Amazon Has Too Many Warehouses. Now Sellers Are Paying More

In China, the owner of an online toy shop relies on Amazon to ship nearly a million packages a year. The toy business, which designs and manufactures toys and craft materials in China and then sells into English-speaking markets including the UK, US, and Canada, has been running on Amazon's third-party fulfillment service. Walker asked WIRED not to reveal the name of his business because successful businesses on the site are often attacked by competitors who report fake issues to Amazon to try to decrease their standing online.

He says we are almost exclusively through Amazon. The business is in the top three of the biggest child-focused arts-and-crafts brands on Amazon in the UK.

He says that it is an awesome scaling program.

Walker handles product design, manufacturing, and marketing because he is almost entirely reliant on Amazon's warehouses and shipping capabilities. He didn't consider any alternatives or competitors.

It doesn't come cheap. Walker received a letter when it was announced that Amazon had built or bought $2 billion too much warehouse space. In the UK and the US, it was decided that the price hike was necessary due to the fuel and inflation surcharge.

Third-party sellers can store their products in Amazon fulfillment centers and take advantage of Amazon's Prime delivery service, as well as take advantage of Amazon's picking, packing, shipping, and customer service. Many companies use it.

With all the warehousing Amazon has, it makes it easier for them to do fulfillment, says Ben Graham, marketing operations manager at a nutritional supplements company. It's fine, but it was attacked by a competitor, temporarily locking it out of Amazon and impacting its sales, so it's looking to draw down its reliance on Amazon.

Graham says that it makes it harder to offer any kind of value. You end up with significantly lower margins on Amazon than you would on your own website.

In 2022, we expected a return to normal as Covid-19 restrictions around the world were lifted, but fuel prices and inflation have presented further challenges. The fuel and inflation surcharge will be implemented on May 12 in the UK, Germany, France, Italy, and Spain.