Client Letters: 2023 Amazon Costs & Linkfest
Amazon Seller Central
Amazon has announced changes for Seller Central pricing effective January 17, 2023:
Referral Fees - All will remain unchanged.
Fuel & Inflation Surcharge - The previously implemented surcharge will be added to the existing FBA charge.
Long-Term Storage Fee Segmentation - Fees will now be applied to items aged 180-270 days. Fees here.
Peak Storage Fees - Fees will increase by roughly $0.20 per cubic foot.
Bottom line: Cost increases are difficult to swallow but Amazon still remains quite competitive relative to other 3PLs when accounting for pick, pack, ship, storage and freight. Amazon is clearly flexing its muscle and realize they provide the most compelled customer and have very little marketplace competition. We recommend building these into your pricing in 2023.
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Amazon Vendor Central
Please be reminded that Buyers and/or Vendor Central Support should have started reaching out to your main account contacts for 2023 Co-Op, Freight and Damages terms. A couple of points to note:
Based on the weak profitability of Retail and slowdown in sales, we are seeing initial proposals higher than in previous years
We are also seeing the majority of the terms requests now including further markdown allowance AND advertising allowance.
Bottom line: We believe the weakness of Amazon Retail will drive some of the highest “asks” many accounts have ever seen. We continue to believe the threat to move to Seller Central and the inability to raise prices will provide credibility in these terms negotiations.
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As we round the corner to Cyber 5, we found a few links interesting:
Amazon layoffs in Retail - Alexa and Retail (Vendor Central) is seeing layoffs. Link Our take: As we have discussed, Retail struggles continue and the push to Seller Central is very clear. Only the few will remain.
Walmart has managed inventory - Walmart surprised many with the positive results in grocery and its ability to cancel POs from vendors. Link Our take: Walmart pushed the inventory glut back to the Vendor base. The inventory glut still sits in the supply chain.
Gap starts selling on Amazon - Gap has opened an Amazon store. Link Our take: No mass brand can afford to avoid Amazon.
TikTok now has shops - TikTok is taking another stab at commerce. Link Our take: We have seen the shop approach from a number of social media players over the years yet limited success. We believe if anyone can pull it off, it might just be TikTok (assuming they aren’t banned).
UPS further extends in returns - UPS already accepts Amazon unboxed returns in stores. Now they accept unboxed returns via pickup for other retailers. Link Our take: UPS continues to steal FedEx share as Amazon steals UPS share. Quite the battle playing out.
Please reach out with any questions,
Ryan Craver
Disclosure: Client Letters are intended for Commerce Canal clients, investors and employees. Commerce Canal and its officers, directors and employees provide this content for informational purposes only.
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