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- Amazon is offering third-party sellers 75% of storage fees in exchange for them storing best-selling items in its warehouses.
- This would enable Amazon to offer more products under its Prime one-day shipping service.
- Amazon’s third-party marketplace is one of the most profitable areas of its business. Sales from these sellers now make up for more than 58% of the physical gross merchandise sold on Amazon.
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Amazon is offering its third-party sellers discounts on storage fees as part of its plan to fulfill speedy shipping promises.
According to CNET, Amazon emailed its network of sellers on Wednesday offering a 75% discount on storage fees at its warehouses in exchange for storing best-selling items there.
This would enable Amazon to offer more items on its Prime one-day delivery service. Amazon recently announced that it would be reducing its speedy two-day shipping policy down to one-day.
A spokesperson for Amazon did not immediately respond to Business Insider’s request for comment.
Amazon’s third-party marketplace has become one of the most profitable areas of its business. Sales from these sellers now make up for more than 58% of the physical gross merchandise sold on Amazon, growing from $0.1 billion in 1999 to $160 billion in 2018.
CEO Jeff Bezos commented on the success of this arm of the business in the company’s annual letter to shareholders in April. "To put it bluntly: Third-party sellers are kicking our first party butt. Badly," he said.
But Amazon’s role as both a direct seller and a platform for other merchants has also drawn criticism. Most recently, by Sen. Elizabeth Warren, who accused Amazon of using the data from its top sellers to create its own private label products. This practice would "knock out" competition, she said.
Amazon denied this in a statement to Business Insider. A spokesperson said: "Amazon does not use individual sellers’ data to determine which private label products to launch. Private label products are a common retail practice, and Amazon’s private label products are only about 1% of our total sales."
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Source: Business Insider – feedback@businessinsider.com (Mary Hanbury)