FBA sellers disadvantaged by Amazon Add-on
Glenn is one of Tamebay’s regular commenters and has been contributing to the site for many years. He’s an Amazon seller who uses Fulfilment by Amazon (FBA) and has discovered that some of his products might not be selling quite as quickly as in the past. Today he reveals why that might be:
If you follow the link to the ‘Add-on programme’ page you will see the following message
“Add-on items are low-priced products for sale on Amazon that can be purchased as long as you’re ordering at least £20 of eligible products. Previously, we could only offer these items in multi-pack sizes (which for many customers would be too much of one item). We kicked off the Add-on programme with thousands of new items, and we’re adding more each day. Only items dispatched from Amazon are part of the Add-on Items programme; items dispatched directly from sellers don’t count towards the minimum order amount”.
Clearly Amazon wants to reduce postage costs for these low priced items whilst looking to encourage customers to spend at least £20. For low priced products which are larger than a (Large Letter) this makes perfect sense. But if you are a 3rd party FBA seller selling products which could be posted within the (Large Letter) price range you are seriously disadvantaged, for example when selling a gent’s tie.
Merchants who fulfil their own orders can offer low priced products at a total selling price below a FBA seller. The bench mark for qualifying as an add-on product is currently around £5, although I don’t doubt that this will increase in time.
If a FBA seller offers a product below £5 it will probably be included in the Add-on programme’.
Now using a gent’s tie as an example – Using FBA I previously sold several ties at £4 or less which placed me in a competitive position. If I list the same tie now at £4 any potential customer would need to place an order for at least for £20 or let the product remain in their basket until such time that they make a £20 order.
The real kicker however is that FBA sellers pay storage fees and the ties I used to sell as (low price / fast sale) are now incurring storage fees.
This add-on program has dramatically effected my (low price / fast sale) range of products and whatever Amazon’s intention I and other FBA sellers are disadvantaged by it.
The choice of whether or not an item should be treated as an add-on should be made by the FBA seller, with a reduced fee structure for add-on items.
Amazon may repatriate your stock (free of charge) if you contact seller support.
According to my Amazon account manager the free repatriation is only if the original sale price was > £5.50 at the time of the stock arriving, therefore very unlikely to be SKU’s falling under the add-on program
A very timely post!
I have just started using the FBA service, and it was all going very smoothly until Amazon started switching my products to this add-on program.
Obviously i contacted seller support and asked why I wasn’t informed before signing up for FBA. I was told it was a ‘new thing’. I then asked what items would be selected for the program, and was told it depended on item weight and dimensions. Going by my products it would seem anything under about 300g and classed as a large letter.
So what do I do now? Products selling 10+ items a day are now down to 1 a day if at all! Amazon say there is no way to stop products being selected for inclusion. They also say I can recall the items, but that the standard fee will apply (although i could request a refund and it MAY be granted!!!). For me, I have about 300 items sitting in their warehouse for which they want to charge me 60p+ for every one i want back!
Needless to say… i don’t think FBA is for me. I found out the hard way!
According to our Amazon account manager items falling into the Add on program have a roughly 70% loss of sales. This has certainly been the case with our listings. We identified 80 falling into the add on program. Most were phone cases etc.
We looked at all 80 of these and raised prices by 20p at a time until the SKU’s were no longer in the add-on program. We found most items which were 2.99 flipped over above 4.00. It appears items within consumer electronics have a lower threshold whereas items in computers section the threshold is around 5.00.
This has led so some anomalies whereby we have 2 offerings on the same Amazon ASIN (FBA and merchant fulfilled) and the FBA is at £5.05 but the merchant fulfilled is at £2.99). They seem to be sharing the buy box and some buyers are buying at the higher price. More than they were within the add on program anyway. As we only changed the prices a few days ago it’s still early days so we cannot see a real pattern emerging.
Thanks for that Julius.
Interesting & informative insight into the pricing thresholds within FBA for add-on selection.
Could you see if the size/format made a difference?
We believe Amazon don’t really have a large letter equivalent so everything goes packet (excepting media perhaps) and the recent postage hikes have made a significant dent in their margins when shipping small, light inexpensive items.
I cannot recall exactly but I would assume 90% of those items would fall under large letters. I make sure I receive emails when Amazon despatch my FBA orders and most of mine seem to be sent by Royal Mail Tracked. For the price I pay it’s a good service for them to be using.
This is just one of those Amazon practices of moving the goalposts and sellers having to evolve to adapt. It may actually help sellers in the long term as we will all have to raise our prices to escape the add on program, all items are then sold at a higher price and we then make more turnover (as does Amazon).
I thought amazon don’t pay shipping per item. I thought they just splashed out a cool £20,000,000/annum for all goods they send.
I wonder if the add on item scheme will eventually result in a minimum order value to qualify for free shipping.
In addition to being a FBA seller I am also a Prime buyer. I thought that paying my annual fee of £49 was unconditional for products listed as qualifying for Prime. Now it appears that previously unconditional Prime products now have a £20 minimum order requirement.
Not a happy bunny!
Have you contacted amazon regarding this?
Would be interesting to hear what they say. I’d also request a refund of £49.
As has beed said and proven many times Amazon are a law until themselves and you either do it their way or take the highway.
The imposition of changes like this without any warning is absolutely par for the course (remember Kindle accessories anyone).
This has all been driven by their need to stop the margin erosion with items like this due to postage increases etc plus they probably don’t really want this type of stuff clogging up their warehouses anyway.
If you have an account manager you should have been warned mind but then again…
It definitely will be clogging up their warehouses now as none of it is selling.
Indeed you may be right.
Unfortunately Amazon will also be requiring FBA sellers to clear slow shifting stock in early August otherwise they will get thumped for increased long term storage fees.
Heads they win, tails they win!
FBA = Fulfilled by Amazon?
Mrs Brown would have another word for the ‘F’.