Published By : 15 Jun 2016 | Published By : QYRESEARCH
In order to compete with other players in the e-commerce space such as EBay Inc., Alibaba Group Holding Ltd., and Wish.com, Amazon.com Inc. is cutting down the fees it charges merchants for the sale of small items that fit into envelopes such as smartphone screen protectors and USB cables. According to an e-mail by the e-commerce giant, the new rates will be implemented from July 1, 2016. As per the new rates, merchants will pay 67% less than the present price. For example, three 1-ounce packages will be charged US$1.61. However, this recent change in the shipping fees differentiate between items that are small and can fit in large envelopes and items that are thicker than half an inch and are subjected to higher shipping fees.
The new rates charged to the merchants are part of the company’s Fulfilment by Amazon Small and Light Program launched last year to offer free shipping of products including mobile phone accessories, makeup accessories, and stickers. As most of these items are priced below US$10, low delivery costs are crucial to attain profitability. Most of these small items are sold by third-party merchants who offer Amazon a cut for each sale for packaging, storage, and delivery.
ePacket Program Helps Chinese Merchants to Reach U.S. Shoppers at Low Cost
It is cheaper for the Chinese merchants to ship small packages weighing up to 4.4. pounds through the ePacket program, an agreement between the China Post and the U.S. Postal Service. With the help of this program, the Chinese merchants can ship directly to the U.S. shoppers. In 2012, about 27 mn small packages from China were shipped by the U.S. Postal Service. The Chinese merchants can also ship order themselves through this program. As a result, Amazon gets less money on handling packaging and delivery. Worrying over losing marketplace volume, Amazon has slashed the shipping fees.