Leading US origin ecommerce company Amazon is looking at expanding its warehousing facilities to benefit its sellers. The etailer is looking at a new plan, titled ‘Seller Flex’, which is intended to share Amazon’s best practises in warehousing, inventory management, and shipping with the sellers. This way, the sellers have greater flexibility and growth in their expertise.
Seller Flex is intended to offer sellers ease in their control over their stock with Amazon. In a move that could help build seller loyalty, the program will also save sellers the cost of transporting goods to Amazon’s warehouses under its current service.
Amazon is running a feature, ‘Fulfilment by Amazon’ (FBA), which allows sellers to store their products in Amazon’s warehouses. Whenever a buyer places an order, Amazon ships the product directly from the warehouse. This avoids delays in shipping, and errors in packaging. FBA is quite popular with sellers, and most are opting for it. Amazon only charges the sellers for the products that are stored and sold.
However, this is causing multiple problems for both parties. If the product is not ordered, it will remain in the warehouse as dead stock. Sellers also have to go through an elaborate process to recall unsold products.
Amazon has been facing tax problems with the Karnataka government with regard to FBA. The company is being asked to pay sales tax on the products stored in its warehouses. The government says that products stored in Amazon’s warehouses belong to the company, and it will have to pay sales tax.
Amazon, on the other hand maintains that it does not own the products, as it is only a marketplace. However, this argument does not hold water with the tax officials, who say that the company is storing goods from several sellers, which takes its responsibility beyond that of a mere service provider. The dispute led to the tax officials cancelling licenses of 75 dealers.
Amazon’s plans can help build trust and loyalty with its sellers. The pilot plan is for mid-level sellers who have the experience and ability to handle higher scale of operations, says Amazon’s Ram Papatla, director of product management and marketing. “Today, the pilot is not for small sellers but mid-level sellers who have basic e-commerce hygiene and are willing to adopt and learn the operational nuances,” Papatla says.
The new scheme can help Amazon combat its tax woes, as well as bring down its warehouse expenditure. The success of the pilot project will decide if the ecommerce major will roll out the program full-time.
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