If the seller has to ship the product to Amazon anyway, why not just ship it to the customer instead and not pay the extra fees? What need is Amazon fulfilling that Fedex or DHL do not?
For me to ship 500x units to the warehouse, from my home in Australia, it costs around US$200. Factor in the FBA fee of around $3 per unit, and you get a total shipping and logistics cost per batch of $1700.
For me to ship 1x unit from my home in Australia to the US, it would cost around US$20 and take 2 weeks to get there. In this instance, I've paid $10,000 and the customer experience is worse.
Even if I were based in the US, I'd be looking at $6 per package via USPS, plus all the fucking around to label and box up those 500x units. (That's maybe $3200 total including packaging, plus about 10 hours' labour distributed over the course of two months.)
I guess the point is that making use of highly-efficient logistics services allows both small businesses and courier companies to access Amazon's economies of scale.
> For me to ship 1x unit from my home in Australia to the US, it would cost around US$20 and take 2 weeks to get there. In this instance, I've paid $10,000 and the customer experience is worse.
Why are the units starting from your home? Is that where they're manufactured?
Also, my impressions is that Amazon shipping is cheaper since they have volume discounts, use their planes for long-haul, and use their trucks for cities.
There is quite some overhead if you have to schedule all the pick ups and update the order and shipping status. They have all this automated and they have warehouses strategically located everywhere.
This is something that many of the chinese sellers still do not use. They are relatively new and inexperienced, they struggle to do the corporate onboarding paperwork etc. They will get around, though, some have improved fast.
If I can pick between two items on Amazon for the same price and one is fulfilled by Amazon, I buy that one.
Price out overnight service from Fedex or DHL. It's frightfully expensive.
Amazon does not offer reliable shipping speeds and most certainly does not make any shipping speed guarantees. If you want worst-case two-day delivery, you can't use Amazon, because they don't do that.