to B2B sales.
Related: Amazon’s VAT Services Program is Ending This October – Here’s What You Need to Know
4. Amazon’s Fully Managed Supply Chain Now Available
Amazon has taken another major step in enhancing its logistics services for sellers by announcing a fully managed supply chain solution. It is set to launch for US sellers in October 2024, with a global rollout by the end of the year.
This new feature, an upgrade to Amazon’s existing Supply Chain by Amazon solution, promises to automate key logistics decisions, simplifying operations for sellers across various markets.
Under the fully managed solution, sellers no longer need to manually manage logistics for their product movement. Sellers simply specify the quantity and pickup location of their goods.
Program features include:
- Advanced machine learning and predictive analytics are used to determine when and where to move individual units. This helps ensure a streamlined and efficient supply chain experience.
- Customs handling and cross-border transportation: Products are moved safely and efficiently across borders, through ports, and into the appropriate warehouses.
- Warehousing and distribution
Semi-Managed vs. Fully Managed Supply Chain
The key difference between a semi-managed and fully managed supply chain comes down to control and automation.
A semi-managed supply chain allows sellers to pick and choose which services to use, granting more control over decisions like warehousing and shipping. Larger businesses, or those with unique logistical needs, often prefer this option because it offers configurability and customization.
In contrast, the fully managed solution is designed to be hands-off. Sellers simply provide product details, and Amazon takes care of the rest, from logistics and warehousing to cross-border transportation.
This solution is ideal for small- and medium-sized businesses seeking to simplify operations and reduce the burden of supply chain management.
How Could This Feature Help Sellers?
The fully managed supply chain solution offers significant benefits for sellers who prioritize ease and efficiency. By automating complex logistics decisions, it allows sellers to focus more on growth and less on managing day-to-day supply chain tasks. The reduction in fees for sellers using the end-to-end solution further adds to the appeal, offering potential cost savings on storage, transportation, and processing.
However, the solution may not be for everyone. Sellers with larger operations or those who require more control over their logistics may prefer to retain a semi-managed approach. Additionally, as this is a new feature, some sellers may need time to adapt to the automated system and evaluate whether it truly meets their business needs.Ultimately, Amazon’s fully managed supply chain solution represents a significant step forward in streamlining ecommerce logistics. With automation, predictive analytics, and machine learning at its core, it has the potential to revolutionize how sellers manage their supply chains—offering a blend of simplicity, efficiency, and cost savings.
Of course, as with every new program, Amazon will likely need time to work the kinks out of its systems and sellers should use caution before putting all their eggs in the Amazon basket.
Related: Amazon and Flexport Vie for End-to-End Logistics Supremacy, 4 Easy Ways to Fix Your Supply Chain
5. Amazon Updates Full Truckload and Intermodal Trailer Seal Policy
Amazon has announced an important update to its full truckload (FTL) and intermodal trailer seal policy, effective September 12, 2024. This change introduces new requirements for sealing shipments to ensure security and compliance.
Here’s what sellers need to know about the updated policy and its implications.
New Sealing Requirements
- ISO-17712-Compliant RFID Seals: All full truckload and intermodal shipments (involving multiple modes of transport) must now be sealed with ISO-17712-compliant, Amazon-approved Radio Frequency Identification (RFID) seals at the point of pickup. This new measure aims to enhance shipment security and tracking throughout the supply chain.
- Application of Seals: If you’re sending more than 14 pallets and haven’t been directed to use Amazon Freight pallet labels, your shipment likely qualifies as full truckload. For less than truckload (LTL) shipments or small parcels, the seals will be affixed at the carrier’s consolidation terminal before the goods arrive at an Amazon fulfillment center.
Steps for Compliance
- Acquire ISO 17712 Certified RFID Seals: Start by obtaining ISO 17712 certified RFID truck seals from trusted suppliers. These seals must comply with ISO standards for tamper-evidence and feature RFID technology for tracking.
- Amazon Business: RFID seals can be purchased through the Amazon Business store. Sellers need to have an Amazon Business account to make purchases here. You can either use your existing account or sign up for a new one at no cost.
- Seal Vendor: Alternatively, RFID seals can be bought directly from the seal vendor’s website. To complete your purchase, create a customer profile, add the required number of seals to your cart, enter the authorization code Vmn3Ap to verify your seller status, and proceed with checkout.
- Seal Application: Ensure that the trailer’s door has an ISO 17712-compliant RFID seal applied before the shipment departs your facility. This seal is critical for maintaining shipment integrity and meeting Amazon’s security standards.
- Documentation: Note or print the seal number on the bill of lading (BOL) next to the Standard Carrier Alpha Code (SCAC) and Progressive Number (PRO#) or under the Ship To section. This documentation helps Amazon verify that the correct seal has been applied.
This update streamlines the security process for full truckload and intermodal shipments, improving the overall integrity of the supply chain. Requiring RFID seals allows Amazon to improve tracking accuracy, comply with international standards, and reduces the risk of shipment tampering.
However, this also means that sellers must adapt to the new sealing requirements and ensure they are in compliance to avoid potential disruptions in their shipping operations. Coordinate with your logistics vendors on updates to current processes.
For more detailed information or assistance, contact Amazon’s support team at [email protected] with the subject line “RFID Seals Inquiry.”
6. Amazon and PayPal Join Forces
Amazon is ramping up its partnership with PayPal, enhancing the Buy with Prime experience amid skyrocketing usage. This strategic integration, announced during the Amazon Accelerate seller conference on September 18, 2024, aims to streamline checkout processes and boost merchant sales.
Here’s a closer look at how this new collaboration benefits sellers and how it aligns with the growing trend of Buy with Prime.
The Integration: What’s New?
Starting in 2025, Prime members will be able to link their Amazon accounts with PayPal, allowing them to enjoy Prime shipping benefits while using PayPal for their purchases. This means that when shoppers choose Buy with Prime on participating merchant sites, they can now check out with PayPal and still receive their Prime perks.
For sellers already using the Buy with Prime API, this integration offers a significant upgrade. They can now include PayPal as a payment option, expanding their checkout flexibility and potentially attracting more customers. This enhancement aligns with a broader trend of increasing customer convenience and leveraging PayPal’s extensive user base.
Impact on Sellers
The integration with PayPal comes as Amazon reports a dramatic 50% increase in Prime members shopping via Buy with Prime, coupled with a 300% spike in orders for Buy with Prime merchants during Prime Day 2024. These statistics highlight the growing popularity of the Buy with Prime service and highlight the potential for increased revenue for merchants.
Key Benefits for Sellers
- Expanded Payment Options: By incorporating PayPal, sellers can cater to a broader audience and streamline the checkout process, potentially reducing cart abandonment rates.
- Increased Sales: Merchants have seen a 16% rise in revenue per shopper after offering Buy with Prime. The addition of PayPal could further boost this figure by simplifying payment methods for customers who prefer PayPal.
- Enhanced Customer Experience: With the ability to use PayPal for transactions, Prime members can enjoy a seamless shopping experience with added convenience and flexibility.
Amazon’s partnership with PayPal is a strategic move designed to enhance the Buy with Prime experience, offering both non-Amazon sellers and shoppers greater flexibility and convenience.
As Buy with Prime continues to grow in popularity, this integration is set to drive further revenue opportunities for merchants and improve the overall shopping experience for Prime members. Sellers should leverage this new payment option to maximize their sales potential and stay ahead of the competition.
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