Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
Fulfillment by Amazon lets marketplace sellers piggyback on Amazon’s delivery network.
Amazon.com Inc. yesterday brought Fulfillment by Amazon to its Canadian e-commerce storefront, Amazon.ca. The service enables sellers in the retailer’s marketplace to send their inventory to Amazon so that the world’s largest online retailer can pick, pack and ship packages on the seller’s behalf.
In addition to enabling marketplace sellers to piggyback on Amazon’s robust fulfillment operations, using Fulfillment by Amazon also makes a sellers’ products eligible for free shipping for Amazon Prime members and other shoppers who spend at least $25 on eligible products on the site. Amazon Prime enables consumers to receive two-day shipping in exchange for a $79 annual membership fee.
Because Amazon, No. 1 in the Internet Retailer Top 500 Guide, assumes that most shoppers are either Prime members or will spend $25 on eligible items, the retailer doesn’t add in a shipping cost for Fulfillment by Amazon products when sorting sellers by price. That gives sellers an advantage in winning the Buy box, which contains the page's Add to Cart button; when a consumer clicks on that button she buys from the merchant Amazon has selected as the best for that product.
“Fulfillment by Amazon is a win-win for Canadian customers and businesses,” says Steve Oliver, director of Amazon.ca. “Customers will benefit from an even greater selection of items with free shipping and a trusted experience, while businesses can take advantage of our world-class fulfillment services and focus their efforts on growing their business.”
Pricing for Fulfillment by Amazon include a “pick and pack” fee, weight handling charges and inventory storage fees. The pick and pack fee starts at 90 Canadian cents (91 cents), weight handling fees start at C$3.75 ($3.77) for the first 500 grams (1.1 pounds) plus 37 Canadian cents (37 cents) per additional 500 grams. Storage fees start at C$16 ($16.11) per month, although rates vary based on the time of year.