Will Amazon’s prepaid return label drive you to FBA?

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Chris Turton Chris from Chris Turton Ecommerce is an ecommerce and marketplace consultant passionate about understanding how online businesses tick. He writes from experience and tries to answer questions from sellers to improve and share his knowledge. Today, Chris considers the new Amazon prepaid return label edict and asks if it will drive all sellers towards using FBA?

Is Amazon’s prepaid return label feature the next step towards driving all sellers towards FBA

As a consultant to over 35 Amazon seller and vendor accounts currently, we see some common trends grow over multiple merchants in multiple categories and occasionally see things that make us step back a little. Since the explosive growth of marketplace selling down to covid, as well as the position of brands to leverage their own inventory and offers, more and more focus seems to be driven in moving stock away from the MFN (Merchant fulfilled network) where sellers are happily providing the service and postage directly to the customer and strong incentives to get these accounts to FBA (Fulfilled by Amazon) where stock is shipped directly into Amazon’s warehouses for storage and direct dispatch to the customer.

Free return labels for seller fulfilled items

Over the past six months we have seen some big changes to seller central in both the UK and US interface culminating in the latest feature that starts in July for UK sIs Amazon’s prepaid return label feature the next step towards driving all sellers towards FBAellers where they must provide a label for a return to customers for returns of any reason or offer a returnless refund. This step will increase margins and in short, possibly damage seller and customer relations because of potential increases in fraud, and more importantly making small items high risk. In comparison FBAs “return processing fee” is only 50% of the original fee on clothing, shoes and handbags, while all other categories remain free.

Sell Global System Replacing Pan European FBA Possibly

Just a couple of weeks ago, we started to see customers’ products for sale globally under a new seller account “Amazon EU” and “Amazon UK”. Then on the 12th June, Amazon publicly announced that UK sellers who are using FBA are automatically enrolled into Amazon’s global stores programme, allowing a customer to purchase an item in Europe from Amazon’s seller account. Amazon in turn will buy the FBA item from your UK stock and ship it internationally, circumventing the complicated Brexit red tape allowing products out of the country. This system as it develops may become a replacement for the Pan-European FBA system which ceased in December 2020.

Will Amazon’s prepaid return label drive you to FBA - The buy boxThis buybox is occupied by Amazon UK’s “seller central” account. Yet this product is being manufactured and sold by our client using FBA, however this item is being sold on amazon.de

The order is then collected by Amazon who in turn buy the product from your FBA inventory.

Removal of The Early Reviewer Programme

The Early Reviewer Programme was a cost effective and legitimate way to bring reviews to new products. Amazon would incentivise the customer with a gift card if you signed up for this service. It cost £60 per parent ASIN and would allow upto 5 reviews on any new product, what’s more, any seller of these products could use the programme to help drive their listings. This system ceased on March 10th 2021, allowing review acquisition from Amazon “vine” a similar service which offers a free product in return for a review, this is only available to brand owners who are utilising the FBA service.

Early Reviewer programme removed

Seller Fulfilled Prime Delivery Times Less Attractive

In the last few months we have seen SFP (Seller Fulfilled Prime), which allows merchants to fulfill orders from their own warehouse location while offering the prime badge have longer delivery windows than its FBA (Fulfilled by Amazon) counterpart, meaning that FBA is a more attractive option than SFP, Amazon may argue its to protect customers expectations when it comes to delivery timeframes but, in reality to use seller fulfilled prime; one must use a tracked service usually on a 24 hour window.

Seller Fulfilled Primes Move to Six Days

Seller fulfilled prime also becomes less desirable from the end of June 2020, as merchants are required to offer a Saturday or Sunday collection. Meaning warehouse teams will need to work an extra day to fulfill orders as well as agreeing with couriers a weekend collection time. This added step has frustrated many businesses.

This all seems a little counterproductive currently, if you’re a UK FBA seller in particular you will know the pain of Amazon’s recent “instock” limits, we think this has occurred due to the sheer increase in new sellers jumping on board down to covid. Amazon’s new storage fee system around the “IPI” scores means that limitations and costs don’t kick in for the first 13 weeks of FBA. This has led to many new sellers sending in large quantities of product that they simply aren’t moving. In May this year, Amazon announced that 5 new fulfillment centres will open in 2021 in the UK creating 10,000 jobs.

There are probably more instances than this where certain tools, features and advantages for sellers seem to have been steered more to FBA sellers, I would love to know of any others I may have missed in the comments.

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