Amazon.com Inc. packages lie in front of a FedEx Corp delivery truck. At New York.
Christopher Lee | Bloomberg | Getty Images
In its latest effort to deal with soaring inflation, Amazon plans to raise fulfillment fees over the holiday season, passing on some of its increased costs to the millions of merchants who rely on the site. to sell their products.
Starting October 15 and continuing through January 14, third-party sellers using Fulfillment by Amazon, or FBA, will have to pay 35 cents per item sold in the United States or Canada, the company said in an email to sellers on Tuesday. For merchants using FBA, Amazon handles the process of picking, packing, and shipping items.
Vacation fees are in addition to existing fees that sellers pay for using FBA services. These costs vary depending on the size, category and weight of an item.
Amazon said it was implementing a holiday surcharge for the first time as “expenses hit new heights,” making it harder for the company to absorb the costs associated with the peak shopping season.
“Our business partners are extremely important to us, and this is not a decision we made lightly,” Amazon said in the email.
Amazon’s third-party marketplace has become the centerpiece of its dominant e-commerce business, as it now accounts for more than half of online retail sales. Due to Amazon’s global reach and massive customer base, many retailers rely on the company for the majority, and in some cases all, of their business.
Amazon took advantage of this leverage. Revenue from third-party seller services, which includes commissions earned by Amazon, fulfillment, shipping and other fees, increased 13% during the year. second quarter from a year earlier to $27.4 billion. Amazon’s total e-commerce revenue fell 4% over the same period.
Selling fees have already increased this year as Amazon manages higher costs from inflation, supply chain constraints and the war in Ukraine. Amazon’s spending also surged on rapid warehouse hiring to meet a pandemic-driven surge in e-commerce demand.
“At some point, you can’t go on absorbing all of these costs and running an economical business,” CEO Andy Jassy told CNBC in an April interview.
Major carriers such as UPS and FedEx typically advertise surcharges during the holiday shopping season. Last week, the US Postal Service requested a temporary holiday price hike to cover additional handling costs.
LOOK: How Amazon ships third parties to compete with FedEx and UPS