April 18, 2022
Amazon.com marketplace sellers who use the company’s fulfillment services will see a five percent temporary surcharge for shipments, from April 28, attributed to rising fuel prices and inflation.
This is the first such supplement from Amazon. Amazon increase in enforcement fees in January by 5.2% on average.
“In 2022, we expected a return to normal as COVID-19 restrictions eased globally, but fuel and inflation presented other challenges,” Amazon wrote in an email. email to sellers. “It is still unclear whether these inflationary costs will rise or fall or how long they will persist, so rather than a permanent change in fees, we will for the first time use a fuel and inflation surcharge, a mechanism largely used across supply chain suppliers.
About 90% of Amazon sellers use Fulfillment by Amazon (FBA) to store, package, and ship their items. FBA is considered the primary way to make products eligible for Prime.
Amazon said that even with the supplement, its fulfillment rates “continue to cost significantly less than the alternatives.”
When it raised fees in January, Amazon said it had more than doubled its fulfillment capacity in the United States since the pandemic began, hired more than 628,000 and raised starting salaries. At the time, Amazon said its fees remained on average 30% cheaper than if sellers had to fulfill orders on their own, “providing FBA sellers with expedited fulfillment and premium delivery speed for service prices.” below standard prices.
Amazon sellers should increase listing prices to offset costs.
According to JungleScout’s “State of the Amazon Seller” report based on a December survey of 3,500 U.S. Amazon sellers, 76% are profitable and 45% have increased profits from 2020 to 2021 despite significant supply chain disruptions. Fifty-eight percent have aggressive growth plans in 2022.
The biggest concern for sellers, however, is rising shipping costs for inventory and order fulfillment, followed by growing competition that drives down prices and increases advertising costs. More than half are actively selling on other platforms, and many plan to do so this year. The main platforms to join were Walmart.com, Shopify, eBay, Facebook and Etsy.
DISCUSSION QUESTIONS: Does the temporary fuel and inflation surcharge seem like a fair charge given escalating shipping costs? Where do you think Amazon’s online marketplace is most vulnerable to competition for its sellers?
“As long as Amazon is the easiest, easiest, and most convenient way to buy things, customers will remain tolerant of price gouging and overspending.”