Business

Amazon raises seller fulfillment fees during the holidays

Amazon.com Inc packages. lying in front of a FedEx Corp delivery truck. in New York.

Christopher Lee | Bloomberg | beautiful pictures

In its latest attempt to combat soaring inflation, Amazon is planning to increase fulfillment fees during the holiday, eliminating some of the increased costs for the millions of sellers who rely on the site to sell their products.

Starting October 15 and running through January 14, third-party merchants use Made by Amazon, or FBA, will charge 35 cents per item sold in the US or Canada, the company said Tuesday in an email to sellers. For sellers using FBA, Amazon handles the picking, packing, and shipping of items.

Holiday fees are charged on top of existing fees charged by merchants to use FBA services. Those costs vary depending on the size, type, and weight of an item.

Amazon said it was implementing an additional holiday surcharge for the first time because “costs are reaching new heights,” making it difficult for the company to absorb the costs associated with the peak shopping season.

“Our sales partners are extremely important to us and this is not a decision we have taken lightly,” Amazon said in an email.

Amazon’s third-party marketplace has become the heart of its dominant e-commerce business, as it now accounts for more than half of online retail sales. Because of Amazon’s global reach and huge customer base, many retailers trust the company for most and in some cases their entire business.

Amazon made money from that leverage. Revenue from third-party seller services, which includes commissions collected by Amazon, fulfillment fees, shipping and other fees, increased 13% in the year. second quarter from a year earlier to $27.4 billion. Amazon’s total e-commerce revenue refuse 4% in the same time period.

Fees the seller has went up this year as Amazon managed through higher costs related to inflation, supply chain constraints, and the war in Ukraine. Amazon’s costs have also increased due to the rapid rental of warehouses to meet the increased e-commerce demand caused by the pandemic.

“At a certain point, you can’t continue to absorb all those costs and run an economic business,” CEO Andy Jassy told CNBC in an interview in April.

Large service providers like UPS and FedEx Usually notice the surcharge during the holiday shopping season. Last week, the United States Postal Service request temporary price increases during the holidays to help cover additional handling costs.

CLOCK: How Amazon ships to third parties to compete with FedEx and UPS

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