The Federal Trade Commission has been investigating Amazon for antitrust violations, and the company is reportedly preparing to implement an extra charge for sellers who decide not to utilize its fulfillment service. Starting this October, thousands of sellers will be required to pay a 2% fee on every product they ship on their own rather than through Amazon’s Fulfillment by Amazon (FBA) program. This new fee will be in addition to Amazon’s commission on each product sale — between 8 and 15%.
According to documents reviewed by Bloomberg and CNBC, this new fee will affect members of the Seller Fulfilled Prime program, which launched in 2015 and allows merchants to display the Prime badge on their products without using Amazon’s FBA logistics service. However, merchants must offer one- or two-day shipping and weekend deliveries to qualify for the Prime badge. The new fees, including a minimum storage fee of $0.25 per item, will require merchants to meet these delivery standards or risk losing their Prime badge.
As the fee goes into effect, many sellers express concern over the potential of being forced to use Amazon’s fulfillment services. Some believe the fee encourages them to use Amazon’s FBA services, which are often more expensive than their logistics solutions. Others argue that the fee increase will ultimately cost customers since the prices of items sold on Amazon’s marketplace will be inflated.
Some sellers already estimate that the new fees will cost them $1 million a year, while others have been unable to make any sales because of the increased costs. The 2% fee is not the only new expense for sellers — Amazon has been raising its referral fees and advertising charges, which add up to around half of a seller’s total revenue, PYMNTS notes.
While some observers have argued that these fees will help Amazon to control its marketplace better and improve customer experience, others have said the company is abusing its dominant market position by keeping customers locked in. For example, an Institute for Local Self-Reliance (ILSR) report argues that the company uses its marketplace dominance to keep its prices high, limiting competitors’ ability to challenge its market share. This could eventually lead to a more fragmented e-commerce industry and hurt customers. The ILSR report outlines several ways the government can address this issue and calls on lawmakers to hold hearings and initiate investigations into Amazon’s practices.
