This week, Amazon announced an expansion to incentives offered to brands who take part in SIOC (Ships in Own Container) or FFP (Frustration Free Packaging). Products that meet the incentive requirements will be given an additional credit between $0.08 and $6.49 per unit received.
The new incentives apply to newly certified SIOC/FFP products or existing products that become certified as enhanced packaging between a 15-month period of October 1, 2021, and December 31, 2022.
It’s important to note that this announcement does not affect the SIOC chargeback that is currently in place, nor does it change the scope for what does and does not trigger that charge.
Direct-fulfillment items are exempt from both the SIOC chargeback and this new incentive program.
Why is Amazon Offering This Incentive?
In 2019, Amazon co-founded The Climate Pledge – a commitment for Amazon to be net-zero carbon by 2040. We see this new incentive as a continuation towards Amazon’s Climate Pledge goals, specifically their Shipment Zero commitment of having 50% of all their shipments be net-zero carbon by 2030.
SIOC requirements were first introduced 2 years ago. While we continually encourage the brands we work with to adopt these packaging specifications, we suspect brand adoption overall has begun to plateau after the initial push by Amazon when the program was first announced.
The FFP/SIOC incentive encourage more brands to take steps towards helping Amazon achieve their Shipment Zero goals. These efforts also increase capacity within Amazon Fulfillment Centers by reducing packaging sizes.
We strongly encourage the brands to take advantage of the SIOC and FFP incentives for non-fragile products that weigh less than 50 pounds. Historically, all SIOC certifications needed to be passed through an ISTA-6 certified packaging lab, which was incredibly expensive for many product types and categories. By allowing suppliers to process their own SIOC testing, brands can overhaul their selection’s packaging to be more “eCommerce friendly” at a fraction of the cost.
Marketing and security play important roles in packaging for physical retail. However, this adds extra materials that aren’t necessary for eCommerce packaging. Things like plastic clamshells and wire ties should be removed from packaging sold through eCommerce channels. This reduces packaging materials, reduces the weight and volume of shipped products, and provides a better customer experience with easy-to-open packaging.
We encourage brands to utilize these incentives from Amazon with the added benefit of:
- Participating in sustainability-themed on-site marketing such as Climate Pledge widgets and curated sustainability landing pages.
- Lowering channel costs by taking advantage of reduced fees and minimizing SIOC chargebacks
- Lowering shipping costs. This mostly impacts pre-paid vendors or FBM suppliers, however, collect vendors and FBA suppliers could experience lower fees long term.
- Improving other eCommerce channels. More efficient and smaller packaging can be used for channels beyond Amazon.
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