In response to rising costs, Amazon will increase a fee charged to third-party merchants who use its Fulfillment By Amazon services by 5% to cover fuel and inflation. The surcharge, a first for the e-commerce giant, will go into effect on April 28.
According to a notice to sellers, the increased fee will apply to all product types, including “non-apparel, apparel, dangerous goods and Small and Light items.” The fee, which covers the cost of customer service as well as picking, packing and sending out a product with two-day shipping, will be increased on average by 24 cents.
Merchants who use the Fulfillment by Amazon service — which stores, packs and ships their goods — pay a variety of fees in addition to the fulfillment rate that will increase at the end of April. In November, Amazon announced FBA fees were going up “to partially offset the higher permanent operating costs we face going forward.”
The move comes after months of concerns over inflation, at a time when Amazon has told shareholders it expects logistics and labor costs to increasingly eat into its sales. The fee increase is set to kick in the same week Amazon is expected to report its earnings from the first three months of 2022. Separately, Etsy increased its base seller fees from 5% to 6.5% on Monday, leading one seller to call for a strike and more than 15,000 sellers to sign a petition in protest.
Amazon’s new surcharge, with its average increase of 24 cents per unit, is below UPS’ 42-cent fuel surcharge and the 49-cent fee charged by FedEx, the company said.
“In 2022, we expected a return to normalcy as COVID-19 restrictions around the world eased, but fuel and inflation have presented further challenges,” the FBA team said in the notice. “It is still unclear if these inflationary costs will go up or down, or for how long they will persist,” the notice continued, “so rather than a permanent fee change, we will be employing a fuel and inflation surcharge for the first time, a mechanism broadly used across supply chain providers.”
It’s estimated almost 90% of Amazon’s more than 2 million sellers use its FBA service. Analysts predict many will pass the increase on to their customers.
“Costs inevitably have to be shared across the economy, customers included,” John Elder, CEO of Black Label Advisor, told Business Insider. “FBA sellers can only handle so much margin compression before customers are affected.”
