Moving Amazon closer to its goals while helping 3rd Party Sellers Reach theirs
Thomas Plaster spoke on Amazon’s Fulfillment by Amazon (FBA) program at the recent Internet Sellers Conference in Seattle. I found his talk enlightening not only as an FBA user; he also gave attendees a taste of the direction Amazon is going as an online retailer.
The surprise/awakening statement:
Tom started by telling us a little about the history and direction and ‘why’ of FBA. As you may know, founder Jeff Bezos started the company with the vision of being the biggest book seller in the world. He wanted every book ever written to be available. As the company has matured the vision has changed. Now Amazon aspires ”to have available for sale everything ever created or intended to be sold.” Think about it – that’s an astonishing goal. And, how in the world would any corporation ever have enough capital funding to achieve such a goal?
Well, that’s the interesting thing. Amazon has no real intention in purchasing all those products to resell. To accomplish the goal they are moving away from being a direct retailer and moving toward being a platform or ‘marketplace.’
Slowly, but surely, Amazon is moving away from purchasing and reselling products. To accomplish this Amazon has two hurdles to overcome.
One is that 50% of their buyers have still not purchased from a third party seller. That could be because third party sellers charge shipping and it may be the trust and safety feature.
Two small, third party merchants often have storage and fulfillment problems that stand in the way of expanding.
Amazon FBA was designed to bridge those gaps.
When a seller sends the inventory to a fulfillment center Amazon includes it in their free shipping program and takes care of all the shipping, handling and customer service issues.
The program is a whopping success! The Amazon marketplace is being changed rapidly by FBA. And, this year alone Amazon intends to add between 3 and 5 new centers to the 28 fulfillment centers.
If you haven’t looked into Amazon FBA as a part of your seller toolkit this program may help you gain the lift you need in the Amazon marketplace. Look at your inventory – is there a product that might sell better if it shipped for free? Can your retail price be shifted or tweaked a little to roll the pick, pack and storage fees and offer you a reasonable margin? If so, consider try using the Amazon FBA program before your competitor does.
For more information about Amazon FBA and how to use it to grow your business join us at the Web Sellers’ Circle.
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Fantastic, kinda awesome subject. I am goin to write about it also!!
Here’s the problem that we are facing with Amazon.com FBA program. Amazon.com is taking our the products that are being returned to us, and selling them under their own Amazon Warehouse Deals Program. They say they are paying us for these, but they have yet to be able to point out a payment that they’ve made us for these products. Not only does this cause a problem with us, but also our manufacturers. Some manufacturers will absolutely not deal with Amazon with a 10 foot stick due to their total disregard for MAP pricing policies. As a seller of many products that have MAP pricing, I can tell you Amazon is a nightmare, and our below MAP pricing on close to 100% products they sell that have this policy. So the manufacturers don’t want to deal with Amazon, and are getting furious that Amazon is now selling their products under Warehouse Deals, below MAP price. We have seen this now on 3 different brands, and 2 of those brands have now banned their vendors from participating in Amazon FBA program because of this. Thanks Amazon, appreciate it. Selling through FBA is not all it’s cracked out to be.