Packages - Photo by Claudio Schwarz

Packaging for Amazon: Navigating New Packaging Requirements

As of February 4th, 2020 Amazon has updated the minimum package dimensions pertaining to its sustainable packaging programs. This communication highlighted increased expectations of Amazon Vendors to develop and implement ready-to-ship packaging.

While this is not the first instance of Amazon updating product packaging policies, this marks a significant increase in the number of products impacted by Amazon’s declared sustainability goals. Amazon has pledged to meet the Paris Agreement 10 years early through their Climate Pledge: getting to net-zero carbon impact by 2040 across all Amazon businesses and a major component of this commitment is to reduce packaging waste through the FFP and SIOC programs.

What is FFP and SIOC?

Amazon breaks out ready-to-ship packages into two tiers:

Tier 1: Frustration Free Packaging (FFP)
  • Curbside Recyclable Packaging Materials
  • Easy to Open
  • Minimal Packaging
  • Ships without Amazon Overboxing
  • Minimal Damage Rates
  • No Additional Preparation Required by Amazon
Tier 2: Ships-In-Own-Container (SIOC)
  • Ships without Amazon Overboxing
  • Minimal Damage Rates
  • No Additional Preparation Required by Amazon

What Do Amazon Vendors and Sellers Need to Know?

Amazon’s Frustration Free Packaging (FFP) program has existed for a decade, but mandatory inclusion of sustainable packaging did not happen until 2018. On September 3rd, 2018 Amazon laid out long-term plans to move small items to boxes with flexible mailers, and to work with Vendors to have items Ship-In-Own-Container (SIOC).

Amazon gave a deadline of August 1, 2019, that many products sold through Vendor Central would be required to meet its Tier 2 SIOC packaging requirements. This applied to non-sort items with dimensions over 18"x14"x8" or weighed more than 20lbs. If items were not tested and certified as SIOC or FFP, then each unit sold would be subject to a $1.99/unit chargeback fee.

It’s important to note that Amazon is talking about non-sortable packages: these programmatic changes do not yet apply to products going to Sortable fulfillment centers.

New Minimum Package Dimensions

The minimum dimensions for FFP or SIOC certification are now set at 6" x 4" x 0.375." This is a reduction from the 9"x6"x0.375" expectations.

Items are excluded from SIOC chargebacks if:

  • Any one, or more, of its dimensions are less than 6" on its longest side
  • Less than 4" on its median side
  • Less than 0.375" on its shortest side
The Cost

Each item above the minimum packaging expectations will be subject to the $1.99/unit chargeback. The change will go into effect on August 1st, 2020. Units sold from Feb 1st through July 31st will still likely receive a chargeback notice, but the fees will be "waived."

My Products Qualify, What Should I Do?

Many businesses will be impacted by these updates to SIOC / FFP guidelines. Brands will need to invest to create packaging that is durable, space efficient, and ready to ship. Amazon has established the Amazon Packaging Support and Supplier Network (APASS) to help brands on designing, testing, or certifying packaging to meet SIOC requirements

Not every iteration of product is subject to testing–-if variated products have the same shape, material composition, packaging design, and packaging specifications-–a single product is eligible for testing as a representative for all highly-related items (Color, Size, Scent, etc).

Additionally, if products are sold through multiple Vendor Codes or multiple marketplaces, adjustments to the certification form are required to prevent excess testing.

While a $1.99/unit fee is high, the cost of developing and testing products may be hundreds or thousands of dollars per item--for businesses with large catalogs, the total cost may be unrealistic to implement.

Companies will need to adapt to these changes. In the near term, moving to Seller Central (FBA fulfillment) may be the best way to preserve profitability, but with these ambitious environmental commitments, it is only a matter of time before Amazon will seek to reduce packaging waste from marketplace sellers as well.


Curious to learn more about how FFP and SIOC may impact your brand? Want to know how to take your brand's marketing strategy to the next level? Our team of ex-Amazonians are here to help. Please reach out to us at info@getarmr.com


Photo Credit: Claudio Schwarz

Amazon Ordering Behavior Changes

Over the last six months ARMR has collected several data points indicating Amazon would make significant reductions in their vendor pool, trimming thousands of vendors down to hundreds.

It seems as if that day has arrived. Some of you have did not receive expected purchase orders Monday (March 4), and threads on multiple vendor forums indicate thousands of other vendors also have not received purchase orders.

We have reached out to Amazon's support staff and received the following response:

"Please be informed that at this time, we are not placing any purchase orders on your products.

To preserve the customer experience, the featured offer will be disabled when the product is out of stock. We will notify you if we choose to place any purchase orders.
I apologize for the inconvenience that caused to you in this regard.
Kindly note that we put a lot of effort and time in getting this provision for our vendors, only with an intention to improve the services."

This is an abrupt shift in Amazon’s behavior and we believe that all or some of the below will happen. Please note that, while these claims are thus far unsubstantiated and speculative, these are our best-informed predictions:

  • This is a hard reset to push all vendors to Amazon’s new platform (yet to be announced) but what we think will be called “Amazon Seller” or “One Vendor”
  • This new platform will be announced in the coming two to four weeks
  • Amazon will introduce their version of a “consignment” relationship
    • A new form of selling on Amazon, where Amazon determines the end-retail price to the consumer, but you [the business] still own the inventory (as opposed to FBA where you determine the end-retail price and own the inventory)
    • If the above is true, this will be a relationship which we wish to avoid
    • Amazon may announce the new platform with “product orders” under the new consignment relationship following not far behind.
  • Amazon will follow up with purchase orders on a select subset of your catalog, seeking the highest demanded products through the new portal/One Vendor program
  • Amazon will further follow up with a bulk-buy offer (at a reduced wholesale cost they will dictate)

This change in purchasing behavior is going to require a significant change in our strategy. Over the next several weeks, our team will communicate and implement updated strategies, built around your business and taking into consideration the new dynamics of the marketplace and platform.

This shift increases the importance of Seller Central (3P and FBA), driving traffic to your detail pages from outside of the Amazon ecosystem (social media and influencers, Google AdWords, etc.), pricing, and high-quality content generation.

You hired us for exactly this situation—an existential crisis on your Amazon business—and we are here to do our job: right the ship and plot a new course into the future.

This shift will open new opportunities and close previously successful pathways. We will do our utmost to research these new opportunities and execute a strategy designed to maximize your revenue in this new marketplace.

Best regards,
Oscar

Oscar Barbarin
CEO
Have a question? Please reach out to us at info@getarmr.com