On Wednesday, Amazon Inc. announced that third party sellers on its online platform would have to pay a five percent surcharge for costs due to fuel and inflation. It is supposed to begin on April 28 and will apply to those who use “Fulfilled by Amazon” service. The service stows, packs and delivers these third party sellers’ goods. Analysts think that the surcharge will be added on to consumer prices by the sellers.
The website of the Seattle based retailer mentioned the levy of five percent for fuel and inflation that will be put on online merchants who use Amazon for their shipping. These third party sellers use its fulfillment services and the company believes that the rise is in sync with the rates offered by other shipment services such as UPS and FedEx, its main competitors.
The giant retailer also said that the rates were “subject to change” and would be applied across products including apparel and non apparel. The company explained that costs had gone up during the pandemic and it had tried to absorb these costs.
It mentioned that wage increase, construction of additional warehouses and hiring of workers had increased. It said that it was only increasing its levy to deal with what it termed as “permanent costs” and those that are incurred as they face competitors.
Amazon also said that there had been an increase in costs after the pandemic due to challenges from fuel and inflation which is at an all time high.
Stacy Mitchell, the co-director of the Institute for Local Self-Reliance said that Amazon was taking advantage of the moment and that the retailer was taking money from third-party sellers and adding it to its business, according to a report in ABC News,
About 22 percent of the giant retailer’s revenue comes from fees it collects from third party sellers. Amazon has been accused of copying popular items and products by making “knockoffs.” It also boosts these made by Amazon on its site and has faced a few legal suits or memes mocking the company. Has it found another new way of making money without much effort as suggested by Mitchell of the anti monopoly organization? In the current situation where fuel prices have skyrocketed due to the Russian invasion of Ukraine, it is a point to ponder.
