UPDATED: Amazon Wants to Take a Bigger Chunk Out of Seller Profits with 2 New Fees
UPDATE 09/21/2023: In a rare move, Amazon has dropped its plan to impose a 2% fee on sellers who use Seller Fulfilled Prime (SFP). 🤯
The company had initially scheduled to initiate this fee on October 1st, in addition to the existing 8% to 15% commission it levies on all sellers.
According to documents referenced by Bloomberg, Amazon stated that it based its decision on feedback from SFP sellers, though both some sellers and media outlets finger the pending antitrust suit as a more likely motivator.Â
In a statement to Forbes, an Amazon rep said that “after careful consideration we’ve made the decision not to implement this program fee to ensure seller sentiment related to the fee does not impact program participation.”Â
The spokesperson further explained that the additional fee was intended to assist the company in offsetting infrastructure expenses. However, many sellers refused to believe that, telling Bloomberg that the new fee was “as an attempt to pressure them into using Amazon’s logistics services rather than fulfilling orders themselves,” potentially implicating the eComm giant in another anti-competitive practice.
Amazon’s logistics program has been the target of FTC’s increasing antitrust scrutiny, alleging that it is favoring its own products and sellers who use FBA/Prime and disincentivizing non-Prime sellers on its platform. The agency may file suit centered precisely on that allegation later this month, as reported by Reuters.
Related: FTC Alleges Amazon of Tricking and Trapping Customers into Recurring Prime Subscriptions, Amazon Faces Tougher Scrutiny Under EU’s Digital Acts
One week after announcing a Prime Day-like event in October, Amazon decided to spoil the fun by bringing back its seasonal surcharge and imposing an extra fee for those who use Seller Fulfilled Prime.
2023 Holiday Peak Fulfillment Fee for FBA and MCF Orders
From October 15, 2023 through January 14, 2024, a holiday peak fulfillment fee will apply to the following orders:
- US FBA
- Canada FBA
- Multi-Channel Fulfillment
- Remote Fulfillment with FBA
The seasonal surcharge rates remain the same from 2022 for US and Canada, per Amazon. But you will see that the holiday fee has the following significant increases in comparison to fulfillment fees during off-peak:
- Small standard: $0.20 more per unit
- Large standard up to 2 lbs: $0.30 more per unit
- Large standard between 2 lbs and 20 lbs: $0.50 more per unit
- Small oversize: $1 more per unit
- Medium, large, and special oversize: $2.50 more per unit
Check out the updated rate card for US FBA, CA FBA, MCF, FBA Remote Fulfillment to see the fee changes in greater detail.
Some sellers in the comment section of the news post feel like there’s no end in sight to Amazon fee hikes. Meanwhile, others are more concerned about whether paying these extra fees will really get their inventory checked-in on time for the holidays or Amazon’s “just charging extra for the same abysmal service FCs have been providing of late.”
One seller in particular is surprised about the announcement, given that “most customers already shop at Temu for lower prices,” causing their profits to fall. However, “Amazon has not taken any actions other than charging sellers for more expensive rates.”
To minimize the impact of fees on your margins, be sure to read our white paper, Attack of the Fee Stack. This year, more eCommerce sellers and experts have been sharing practical profit-focused advice and solutions to improve margins in the face of these fee hikes.
2% Fee On Each Product Sold for Seller Fulfilled Prime
Amazon has introduced a new fee targeted at sellers who opt not to utilize its fulfillment solutions, aka Seller Fulfilled Prime (SFP). This program lets Amazon sellers sell their products with the Prime badge and offer 1 to 2 day shipping to Prime customers while fulfilling orders from their own storage facility or by teaming up with an approved third-party fulfillment service provider.
The fee hike has caught many sellers off-guard and is perceived by many as a strong-arm tactic (to get them to switch to FBA), especially in light of the impending antitrust lawsuit by the FTC against the eCommerce giant, Bloomberg reports.
In the course of FTC’s investigation, the agency has directed its attention towards Amazon’s treatment of sellers operating on its platform. Of particular interest is Amazon’s practice of punishing sellers who are shipping products themselves by favoring Prime sellers over non-Prime.
Currently, there are expectations for the agency to unleash the said lawsuit which has become almost unavoidable following the recent “last rites” deliberation between Amazon and FTC representatives.
With the FTC intensifying its scrutiny, Amazon’s decision to introduce an additional fee for sellers sidestepping its FBA services and choosing to manage their own product shipments seems rather poorly timed.
Starting from October 1st, SFP sellers will be subject to a 2% fee on every item sold. This is on top of any other applicable charges like the 8% to 15% referral fee.
Ever since its inception in 2015, SFP has enabled sellers to dispatch their products autonomously at no extra cost. However, the recently introduced 2% fee might create a compelling reason to transition towards using Amazon’s own logistics services, as they might now be cheaper than SFP.
In a notice sent to SFP sellers last week, Amazon offered a vague explanation why the additional fee was necessary.
“We’re updating our requirements for Seller Fulfilled Prime to ensure that it provides customers a great and consistent Prime experience.”
However, in communication with Bloomberg, the company stated that the levy would assist in funding the expenses associated with maintaining “a separate infrastructure and measuring its effectiveness.”
Discussing the matter without revealing their identity, an anonymous source informed Bloomberg that SFP sellers were given only a few weeks’ notice about the fee change.
This limited time frame posed challenges for the sellers to accommodate this additional cost, especially considering that they had already procured inventory for the upcoming holiday season, the source further elaborated.
Amazon taking third-party sellers by surprise with sudden policy changes and short adjustment period is nothing new. The online retailer simply has too much control over the marketplace, which is why the FTC stepping in could potentially bring about great changes in the way Amazon or the US eComm industry is regulated.
Recently, Amazon offered concessions to the UK Competition and Markets Authority (CMA) to stop an ongoing antitrust probe. However, FTC Chairperson Lina Khan opposes such legal remedies. This means if the agency wins its long-awaited lawsuit vs. Amazon, it could finally break up parts of the retail giant.
Need more information?
- Send Message: We typically reply within 2 hours during office hours.
- Schedule Demo: Dive deeper into the nuances of our software with Chelsea.
- Join Live Upcoming Webinar: New to Amazon inventory management? Learn three inventory techniques you can implement right away.