Amazon Adds Fuel, Inflation Surcharge To Sellers

Amazon has passed the rising costs it is facing onto third-party sellers that utilise the Amazon fulfilment services.

According to the Guardian newspaper, Amazon is adding a 5 percent “fuel and inflation surcharge” to the fees it charges third-party sellers who use its fulfilment services.

Amazon reportedly blamed the move on a number of factors, but it will likely mean that the third-party sellers pass the increased costs onto their customers, which turn will continue to add to inflationary pressure around the world.

Added costs

Seattle-based Amazon said the increase, which will take effect from 28 April, were subject to change and applied to clothing and non-clothing items.

The move follows an increase in fees announced in November, which came into effect in January this year.

Amazon did not immediately respond to a request for further details, the Guardian reported.

But it cited a notice sent to sellers on Wednesday, where the e-commerce giant said its costs had gone up since the beginning of the Covid-19 pandemic due to increases in hourly wages, the hiring of workers and construction of more warehouses.

Amazon reportedly said it had absorbed costs whenever possible, and increased fees to address permanent costs and to be competitive with other providers.

Amazon’s competitors FedEx and UPS also have fuel surcharges, the Guardian noted.

“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 reportedly said in the notice.

The United States inflation figure has jumped to 8.5 percent in March, its fastest pace in more than 40 years. Petrol prices in the have rocketed 48 percent in the past 12 months.

And it is not just the United States experiencing these problems. The UK inflation rate rose to 7 percent in March 2022, up from 6.2 percent in February.

Fuel prices in the UK, which were already very high, have risen even more.

Third party marketplace

Amazon’s third-party marketplace is where independent sellers can list their products, and it is a huge part of Amazon’s business model.

Indeed Amazon reportedly has about 2 million sellers, who are responsible for half the goods sold on Amazon.com in the US.

Last year, sellers paid Amazon about $103bn (£78bn) in fees, which made up about 22 percent of the company’s revenue.

Antitrust lawsuit

In May 2021, the Attorney General of the District of Columbia (Washington DC) filed antitrust charges against Amazon.

Attorney General Karl Racine alleged the company’s practices have “raised prices for consumers and stifled innovation and choice across the entire online retail market.”

The lawsuit also alleges that Amazon illegally maintained monopoly power through pricing contracts with third-party sellers.