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Amazon hits US sellers with surcharge to offset inflation and fuel costs

Amazon is adding a 5 per cent surcharge to its delivery fees in response to rising fuel costs and inflation, the company told its third-party sellers on Wednesday.

The fee, which takes effect April 28, will be applied to US sellers using Amazon’s logistics network to deliver products, known as Fulfillment By Amazon. It is not intended to be permanent, nor will it be passed on to consumers directly.

The fee will be added to the per-unit delivery cost, not the overall product price, a spokesperson said. For instance, the cost to deliver a T-shirt would rise from $5.07 to $5.32. The average rise will be 24 cents per package.

While the company does not disclose how many packages it ships, an estimate from logistics consultancy MWPVL suggested 3.25bn packages from third-party sellers were sent to US customers via Fulfillment By Amazon in 2021.

The surcharge does not apply to deliveries made by other companies, such as the US Postal Service or UPS.

In a message sent to sellers on Wednesday, Amazon said it had, until now, absorbed some of the increased costs of doing business, such as adding more than 750,000 new workers, increasing wages and rapidly increasing its warehousing footprint.

“In 2022, we expected a return to normalcy as Covid-19 restrictions around the world eased, but fuel prices and inflation have presented further challenges,” the statement read.

“It’s still unclear if these inflationary costs will go up or down, or for how long they will persist.”

The move is one of several Amazon has made to offset rising costs of its logistics operation. In February, it said the price of its Prime membership scheme — where customers pay a monthly or annual fee for free delivery — would increase from $119 to $139 per year.

The change was made partly because of a rise in “wages and transportation costs” in its logistics network, the company said at the time.

The pandemic has added to strain between Amazon and its millions of third-party sellers, whose products made up 56 per cent of units sold on the ecommerce store in the most recent quarter.

“I just threw my hands up in the air,” said Jason Boyce, chief executive of brand agency Avenue7Media. “What’s next for these sellers? Amazon is just in an insurmountable position right now to do whatever they want.”

During the early onset of the coronavirus outbreak, the company abruptly halted accepting items into its warehouses that were not deemed essential, such as cleaning supplies.

In a recent survey of 3,500 global Amazon sellers, conducted by ecommerce software platform Jungle Scout, 64 per cent said rising supply chain costs was the biggest concern for their businesses in 2022.

But Mike Scheschuk, Jungle Scout’s chief marketing officer, added the changes were unlikely to provoke price rises for consumers in the store. “Any time fees increase, a seller might consider passing the cost to the customer, but many will decline to do so to maintain their competitive position in the marketplace,” he said.

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