FBA sellers penalised by new Amazon postage policies
Glenn is a reader and regular commenter on Tamebay and sometimes he writes for us, sharing his experiences as an ecommerce trader.
As February’s long term storage fees approach I find myself somewhat miffed to be paying storage fees on products that I had reasonable expectations would sell within a 12 month period.
Why am I miffed?
Because Amazon have changed policies after stock was submitted to a fulfilment centre and products which previously sold well are now slow sellers or even stagnant. Many products with a selling value below £10 have become “Add on” products (after) being submitted to a fulfilment centre and customers (except Prime buyers) wanting to make a single small purchase below £10 cant do so and any selected product is placed in their shopping basket until the total value of products reaches £10 or more.
I, like other Amazon FBA sellers, must now assess my unsold stock and make a decision to retain, remove or destroy and each option has a cost implication.
Not all products below the value of £10 are “Add on” products and Prime member can still enjoy Unlimited FREE One-Day Delivery, with no minimum purchase requirement. Customers who are not Prime members often pay a high postage costs to such a degree that it’s tempting to increase the price of the low value products to £10 at which point they become eligible for “FREE Super Saver Delivery in the UK on orders over £10”
On 8/1/2014 Dan highlighted within Tamebay Amazon’s change of policy concerning Free super saver delivery to the effect that only orders over £10 will be eligible for free delivery on UK orders fulfilled by Amazon.
All those FBA sellers, and I include myself, who sent media products to Amazon are now finding that CDs and books which previously sold well are now selling slowly if at all.
To counter this drop in sales I have started to fulfill many of my low value products myself and generally only send products with a selling value of £10 or more to a fulfillment centre.
This change is bad for me and Amazon because for personal reasons I only work 10 months of a year and during the 2 months absence all my merchant fulfilled products will be placed on ‘Holiday’.
The CDs, books and low value products sent to Amazon for fulfillment by Amazon were all tried and tested products and really should have all sold out. To find that I am now going to incur unnecessary fees because the goalposts were moved has seriously undermined my confidence in Amazon.
I was an Amazon customer long before I commenced to sell with them. I spend a considerable sum with Amazon every year on books, computers, and other items and will probably continue to do so, but considering how customer focused Amazon is I am surprised at the lack of consideration to FBA sellers.
Sellers Using FBA on low value items, also manage to disrupt sales for non FBA sellers fon the same item. FBA items get a preference when it comes to winning the Amazon buy box. and the item rmains an add on item even if other third party sellers are selling the product and handling delivery themselves.
You are correct that FBA sellers have an advantage in winning the Blue Buy box, but being FBA is no guarantee and your price has to be competitive.
FBA seller also pay higher fees and now I have started to sell some of my lower value products I am getting better profits.
For me FBA has always been about time management, in that I can take few days off knowing that Amazon will post and pack all orders.
We are stopping FBA at the end of this month, sadly we launched two weeks before they changed to the £10 price for delivery and 90% of the products we sent were under £10! I kicked up a fuss but no one cared about it.
We are also getting killed on the sales front as they opened our category up to Chinese sellers, nearly £40k down in the last four months of the year as they are selling products at huge discounts ( I am not sure where or when these retail prices were established) but it doesn’t show customers that they come from china.
Add-on items are the same for Prime customers – you can’t order them on their own.
We don’t have the £10 limit but we can’t order add-on items without ordering something else.
I am hoping Amazon have done a lot of analysis on this as I sell a lot of sub £10 things through FBA.
They must know how many customers look for other items to hit the £10 figure. Will they be buying mine to top up? I hope so.
The other thing we don’t know is how what percentage of their sales are to Prime members. Will they get more Prime members as a result which means more amazon loyalty?
I am always amazed how many of my items are expedited suggesting a reasonable number of Prime customers.
I am not sure it is all that straight forward.
Amazon hold small and medium sellers to ransom and FBA is just another example. The Blue Buy Box has caused one of my customers no end of problems and at least once a week I get a call from a customer who thinks they have bought from us but haven’t. Very frustrating.
Anyone needing to take a 2 month break from trading is more than welcome to come to a small fulfillment house like ourselves and we will cover your sales.
Amazon should offer discounted FBA/sales fees for goods sold for less than £10 to encourage sellers to continue to use FBA for low value goods.
The inclusion of “add on” to any product is the kiss of death. It effectively tells potential buyers “if you are not prepared to spend at least £10 then we don’t want your business at the moment, come back when you do.”
I was selling ties at around £5 and doing very well with them. Ties easily go into a jiffy for posting as a large letter, and yet many are now add on products.