When I arrived to work this morning, I discovered a news story disguised as routine notification emails (right, click to zoom). Fulfillment by Amazon, a service that warehouses and distributes products for sellers, will be raising its storage fees starting in August.
The cost will be $45 per cubic foot per year for any items that have not been sold within a year. This amounts to $1.10 per average-sized book or $4.58 per average-sized toy. Prices for removing surplus inventory will decrease overall, including a dramatic reduction of 67% plus no shipping costs (or 750% plus no shipping for oversize items) until the changes roll out August 15. What does this mean for the logistics community?
FBA emails raise more questions
There's more to the story. I was curious about the emails because we sell books through our Amazon store (disclaimer: shameless plug), not through Fulfillment by Amazon.
Likewise, Twitter is beginning to buzz with confusion:
Granted, the link in the German tweet shares an email that should raise some eyebrows. As the blogger points out, "---> NEVER ANYONE asks for a password in CLEAR TEXT !!!!! No bank, no e-mail provider, not even an internet forum about boring embroidery of the 18th Century!" (via Google Translate)
The emails I received seem more legitimate; I was never directly asked for a password. But the inscrutable links didn't inspire confidence. Even anchor text that begins with https://amazon.com hides a long tracking link. My emails also announce a copyright date of 2010.
There may be multiple versions of these emails going around, possibly some composed by copycats looking to phish. If you're skeptical, sign in directly by typing Amazon.com into your browser, not by clicking a link in an email. Caveat emptor.
Fulfillment by Amazon changes policies -- just-in-time?
Despite some confusion over emails, the story is real, and it has potential to significantly influence online marketplace models. Clearly, Amazon could end up with less variety of products. With more storage fees, sellers would have less incentive to keep long-tail items that might not sell quickly or oversize items that might not cost enough to merit the fees. On the other hand, if sellers effectively reduce packaging in response to the fee restructuring, they might be able to afford to store a broader inventory.
Will the rising cost of inventory storage make just-in-time logistics strategy appeal to more sellers? How do you think the supply chain community will respond?
UPDATE (May 19, 1:38 pm Central): Amazon says that some sellers received FBA-related emails as the result of a technical error. Thanks for addressing this so quickly!