Amazon now imposes additional fees on merchants who do not use the company’s logistics services—cutting severely into many merchants’ profit margins.
Key Details
- Amazon informed its sellers last week that as much as a 2% levy on sales will be issued against certain third-party sellers using Seller Fulfilled Prime starting in October.
- This is in addition to Amazon’s roughly 15% commission rates it imposes on merchants.
- Seller Fulfilled Prime is a service that allows third parties to personally shift packages while still being accepted as part of Amazon Prime, often selling large, bulky, or difficult-to-ship items.
- Amazon defended the change to Bloomberg, saying it will help address cost overruns from operating a separate infrastructure for these merchants.
Why It’s Important
The new fees are just the latest in a series of policies from online retailers against customers who are selling their products through the service. The company has consistently been pinching the profit margins of third-party sellers for the past seven years and appears to want to continue doing so in an effort to increase profits or discourage third-party sales on the website.
As a 2022 study from Marketplace Pulse shows, Amazon’s portion of third-party sales last year exceeded 50% of the profits, cutting severely into the pockets of 2 million merchants who work with the company.
These new policies also come amid added pressure from the Federal Trade Commission, which has been in the process of preparing an antitrust lawsuit against the massive online retailer. As Insider Intelligence notes, Amazon controls 37.7% of all online spending, which is six times higher than its second-largest competitor Walmart.
Notable Quote
“We are excited to offer Seller Fulfilled Prime to sellers as a way to independently handle fulfillment of their products while also making those products available to Prime customers with fast, free delivery, great customer service, and free returns,” says Amazon spokesperson Jonathon Hillson.