Amazon slashes shipping fees to compete with other online marketplaces

By Sumit Modi

Amazon is threatening other online marketplaces - such as Alibaba, eBay, and Wish - by cutting the fees it charges Chinese merchants to sell cheap technology and other small items.

These new rates will begin next month. Merchants will pay 67 percent less than the current price to ship three flat, one-ounce packages, but make significally less of a saving for larger items.

Amazon has been under pressure to compete, thanks to the ePacket program - an agreement between the US Postal Service and China Post - which allows Chinese merchants cheap access to US shoppers on small packages. Even if they sell on Amazon, they can also ship orders themselves through ePacket, thus Amazon earns less money.

This program has been described as unfair, as it means US businesses pay more to ship an item to an American customer than a Chinese merchant pays to post the same item from overseas.

Amazon's new rates are structured around the company's Fulfillment By Amazon Small and Light program, which was introduced in 2015. It allowed the business to offer free shipping on thousands of popular small items, most of which come from third party merchants who offer Amazon a cut of the sale to handle storage, packaging, and delivery. Low delivery costs are essential for profitability, as most of these items cost $10 or less. 

According to Bloomberg, Jarrett Streebin, CEO of EasyPost, stated: “Amazon is worried about losing marketplace volume to Alibaba and others since merchants can just sell on there and ship to customers through ePacket."



Follow @BizReviewUSA and @NellWalkerMG

Read the June issue of Business Review USA & Canada here



Featured Articles

Top 20 essential leadership resources for Black executives

To celebrate Black History Month, here are 20 resources for Black leaders – from business books to leadership coaches to business school exec programs

Broadridge study reveals huge impact of AI on C-suite

Broadridge Financial Solutions spoke to 500 C-suite executives from across the globe, many of whom said AI was significantly changing the way they work

PwC's Kathryn Kaminsky – the role of boards on social issues

As Vice Chair Trust Solutions Co-Leader at PwC, Kathryn Kaminsky says boards play an important role in helping businesses take action on social issues

Why your business needs a Chief Transformation Officer

Leadership & Strategy

12 top AI and ML trends for the enterprise in 2023 – Dataiku

Technology & AI

From NYC to Hong Kong, the rise of the private members' club

Leadership & Strategy