According to a recent report by Bloomberg, Amazon.com Inc. is introducing a new fee for third-party merchants who do not use the company’s fulfillment services. This unexpected move has raised concerns among sellers, especially considering that the US government is preparing to file an antitrust lawsuit against the e-commerce giant.
Starting from October, thousands of merchants participating in Amazon’s Prime Fulfilled Prime program will be required to pay a 2% fee for each sale on top of the existing commission they already pay. The fee is seen as a way to pressure these sellers into using Amazon’s fulfillment services instead of fulfilling orders themselves. While the company did not provide any explanation for this levy, it stated that it aims to cover separate infrastructure costs and measure its effectiveness.
This development comes at a time when Amazon is facing accusations of having excessive control over its platform and its merchant partners. With approximately 37.6% of all online spending in the US being captured by Amazon, according to Insider Intelligence, there are concerns about potential antitrust violations. The Federal Trade Commission (FTC) is currently finalizing an antitrust case against Amazon, making the timing of this new fee surprising for many merchants and industry consultants.
Jason Boyce from Avenue7Media, which assists around 100 companies with online product sales, commented on this situation stating, “We are sitting here waiting for the FTC to take action against Amazon on antitrust issues, and this fee shows that Amazon is not afraid at all.”
In recent years, Amazon has been gradually increasing fees for merchants who rely on advertising and logistics services provided by the company to enhance their sales performance. As growth in its core online operations slows down, these merchant services have become increasingly important for generating revenue. In fact, during Q2 2020 alone, vendor services generated $32.3 billion—an increase of 18% compared to the same period last year—surpassing even their profitable cloud services business.
The newly introduced fee specifically targets merchants who use Seller Fulfilled Prime, a service that allows them to handle logistics independently while still displaying the Amazon Prime badge for fast delivery. These sellers typically deal with bulkier items like furniture, which are not well-suited for Amazon’s highly automated warehouses designed for smaller products.
Amazon initially launched Seller Fulfilled Prime in 2015 as a way to expand its inventory without straining its fulfillment centers. However, enrollment in the program was closed a few years later due to difficulties faced by merchants in meeting Amazon’s delivery standards. In June of this year, Amazon announced the reopening of enrollment for Seller Fulfilled Prime, possibly as an attempt to appease regulators investigating antitrust concerns.
Merchants were informed about the new fee just last week. One office furniture dealer enrolled in Seller Fulfilled Prime estimates that it will cost his company approximately $1 million annually, forcing them to increase prices. Another merchant expressed similar intentions and highlighted how the 2% levy will significantly impact already slim profit margins for many sellers using the service. Moreover, sellers also faced challenges adjusting their strategies due to the short notice provided by Amazon, especially since they had already ordered inventory for the upcoming peak holiday shopping season.
It is important to note that both of these sellers requested anonymity out of fear of potential retaliation from Amazon.
An Amazon spokesperson defended this move by stating, “We are excited to offer Seller Fulfilled Prime to sellers as a way to independently handle fulfillment for their products while also making those products available to Prime customers with fast, free delivery, excellent customer service, and free returns.”
Regulators and lawmakers have been scrutinizing Amazon’s seller fees since 2019 when a merchant accused the company of leveraging its e-commerce dominance to compel sellers into using its fulfillment services. This accusation aligns with allegations made by several other sellers and has become a focal point of the FTC’s antitrust case against Amazon.
Juozas Kaziukenas, founder and CEO of Marketplace Pulse, an online sales monitoring firm, points out that Amazon has been making it increasingly challenging for merchants to qualify for Seller Fulfilled Prime in recent years. Consequently, most sellers opt to use Fulfillment By Amazon instead.
The meat, the introduction of a new fee by Amazon for third-party merchants who do not use its fulfillment services has raised concerns among sellers. With an impending antitrust lawsuit from the US government and accusations of excessive control over its platform, this move may further intensify scrutiny on the e-commerce giant’s practices. As the situation develops, it remains to be seen how this fee will impact merchants and whether it will have any bearing on the ongoing investigations into Amazon’s business practices.
It is widely confirmed that: source.
