Amazon had some big announcements for sellers this week.
- There will be FBA Inventory Storage Fees increases and some Policy Changes. The stated goal is to encourage improved inventory management. These changes are not immediate. Some start in April and others in September. In April, Regular monthly inventory storage fees will be increased by $0.05 per cubic foot for standard-size and oversize items. In July storage for sellers with a low inventory performance index will be limited. So, if you don’t have a history of selling quickly, you will not be able to store as much in fulfillment centers. Finally in Sept, long-term storage fees for FBA, Multi Channel Fulfillment and the Small and Light program will be adjusted and the assessment dates will be changed from a semi-annual basis to a monthly basis. Now, with the stated goal of a 6 month window before long term fees are charged, but only assessing it twice a year, sellers could game the system by sending inventory in at any point after Feb 15th to get almost 12 months but have it only count as 6. Starting in Sept, it will be assessed every month on the 15th so sellers will simply have to only send in inventory that will sell in an actual 6 month period. Fees increase somewhat after 6 months and significantly after 12.This is all to encourage active management of inventory that’s been in Amazon fulfillment centers for six months or longer.It used to be that a seller could use the Amazon warehouse as their own for a very low cost. As warehouses have been close to or at capacity for the few years policies continue to change to keep the inventory leaner. Sellers who wish to hold inventory will either need to have their own warehouse or use a private warehousing solution. Knowing inventory turn rates and understanding sell through time is vital to the success of a business and overall improves cash flow and forces better decision making so this can be seen as a motivator to run a more efficient and profitable business.
For full details go to: amazon.com/fba-fee-changes
- The words taxes and good news are rarely used together but we are doing it! Now, in addition to paying the state tax directly in Washington, Amazon must pay direct in Pennsylvania effective on April 1st. This saves small businesses time and money and is great for third party sellers. Hopefully soon, they’ll do it in every state!
- The packaging guidelines for apparel, fabric, and textile products such as clothing and shoes have been updated. Some of the new requirements are that all products must be in a sealed poly bag, shrink wrap or box. Shoes must in their original, manufacturer-provided box.
These are solid business practices that will help the customer experience as well as help workers in warehouses process inventory more efficiently. A lot of sellers were doing this already but obviously not all. So now, those with good practices can just keep up the good work!
In Industry news…
- eBay announced their Spring Seller updates which pleased some and horrified others. They are also rolling out changes over the next few months. A few that tie in well with Amazon sellers are their added exposure for bundles and lots. They are encouraging sellers to use universal product identifiers such as a UPC code and shared listings. Links to external sites are being discouraged and there are fee updates as well. As Amazon become more challenging for smaller sellers, this is a great time to learn about or increase eBay sales.
- Walmart introduces new meal kits for customers. Developed at their Culinary and Innovation Center they are made and assembled fresh in-store daily. Options include pre-portioned cooking kits, kits to accompany the rotisserie chicken, along with options that can be heated up and on the table in less than 15 minutes. Some tasty sounding choices are:Steak Dijon, Thai Curry Chicken, and Chicken Enchiladas. They serve two people and range in price from $8 to $15.Buyers can order at lunch and pick up in time to bring home for dinner that night.Walmart is integrating trending food business ideas into their current infrastructure. They want buyers to come in store and they want to attract higher end shoppers. These new meal kits will do both. It’s interesting that they are offering three options. The pre-portioned cooking kits are an ingredient based solution similar to Hello Fresh. Bloggers and Pinners have been posting for years about how it’s cheaper and easier to buy a rotisserie chicken than a raw chicken and then do something creative with it. Walmart is using that idea in the second of their meal prep option. And finally, stores like Whole Foods and Costco have been offering heat and eat dinner options. Walmart is diving in with all three in a dinner blitz.
- Walmart is expanding their private label clothing to compete with Amazon and Target. Historically, their brand White Stag has been lower end and not attractive to brand conscious buyers. They are adding 4 new luxurious lines. Time & Tru for women size Small through 2x, Terra & Sky, a high end plus size women’s line, Wonder Nation, comfortable and durable clothes for kids and George, for men. They are using the scale, buying power and logistics that they’ve built with lower end lines and diving deeper into higher end clothing.