E-Commerce Briefings: FBA Raises Fees; Walmart expands health care

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“Ecommerce Briefs” is my occasional series on news and developments that impact online merchants. In this article, I discuss Amazon’s increased vacation fees, new Prime benefits, and the company’s continued competition with Walmart in subscription services and healthcare.

New FBA Fees for the Holidays

Amazon recently announced it was increasing fees for Fulfillment by Amazon sellers during the holiday shopping season as it struggles with rising costs. From October 15 through January 14, sellers using FBA will pay an additional 35 cents per item sold in the United States or Canada. This is the first time that Amazon has increased seller fees for the holidays.

The company told sellers in an email that it was applying the surcharge because “…expenses are reaching new heights.” This is the second new fee imposed on merchants this year. In April, Amazon imposed a fuel and inflation surcharge of 5%.

Advantage Competition

In August, Amazon announced new benefits for its US Prime members. They can now buy products from select retailers on the Amazon app and Amazon.com and have the goods delivered the same day to select zip codes in more than 10 cities.

The partnerships are with omnichannel clothing retailer Pacsun, health and nutrition retailer GNC, kitchenware supplier Sur La Table, global clothing retailer Superdry and omnichannel clothing brand Diesel. Brands and retailers selling through Prime will have access to Amazon’s logistics and fulfillment capacity in addition to fast delivery to consumers.

Amazon values ​​the benefit at $59. Also in August, Amazon teamed up with food delivery company Grubhub to offer Prime members a Grubhub+ membership for one year. Normally membership costs $9.99 per month.

Amazon is expanding Prime benefits to secure member retention at a time when the number of new subscribers is declining. Subscription revenue growth was 10% in the second quarter of 2022, compared to 30% in the same quarter of 2021. Amazon is trying to provide more value to Prime members and prevent members from leaving. Amazon first offered its Prime subscription in 2005 at $79 per year and remained at that level for years.

In February 2022, Amazon increased the subscription price from $119 to $139. Some members rate whether Prime is still a good value. In April this year, in a letter to shareholders, Amazon said Prime had more than 200 million members. Consumer Intelligence Research Partners put the number at 172 million.

Walmart, on the other hand, kept its Walmart+ program at $98 per year. It recently announced a partnership with Paramount for a streaming service for Walmart+ members: a Paramount+ Essential subscription (with ads) at no additional cost.

Amazon and Walmart will likely continue to compete for subscribers by expanding their respective offerings through 2023.

Walmart+ members now receive a free Paramount+ Essential subscription.

Health care

Two weeks ago, Amazon revealed it would shut down its much-heralded telehealth service, Amazon Care, on December 31. The service — which offers virtual urgent care services, free telehealth consultations and home visits from nurses — began in 2019 as a pilot program for Amazon employees in Seattle.

Last February, the company expanded virtual offerings nationwide for its employees as well as to businesses. However, in a statement to employees announcing the end of the program, the company said Amazon Care “…is not a comprehensive enough offering for the large businesses we are targeting and is not going to work long term.” . Still, CEO Andy Jassy said as e-commerce growth slows, Amazon is looking to healthcare for additional revenue.

As Amazon ends its virtual care program, Walmart announced on September 7 that it will expand virtual health services in 2023. Walmart and health care conglomerate UnitedHealth Group are joining forces in a 10-year plan to provide preventative care to seniors age 65 and older in select Medicare Advantage plans and virtual health care for all age groups — starting with 15 Walmart Health locations in Florida and Georgia. The program will eventually include other locations.

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