Originally Published in Pymnts.com, October 13, 2016
More of Amazon’s marketplace sellers are using Amazon’s fulfillment services, in part because of Amazon Prime’s popularity, according to Internet Retailer.
“Our data indicates that more retailers are adopting Fulfillment by Amazon [FBA] for shipping and handling and to stay in front of the Prime consumer … If you’re not using FBA, you’re likely losing share,” said Scot Wingo, executive chairman of ChannelAdvisor, in March.
In September, almost 41 percent of the value of goods sold by ChannelAdvisor clients through Amazon’s marketplace was managed by Fulfillment by Amazon, up from almost 34 percent a year ago. Monthly reports are produced by ChannelAdvisor comparing merchant clients’ sales through online marketplaces and marketing channels, such as Amazon, eBay and Google Shopping.
Amazon Prime is a subscription-based service providing customers with free two-day shipping, video streaming and music privileges for $99, and it is causing sellers on Amazon’s marketplace to use Fulfillment by Amazon. Fulfillment by Amazon means that merchants ship their goods to one or more Amazon warehouses and pay Amazon for storage. Amazon then picks, packs and ships those goods when they are purchased by consumers from the sellers. When marketplace merchants use Fulfillment by Amazon, their products become eligible for Prime shipping.
Amazon began restricting shipments this week from new-to-FBA sellers and stated that, if a new Fulfillment by Amazon seller had not completed its first shipment before Oct. 10, it would have to wait until Dec. 19 to do so.
According to Amazon, it wanted to “have the capacity necessary to receive and store inventory and to ship products to customers quickly.” The service suspension period covers the busiest parts of the holiday shopping season.
Sellers can use Amazon’s fulfillment services for sales through other channels, such as a retailer’s own website and marketplaces, such as eBay. ChannelAdvisor tracks where the sales fulfilled by Amazon were Amazon sales or sales originating from other sites. In Sept. 2016, only 2.2 percent of the gross merchandise value fulfilled by Amazon was not fulfilled for Amazon sales, according to ChannelAdvisor, which is down from 3 percent a year ago.
Wingo has said in a blog post that Amazon might make this option a thing of the past, although Amazon has not made an announcement concerning the discontinuation of fulfillment services for sales from other websites.