Amazon is turning to third-party sellers to expand one of its fastest shipping options — and asking them to pay up for it.
The e-commerce giant is asking some sellers who use Fulfillment by Amazon, or FBA, to submit bids to make their products eligible for “sub-Same Day” delivery, according to an email sent to sellers earlier this month.
Sub-Same Day deliveries arrive as soon as two hours after customers place an order and are available in 2,300 metro areas, according to Amazon. Items sold through sub-Same Day delivery “have experienced 12% higher sales on average” than those delivered through regular FBA service, Amazon wrote in the email.
“You pay only for units that actually ship through Sub Same Day, at the per-unit price you bid,” the email reads. “Participation is optional, and you’re never charged more than the price per unit you set.”
The bid system could increase what sellers pay to Amazon, people who advise sellers told Business Insider.
Under FBA, sellers already pay Amazon to store and pack their inventory. Amazon charges some fees on a per-item basis, while others are a percentage of each sale.
“For the first time, sellers can choose which additional products to offer at faster speeds based on their own business expertise and customer insights,” a company spokesperson told Business Insider about the bidding system.
Amazon will evaluate bids using factors such as customer feedback, the company said. Items sold by third-party sellers for sub-Same Day delivery span several categories, from groceries to toys.
Amazon “will continue to place a wide variety of products from independent sellers throughout our Same Day network at no additional cost to sellers,” the spokesperson added.
Paying to ‘keep playing at the highest level’
Amazon has expanded the range of products available for delivery in as little as a few hours over the past year. It’s also offering 30-minute delivery in some cities for some groceries and other essential products.
To meet those kinds of delivery times, Amazon wants to use inventory stored in its warehouses from third-party sellers, who account for the majority of unit sales on the platform. And it’s not afraid to make sellers compete against each other.
“Amazon will prioritize in search results — or even in Alexa results —whatever gets there faster,” Vanessa Hung, CEO of Online Seller Solutions, an agency that advises Amazon sellers.
“If you want to keep playing at the highest level, you need to bid for that and pay more,” she added.
FBA is still “a good deal” for fast shipping even with the change, said Scott Needham, who has sold on Amazon for 13 years and is the CEO and founder of SmartScout, which provides market intelligence about Amazon to sellers.
Amazon’s introduction of a bid system makes using FBA more complicated for sellers, who now have to calculate a winning offer to ship more of their inventory with the fastest shipping option, he said.
“I would rather that they just have an elevated cost” for sub-Same Day shipping and invite sellers to participate instead of using an option, Needham said.
That way, he said, “there’s no game theory.”
For some sellers, ‘this is another fee’
Sellers are likely to spend more on sub-Same Day delivery even without the bidding system, Hung said.
To meet faster shipping deadlines, sellers have to warehouse their products closer to customers — a move that usually means buying more inventory and keeping it in more Amazon facilities.
“Before, the same warehouse could serve Raleigh and Charlotte,” Hung said. “Now, you need to have inventory in Raleigh and in Charlotte in order to have the 30-minute delivery window.”
Amazon says that its sub-Same Day facilities stock about 100,000 products — a fraction of the millions found at the company’s traditional fulfillment centers.
Third-party sellers have pointed to the rising costs of selling on Amazon over the last few years.
In April, some sellers staged a one-day Amazon ads boycott after the company began deducting ad costs directly from sales proceeds instead of letting them pay by credit card.
Some sellers are trying to increase sales on other platforms, such as TikTok Shop, where selling costs are lower, Hung said.
For anyone who wants to access the high sales volumes that Amazon provides, though, Amazon’s request for bids is a new hurdle, she said.
“I roll my eyes, and I’m like, okay, this is another fee,” Hung said.
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