Amazon cuts shipping fees in threat to Alibaba’s US business

Business Thursday 16/June/2016 13:21 PM
By: Times News Service
Amazon cuts shipping fees in threat to Alibaba’s US business

Seattle: Inc. is slashing fees it charges merchants to sell USB cables, smartphone screen protectors and other small, flat items that can fit in envelopes, posing a potential threat to competing marketplaces owned by Alibaba Group Holding Ltd., EBay Inc. and that connect Chinese sellers with US shoppers.
The new rates will take effect on July 1, according to an Amazon e-mail to marketplace sellers obtained by Bloomberg News. Merchants would pay $1.61 to ship three, flat, 1-ounce packages, 67 per cent less than the current price, according to the e-mail. The change differentiates between small, flat items that can fit in large envelopes and items thicker than half an inch that are subject to higher fees.
The new rates apply to merchants using the company’s Fulfillment By Amazon Small and Light programme, introduced last year to offer shoppers free shipping on thousands of popular small items such as makeup, mobile phone accessories and stickers. Most of the inventory comes from third-party merchants who give Amazon a cut of each sale for handling storage, packaging and delivery. Most items cost $10 or less, making low delivery costs essential for profitability.
Amazon shoppers in the US order tens of millions of units annually that fit the small and light dimensions, according to company documents reviewed by Bloomberg News. Amazon, through a spokesman, declined to comment.