Will Amazon’s fuel surcharge irritate its marketplace sellers?
Amazon.com marketplace sellers who use the company’s fulfillment services will see a five percent temporary surcharge for shipments, starting April 28, attributed to rising fuel prices and inflation.
It is Amazon’s first such surcharge. Amazon raised fulfillment fees in January by 5.2 percent on average.
“In 2022, we expected a return to normalcy as COVID-19 restrictions around the world eased, but fuel and inflation have presented further challenges,” Amazon wrote in an email to sellers. “It is still unclear if these inflationary costs will go up or down or for how long they will persist, 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.”
About 90 percent of Amazon’s sellers use Fulfillment by Amazon (FBA) to stock, pack and ship their items. FBA is seen as the primary way products are made eligible for Prime.
Amazon said that even with the surcharge, its fulfillment rates “continue to cost significantly less than alternatives.”
When it raised fees in January, Amazon said it had more than doubled its U.S. fulfillment capacity since the start of the pandemic, hired over 628,000 and increased starting wages. At the time, Amazon said its fees remain 30 percent less expensive on average than if sellers were to fulfill orders on their own, “providing FBA sellers with premium expedited fulfillment and delivery speed for lower than standard service prices.”
Amazon sellers are expected to raise listing prices to offset the costs.
According to JungleScout’s “The State of the Amazon Seller” report based on a survey of 3,500 U.S. Amazon sellers in December, 76 percent are profitable and 45 percent increased profits from 2020 to 2021 despite extensive supply chain disruptions. Fifty-eight percent have aggressive growth plans in 2022.
The biggest concern among sellers, however, is increasing shipping costs for inventory and order fulfillment, followed by rising competition driving prices down and increased advertising costs. Over half actively sell on other platforms, and many plan to this year. The top platforms to join were Walmart.com, Shopify, eBay, Facebook and Etsy.
- 2022 US FBA fulfillment fee changes – Amazon Seller Central
- Amazon adds a fuel and inflation surcharge to the fees it charges to sellers. – The New York Times
- Amazon prices likely going up with new ‘fuel and inflation surcharge’ – The Verge
- Amazon is hitting its sellers with a 5% fee due to inflation and increased fuel costs, and there’s a good chance products will get more expensive as a result – Business Insider
- Amazon Fuel-Inflation Fee Has Sellers Poised to Raise Prices – Bloomberg
- Update to Amazon US referral and FBA fees, starting January 18, 2022 – Amazon Seller Central
- Amazon Seller Fees Raise This Month: What to Know – Feedvisor
- The State of the Amazon Seller – JungleScout
DISCUSSION QUESTIONS: Does the temporary fuel and inflation surcharge seem like a fair fee given escalating shipping costs? Where do you see Amazon’s online marketplace being most vulnerable to competition vying for its sellers?