Fulfillment by Amazon adding 35-cent surcharge during peak holiday season to most shipments
By Matt Collins Article may include affiliate links
Sellers who use Amazon’s fulfillment service will be hit by a 35-cent surcharge during the holiday shopping rush for many shipments.
Amazon announced the hike in August 2022 and will start collecting it starting Oct. 15, 2022 and apply to sales made through Jan. 14, 2022.
That time period covers much of the prime holiday shopping season, including Black Friday and Cyber Monday, as well as the inevitable return and exchange season after the winter gift-giving cycle.
The added fee is a flat fee per item — not per order, but excludes apparel items, according to the site.
While 35 cents may seem relatively small, depending on a merchant’s category and profit margins, this could force some companies to raise prices to cover all or part of the fee. Many companies have already had to raise prices due to fuel surcharges being imposed by fulfillment and shipping companies nearly across the board.
In some cases, sellers end up paying Amazon up to half of the selling price in fees.
Fulfillment by Amazon uses a rather complex fee structure. Merchants can pay $39.99 a month to become part of the offering or, for lower volume sellers, pay 99 cents per item sold. This fee is not affected by the upcoming change.
Amazon also tacks on what it calls “referral fees,” which are percentage-based rates based on the category of the item, many of which also have a minimum per item that’s around 30 cents.
There is also a “fulfillment fee” that is based on item weight and dimensions and uses a flat-rate structure for most items, though oversized items use a scaled approach. This fee also has a fuel surcharge as of September 2022 that is also a flat rate for most items and a scaled one for bulkier ones.
Sellers who warehouse their inventory with Amazon pay a different fee structure and also have to pay a monthly rate per cubic foot of storage. There are also a handful of other fees, both optional and required, that can apply in select circumstances.
The increase is not surprising, given that nearly all shipping and delivery companies are tacking on additional fees during the peak holiday shopping season, most of which are in addition to existing fuel surcharges.
Amazon increasingly relies on its own delivery vehicles to handle doorstep delivery. Although these deliveries can’t have surge pricing in the traditional sense since only Amazon has access to the stream, the company has said in regulatory filings and announcements that costs are up due to fuel and labor costs. The 35-cent hike announced in August is likely designed to cover both surcharges from third-party delivery companies and Amazon’s own cost increases.
Put simply, surcharges during the peak holiday season is really a form of supply versus demand — though in this case it’s the supply of a service, rather than just goods, that’s driving costs up, though global supply chain issues are also leading to price increases linked to the concept as well as increased labor, raw material and shipping costs.