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"Amazon Introduces New Shipping Fee for Sellers Handling Their Own Packages"

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Amazon Introduces New Fee for Self-Shipping Third-Party Sellers

Changes to Seller Fulfilled Prime Program

Starting October 1st, Amazon's Seller Fulfilled Prime (SFP) program will implement a 2% fee per product sold for sellers who handle their own shipping. This update aims to enhance the Prime experience for customers, as stated in the notice sent to merchants. Previously, sellers were not subject to such a fee.

Focus on Seller Fulfilled Prime Program

Launched in 2015, the SFP program allows third-party merchants to sell products with the Prime badge without utilizing Amazon's fulfillment services. However, this program has not gained as much popularity as Fulfillment By Amazon (FBA) due to the stringent Prime delivery standards that sellers must meet, including fast shipping and weekend service. In June, Amazon reopened signups for the invite-only SFP program after suspending enrollment in 2019.

Additional Fees and Antitrust Scrutiny

In addition to the new fee, Amazon charges sellers referral fees ranging from 8% to 15% per sale. Sellers may also incur expenses for warehouse storage, packing and shipping, and advertising. The company's marketplace has faced increasing scrutiny from antitrust investigators who suspect Amazon of leveraging its power to disadvantage merchants. Regulators are examining whether Amazon pressures sellers into using its services for preferential treatment on the platform.

Fee Increase and Pending Lawsuit

The fee increase coincides with reports that the Federal Trade Commission (FTC) is preparing to file a long-awaited lawsuit against Amazon, potentially this month. The agency's investigation encompasses various aspects, including Amazon's treatment of sellers on the marketplace, which accounts for approximately 60% of the company's overall retail sales.

Amazon's Response and Seller Benefits

Amazon has defended itself against regulatory accusations, emphasizing that sellers choose to participate in its marketplace because of the value it offers. While the paid services are optional, many sellers opt for them due to the opportunities they provide for business growth at a lower cost, according to Dharmesh Mehta, Amazon's vice president of worldwide selling partner services. In conclusion, Amazon's introduction of a new fee for self-shipping third-party sellers through the Seller Fulfilled Prime program reflects the company's efforts to enhance the Prime experience. However, this move comes amid increased antitrust scrutiny and a pending lawsuit. Amazon maintains that sellers continue to benefit from its marketplace, emphasizing the value it provides for business growth. Stay informed as developments unfold in this ongoing situation.

Conclusion: Implications for New Businesses Amid Amazon's New Fee Implementation

Impact on Business Costs

The introduction of a 2% fee for self-shipping third-party sellers by Amazon could significantly affect new businesses. This additional cost may strain their financial resources, potentially impacting their profitability and growth prospects.

Considerations for Joining the Marketplace

New businesses contemplating joining Amazon's marketplace must carefully consider the costs involved. While Amazon's marketplace offers substantial exposure and potential growth opportunities, the fees and stringent delivery standards may pose challenges.

Regulatory Scrutiny and Legal Risks

The increased antitrust scrutiny and potential lawsuit against Amazon serve as a reminder for new businesses about the legal risks involved in operating in such marketplaces. Businesses must stay informed about regulatory developments and ensure compliance to mitigate potential legal risks.

Assessing the Value Proposition

Despite the fees and potential legal risks, Amazon maintains that its marketplace offers value to sellers. New businesses must assess this value proposition carefully, considering the potential for business growth against the costs and risks involved. In conclusion, while Amazon's new fee for self-shipping third-party sellers may present challenges for new businesses, it also underscores the importance of assessing the value proposition of such marketplaces. Businesses must weigh the potential benefits against the costs and legal risks to make informed decisions about their growth strategies.
Article First Published at: https://www.cnbc.com/2023/08/16/amazon-adds-a-new-fee-for-sellers-who-ship-their-own-packages.html
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