In June last year Amazon.com introduced Fulfilment by Amazon (FBA) Small and Light. For items under 8 ounces, smaller than 9x6x2 inches and priced under $10, Amazon.com offers Lower fulfillment costs than the standard FBA program and free standard shipping for all customers.
Now Bloomberg reports that Amazon are going even further cutting fees by up to 67% for items which will fit in a jiffy bag.
The new shipping rates for even lighter and smaller products is intended for items thinner than 1/2 an inch such as cables, mobile phone covers, mobile screen protectors and the like.
The reason Amazon.com are doing this is to attract Chinese merchants who may otherwise ship direct at cut price postage. Postage rates from China are so cheap that FBA has to be ultra competitive in order to compete and currentl it’s not. From the 1st of July when the new rates kick in, Amazon.com are hoping that FBA will be more attractive to Chinese merchants to ship stock to the US in bulk and let Amazon fulfil it.
FBA will enable Amazon to get products to the end customer much faster than a Chinese merchant shipping from China. It will also assist US merchants who will have the same lower FBA fees, but of course potentially they’ll have a lot more competition from Chinese merchants also using FBA but perhaps with lower product prices.
It’s a double edged sword for Amazon third party merchant customers. Lower FBA fees for low cost light weight small items is welcome. The extra competition from Chinese merchants almost certainly won’t be welcomed.
