Europe will now bid farewell to Amazon’s small and light program for compact, lightweight, and budget-friendly products.
Following suit with the discontinuation in the US, this change is set to take effect on September 26th. But what does this mean for the industry?
Amazon’s small and light program
In 2015, Amazon introduced its small and light program, which offered a lifeline to merchants aiming to sell smaller, lighter parcels. Hence the name. This allowed them to avoid hefty Fulfillment by Amazon (FBA) fees.
This initiative was a welcome step, countering the common issue of regular FBA fees eroding the profitability of shipping lower-cost goods.
As the curtain lifts on the small and light program, the reality of regular FBA fees creeping into profits can’t be ignored. To tackle this, Amazon initially permitted longer shipping times for these products compared to regular FBA items.
A change of course
The small and light program was also recently discontinued in the US, with the switchover scheduled for August 29th. The new low-price FBA rates are poised to be, on average, US$0.77 lower per item than the previous FBA rates, albeit around US$0.30 higher than the outgoing small and light rates.
Amazon’s reasoning may be grounded in nuances that separate small and light parcels from large/bulky shipments. And it comes down to the obvious: size.
According to Mark McGinley, CEO of Parca, who spoke on the Retail Untangled podcast last week, big and bulky shipments are more lucrative.
“Small parcels that companies like Australia Post and CouriersPlease specialize in can be processed by sorting equipment, fit onto conveyor belts, and shipped by 1-tonne vans, often using the gig economy. But big and bulky items cannot be so easily managed – they need delivery by professionals with the right equipment,” says McGinley.
The big and bulky segment has reportedly grown by 33% in Australia in the past six months, with an annual growth of 18%.
End of an era
Amazon has developed a strategy in Europe involving country-specific price thresholds to facilitate this transition. The thresholds stand at €11 for Germany, €12 for France, Italy, the Netherlands, and Spain, £12 for the UK, 140 Swedish kronor for Sweden, and 55 zloty for Poland.
For products below the price threshold, actual FBA fees depend on their weight and dimensions. Onlinehändler News calculates that those utilizing the PAN-European FBA, will fork out fees in the range of €1.45 to €2.87.
In contrast, merchants opting for storage in a singular European Amazon location usually face heftier costs. Earlier this year, Amazon nudged up the fulfillment expenses in Europe, making this transition all the more impactful.
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About the author
Marce has contributed tech to various prominent publications since 2018, offering a transparent perspective into the tech industry and its effects on its users. She now spends her time developing insightful content for industry players. You know, when she's not gaming or geeking out about the latest fad.
