FBA shipping costs soared nearly 60%! Amazon again...

According to foreign media reports, Amazon has increased its investment in logistics during the epidemic. However, even before the outbreak, the company's shipping costs increased by more than 40% year-on-year, while the shipping costs of its online stores and third-party sellers increased by 20%-30%.

According to data, in the second and third quarters of 2020, transportation costs increased by 68% and 57% year-on-year respectively. This is mainly because Amazon increased its investment during the epidemic to meet the rapid growth of customer demand.

But even before the pandemic, shipping costs grew 36%, 46%, 43%, and 49% year-over-year from the second quarter of 2019 to the first quarter of 2020. During the same period, online store sales grew 16%, 22%, 15%, and 25% year-over-year. Therefore, Amazon's shipping costs are 20 percentage points higher than online store sales.

The same trend can be seen in global payment units, which grew at a rate of nearly 20% before the pandemic, much slower than the growth rate of shipping costs.

That is to say, Amazon's logistics costs have been rising.

Despite the rapid growth in shipping costs, Amazon's financial report in 2020 was very eye-catching, with third-party support business revenue increasing by nearly 30% year-on-year. The advertising business grew even faster, at more than 40%.

Advertising is becoming a strong growth driver for the company. It has broken the duopoly of Google and Facebook in the digital advertising market. Amazon's advertising business is growing faster than both Google and Facebook.

At the current rate, advertising revenue will reach $50 billion by 2022. This high-profit margin can be used to improve Amazon's logistics network.

Similarly, the subscription business saw strong growth. Improvements in original streaming content, Echo devices, and fast delivery have created strong loyalty for Prime members, who now have very high renewal rates.

Amazon is investing heavily in improving its transportation network to meet future demand. It is also investing heavily in robotics and automation of its delivery network. This is just a huge investment in the early stages of building a physical system, but it may fall back in the future due to investments in automation and robotics.

For Amazon, a comprehensive upgrade of its logistics system can further expand its e-commerce market share .

It is reported that while Amazon increased its investment in logistics in 2019 and 2020, its FBA fees increased. Although there is no news of price increase yet, many people believe that Amazon may increase FBA fees again in 2021.