In a recent email to sellers, Amazon further refines the ecommerce role that they want to play in the marketplace.
“In the past, one unit of each ASIN in storage has been exempt from the twice-annual Long-Term Storage Fee. Effective with the February 15, 2017, Long-Term Storage Fee assessment, this exemption will end. A Long-Term Storage Fee will be assessed on all inventory that has been in a U.S. fulfillment center for six months or more. There are no additional changes to the Long-Term Storage Fee at this time, other than there will no longer be a single-unit exemption effective February 15, 2017.
You can, however, remove these units for free: Starting today, September 19, 2016, we will reimburse you for the return fee or disposal fee for one unit of every ASIN for which you file a removal order. This promotion applies to inventory in U.S. or Canada fulfillment centers and expires end of day October 14, 2016, after which time normal removal-order fees will apply.”
Amazon, as the “everything store” had an emphasis on the availability of, well, everything. In order to do this, they were willing to house and store a large variety of items provided by third party sellers so that a customer could look on Amazon for that obscure textbook, rare bra size or discontinued toy and have it shipped for free as part of their Prime subscriptions. With Amazon’s business growing exponentially, and warehouses filling as fast as they are built, this strategy is changing.
Amazon sellers have been adjusting to their further restrictions on warehouse storage for a while now. Amazon wants our inventory levels to be low enough so that we do not carry more than a 6 months supply of any product unless we are willing to pay a high storage fee. Until last week, sellers could keep 1 of any item in stock with no long term storage fees which allowed for the stocking of rare books and other hard to find items, this is no longer the case.
Now, the fee structure and communication that sellers are receiving is letting us know that Amazon wants to be the place for popular items. They want items that will sell in the next few months and that’s about it. It’s a mass business that is far more profitable and predictable overall for them but less welcoming to the treasure hunter or picker. These sellers stock items that may sell for hundreds of dollars but appeal to a very specific buyer who may not even look for this item for 8 or 15 months from when it is sent in. Source the rare book, prep it and send it in to Amazon and then as Ron Popeil said, “Set it and forget it”.
This business model is not one that is helping with Amazon’s new plans so they are discontinuing it. As a way to help sellers transition, at least, we can have these items returned to us for free until Oct. 14th 2016. This is actually very helpful. For those who stock thousands of books, having them returned for a fee of $.50 each or disposed of for $.15 each can really add up. It also means that the prime fulfilled rare book may be coming to an end.
Impact On The Individual Book And Other Long Term Item Seller
This cost of storage is now an issue so each item will have to be carefully evaluated to see if it is worth storing and selling via FBA (fulfilled by Amazon). The business model will have to be adjusted significantly and those with greater expertise will continue to succeed, perhaps even to a greater extent. When any business become harder, it means that those who are willing to do extra work can be rise to the top.
New Business Opportunities Arise
In online used clothing sales, there has been a rise of more customer focused niche sites such as Swap.com (see our blog post about that here) as well as Instragram and Facebook selling. The used clothing item, which had formerly been the domain of eBay, thrift stores and garage sales is now upscaling and diversifying as more and more customers look online and want a used product shopping experience that is seamless and enjoyable. There used to be a wide range of online book stores and used books sites that were gobbled up by Amazon and eBay such as Half.com. Currently there are used book sellers that do a huge business on Amazon with both FBA and MF sides to their businesses. They are large companies with warehouses and staffing and may be in a position to take further domination of this used book market with warehoused and shipped merchandise that is sourced by third party sellers. Sites that have not been able to get off the ground due to Amazon’s domination may now have a shot as over time, the selection of hard to find items goes down on this giant retailer. We may see the rise of more corporate online second hand stores that provide an Amazon style shopping experience for buyers and an outlet for the selling of millions of hard to find items.
Another sales opportunity for these hard to find books is to convert them to Createspace and Kindle e-books. There is a business model where authors and estates are contacted by a consultant and a revenue share is put in place. Out of print but in in demand books can be made available and accessible. Perhaps these hard to find books can even be sold more, if the price goes down because it’s a print on demand (POD) product. Are you the professional who knows enough to contact these people and work with them? For many authors or their descendants, understanding Amazon’s POD system is just not a priority so the knowledgeable book seller can switch to a role as a service provider.
Regardless of your plan to adapt, think hard about your inventory levels and take advantage of this free grace period from Amazon.
We’d love to hear what you think and how you will adapt to these new changes. Please comment below.