Amazon is asking some third-party sellers who use Fulfillment by Amazon to bid for access to its fastest shipping tier, called sub-Same Day delivery. The bidding system, described in an email sent to sellers this month, could push up what sellers pay to reach shoppers who get packages in as little as two hours.
Amazon is asking some sellers who use Fulfillment by Amazon, or FBA, to submit bids to make their products eligible for sub-Same Day delivery, according to an email the company sent to sellers earlier this month. Sub-Same Day orders can arrive as soon as two hours after checkout and are available in 2,300 metro areas.
Amazon told sellers that items sold through sub-Same Day delivery have experienced 12% higher sales on average than those shipped through regular FBA service. Under the new system, sellers pay only for units that actually ship through the faster tier, at the per-unit price they bid, and participation is optional.
A bid system that adds a new cost
Under FBA, sellers already pay Amazon to store and pack inventory, with some fees charged per item and others as a percentage of each sale. The bidding system could increase what sellers pay on top of that, people who advise sellers told Business Insider.
A company spokesperson said the change lets sellers choose which products to offer at faster speeds based on their own business expertise. Amazon added that it will keep placing a wide variety of independent sellers' products in its Same Day network at no extra cost.
Competing to get there faster
Vanessa Hung, CEO of Online Seller Solutions, said Amazon will prioritize whichever products get to customers fastest, both in search results and in Alexa results. Sellers who want to stay competitive now have to weigh how much extra to bid.
Scott Needham, who has sold on Amazon for 13 years and runs SmartScout, said FBA remains a good deal for fast shipping even with the change. But he said the bid system makes using FBA more complicated, since sellers now have to calculate a winning offer rather than simply paying a set price. He said he would prefer Amazon charge an elevated flat cost instead, so that sellers would not have to play that game.
Sellers already feel the squeeze
Meeting faster delivery windows usually means sellers have to stock inventory in more Amazon warehouses closer to customers, Hung said, rather than serving multiple cities from a single facility. Amazon's sub-Same Day facilities stock about 100,000 products, a fraction of the millions carried at its traditional fulfillment centers.
Third-party sellers have flagged rising costs on Amazon before. In April, some staged a one-day ads boycott after Amazon began deducting ad costs directly from sales proceeds instead of letting them pay by credit card. Some sellers are now trying to grow sales on other platforms such as TikTok Shop, where selling costs are lower, Hung said.
According to Hung: "I roll my eyes, and I'm like, okay, this is another fee."
Source: Business Insider
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