Danger Ahead for Amazon Sellers Hawking Long-Tail Products

By Joe Waynick
June 3, 2016

Is Amazon planning more draconian changes for FBA sellers?

Since 2010 Amazon has unleashed a barrage of policy changes that have had devastating consequences for small sellers on its platform.

It started with long-term storage fees, where Amazon imposed massive fee increases to sellers who maintain more than one SKU of a single ASIN for more than one year in their warehouse.

Simultaneously, Amazon drastically increased its FBA selling fees. For example, the pick and pack fee was increased from $.50 to one dollar — overnight!

Then inventory placement was implemented shortly thereafter. In the "good old days", FBA inventory was directed to an Amazon distribution center that was geographically close to the seller as the primary criteria.

The Winds of Change Are Blowing

Everything changed in 2011 when Amazon started directing inventory to distribution centers based on their own internal criteria. Suddenly, instead of paying an economical $150 to ship a pallet of books into an Amazon distribution center, sellers are now faced with shipping that same pallet across the country at $750 a pop.

That policy shift effectively put an end to selling penny books for $4 as FBA listings. Sellers who continue the practice either have massive volume and can ship inventory from their own distribution centers into an Amazon center at drastically reduced rates, or they are losing money on each sale and use penny books as a loss leader.

fba

There's no point in delving into the economics of past business models involving penny books. Those models don't work anymore.

Where we need to focus our attention is on the economic business models in use today, and how coming policy changes will affect the way we all do business on the world's largest eCommerce platform.

Small FBA Sellers Seem to Be Targeted

Each year tighter controls are implemented on Amazon sellers, especially FBA sellers.

Simply getting inventory into a distribution center is far more complex than it was just five years ago. Sellers used to be able to include up to 1,500 SKUs and a single shipment. Now it you can only include 250 SKUs at a time.

To make things even more complicated, as you process your shipment Amazon requires you to correct item dimension errors in their catalog without compensation.

I completely understand the need for accuracy in the Amazon catalog. But to force sellers to maintain the accuracy of the catalog as a right of passage to listing the items on the website seems a bit draconian to me.

And the latest policy change is the scariest of all because they are now doubling down on long-term storage fees by flagging your listings with the warning that the item you're listing is a slow seller and may be subject to long-term storage fees.

Is The Game Changing Yet Again?

Let's be honest. Changing market conditions force every company to ajust their business practices, policies, and even economic models to stay alive. As much as many may like to believe to the contrary, Amazon is no exception.

The truth be told, Amazon must adapt to the constantly shifting global economy in which it operates or it will not survive. That means we must also adapt or we won't survive either.

Therefore, FBA sellers must ask themselves, ' What are the implications of this new obstacle in listing FBA inventory?'

The current policy says sellers can have a single copy of each ASIN in the distribution center without incurring any long-term storage fees.

The new warning messages in the shipment creation process seem to indicate that the single copy per ASIN policy may be changing in favor of high turnover inventory.

Are the days of building a large long-tail backlist of titles and storing them in an Amazon distribution center numbered? Many large sellers list items with very long tails, especially books, at highly subsidized storage fee rates as FBA items. Those sellers give them a premium price knowing that there's a high probability that the item will eventually sell.

Who can blame them? When monthly storage fees average $0.015 per ASIN, it pays to keep a single copy of everything you find that fetches a $10 profit or more sometime in the future.

However, it appears that Amazon is putting an end to that practice too. Sellers who profit from long-tail merchandise had better make sure that they have sufficient margins to absorb draconian fee increases or else they ignore Amazon's warning signs at their own peril.

Are the Days of Long-Tail Products Numbered?

It seems to me that Amazon is determined to force sellers into only shipping high turnover merchandise into their distribution centers. No more will they tolerate long-tail merchandise without the seller paying a hefty premium. Maybe they don't even want long-tail inventory at all.

What do you think? Do you agree with me that the days of the long-tail seller may be numbered? Your feedback and perspective would be greatly appreciated.

Good hunting.

Joe Waynick is author of several eCommerce books covering the bookselling and publishing industry. His books are available on Amazon.com.You can also follow him on Twitter @JoeWaynick.

* * * * *

Top of Page: Danger Ahead for Long-Tail Amazon Sellers

Previous Page: Legitimate Home Based Businesses

Home Page: Making Money Online Selling Used Books

Would you like to comment on this article?

Has this article been helpful to you and/or your business? Would you like to add a point or two I may have missed?

Use the form below to create your own webpage on this site and share your thoughts about the article. You can even write an entire article of your own! In fact, comments consisting of 300 words or more receive priority consideration.

Blatant commercial messages will not be posted. In addition, SPAM or inappropriate comments or pictures (in my sole opinion) will be ignored.

Nevertheless, a SHORT promo for your business and a link back to your website at the end of your comments are permitted.

What Other Visitors Have Said . . .

Click below to see what other visitors have said about this article.

Long Tail Definition Not rated yet
Original Comment: January 10, 2017 Thank you for keeping us up to date on all of Amazons changes. Your last article regarding long tail books …

New Seller objective Not rated yet
Original Comment: July 15, 2016 As a fairly new Amazon seller who has been selling on Ebay for years what is my best course of action in regards …

Click here to write your own.

Sign-up For A
FREE Weekly
Bookselling Tips
Newsletter
Enter eMail Address
Enter First Name

We promise not to sell your information to anyone.

Click to learn more and sign-up with Endicia Dazzle for a FREE TRIAL!
Click for FREE trial!

Click this image to learn about the Dell PDA with barcode scanner attachment

Click to learn
why you need
this device!

Click this image to learn about the Socket Scan Card for your PDA

Click to learn
why the this
Socket Scan
Card is best!