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Amazon is offering steep discounts of up to 75% on warehouse storage fees to incentivize merchants to store more of their popular products with the company, in an effort to facilitate its transition to a one-day shipping standard for Prime members, CNET reports.
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The promotion will begin in June and run through January; to qualify, sellers will need to have sold 60 or more of a product per month or have products specifically selected by Amazon. They’ll also have to keep the level of inventory they supply to Amazon at a certain level.
Here’s what it means: The push for one-day shipping can’t be a unilateral move by Amazon: It’ll need sellers to work with it.
One-day shipping is likely feasible for Amazon, but more than half its sales come from third-party sellers, making them critical to achieving this new goal. Third-partymerchants were responsible for 58% of Amazon’s sales in 2018, an enormous jump from 3% in 1999.
Because of this, if the e-commerce giant wants to have any chance of making the lion’s share of the items on its marketplace available for one-day delivery, it’ll need help from those sellers. It shouldn’t be too difficult to get them on board, though, given that one-day shipping is likely to increase consumers’ enthusiasm for Amazon, leading to more sales for the sellers working with it.
The bigger picture: Amazon’s one-day shipping goal will highlight the importance of its relationship with sellers as well as the fine-grain control it has over its private-label products.
- The e-tailer should stay transparent on seller policies to avoid alienating third-party merchants. Amazon has several policies that merchants working with it could find frustrating, like shutting down a seller’s account if more than 1% of its orders result in customers filing a claim or giving corporate customers 30 days to pay bills. The company should stay open and listen to seller feedback about these policies, and others that may arise in relation to one-day shipping, to avoid frustrating merchants, as they could stop cooperating or, even worse, seek platforms that are friendlier to sellers.
- It can use private labels to strengthen its one-day shipping offering. Since Amazon can dictate how its own goods flow through its fulfillment network, it may consider launching more of these brands in the future to boost its one-day offering even further.
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