Amazon is offering third-party sellers on its marketplace discounts of up to 75% to use its warehouse space in an effort to make more inventory within reach of one-day shipping for its new Prime promise, CNET reported.
Amazon operates about 75 fulfillment centers in the U.S., and stores, packs and ships orders for third-party sellers through its Fulfillment By Amazon (FBA) program. Third-party sellers represent 58% of its total sales, passing the 50% mark in 2015, chairman Jeff Bezos said in an April letter to shareholders. Thus, they’re an important part of Amazon’s next-day strategy.
The FBA discount program will run from June through January, CNET reported based on an email sent out to 3P sellers. It also reported that to be eligible for discounts merchants need to have sold 60 or more of a product monthly or have items selected by Amazon, and maintain certain inventory levels.
“As we evolve our Prime shipping offer to a one-day delivery promise, we’re continuing to invest in opportunities, like lowering fees, to help selling partners provide even more one-day selection for customers and increase sales,” Amazon said in a statement to CNET.
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MCM Musings: Once again Amazon benefits from its vast size. It can easily swallow whatever FBA revenues it loses through discounts in order to boost the number of SKUs that can be delivered within a day to meet the new Prime promise. This is sure to boost the goldmine of Prime membership, already at a staggering 100 million-plus in the U.S. alone.