Amazon announced a reduction in some FBA rates, effective August 29

For many sellers, FBA fees have always been a major factor that keeps costs high. Especially for those sellers with low average order value, whose profits are not high to begin with, shipping costs account for the majority of their expenses.

However, Amazon seems to have found its conscience recently and said it would give benefits to sellers and lower the FBA shipping fees for some products.

According to an announcement released by Amazon, the platform will reduce the FBA rates for all "low-price" products in the next two months. Although sellers currently using FBA can still apply for lower prices for certain products through the Light and Small Products Program, Amazon will end the program when the new pricing takes effect on August 29.

In the announcement, Amazon said it learned that offering lower shipping costs for low-priced products helps increase consumer choice when shopping, and also mentioned its continued improvements in delivery speeds.

Amazon did not disclose the new fees, but said they would apply to all items priced under $10. It also did not mention whether prices would differ by weight.

This is good news for sellers who use FBA to sell “cheap” items but are not eligible for Small and Light. Amazon says eligible items will automatically receive low prices and will not be affected by the 2023 holiday rush delivery fees.

However, sellers do have mixed reviews on this. When using the Small and Light program, the price cap was $12, but now it has been reduced to $10.

A blogger posted that sellers whose products are priced between $10 and $12 now need to think twice about whether to raise prices to protect profits or lower prices to get shipping discounts.

An industry insider analyzed that after the implementation of the new standard, small-sized products will benefit the most. The delivery fees of the original small and light products in the 2.47/2.54/2.61/3.15 segments have become 2.45/2.63/2.81/3. It can be said that not only has the price not increased, but it has also dropped significantly.

The ones that suffered the most were large standard products, which increased from the original 2.66/2.77/2.94/3.77 for light and small products to 3.09/3.31/3.47/3.98/4.63. However, the original standard FBA delivery fee for large standard products was 3.86/4.08/4.24/4.75, which is actually a price reduction compared to the original standard FBA delivery fee.

However, the biggest loss is the link that responded to Amazon's call and reduced the price to less than 11.99 in exchange for light and small delivery. Now Amazon has cancelled the light and small, which means that products priced at 10-12 US dollars will have to bear excessively high delivery fees, and face the dilemma of whether to raise or lower prices.

If we lower the price to adapt to the low-priced goods Amazon Logistics, the profit will definitely be in tatters. If we don’t lower the price, we will not get any benefits. If we raise the price, we dare not.

It can be speculated that Amazon's move is likely to counter the low-price impact brought by emerging platforms such as Temu. However, frequent changes in shipping policies will only make sellers silently bear the consequences.

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