Highlights

  • New fees will apply to products from April 28
  • Amazon said costs have gone up since the beginning of the pandemic

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Amazon adds 5% 'fuel and inflation surcharge' to seller fees

Sellers paid Amazon about $103 billion in fees, which made up about 22% of the company's revenue.

Amazon is taking a step to offset its rising costs, announcing Wednesday it will add a 5% "fuel and inflation surcharge" to the fees it charges third-party sellers who use the e-commerce giant's fulfillment services.

The Seattle-based company said on its website that the added fees, which take effect April 28, are "subject to change" and will apply to both apparel and non-apparel items.

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The latest fee hike follows one announced in November and went into effect in January. In a notice sent to sellers Wednesday, the company said its costs had gone up since the beginning of the COVID-19 pandemic due to increases in hourly wages, the hiring of workers and construction of more warehouses.

It said it had absorbed costs whenever possible, and only increased fees to address permanent costs and to be competitive with other providers. Amazon competitors FedEx and UPS both have fuel surcharges.

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Federal data released Tuesday showed inflation jumped 8.5% in March, its fastest pace in more than 40 years. Gasoline prices have rocketed 48% in the past 12 months.

Though the company is blaming inflation and rising fuel costs for the surcharge, Stacy Mitchell, co-director for the anti-monopoly group Institute for Local Self-Reliance, criticized Wednesday's announcement, saying Amazon was taking advantage of the moment.

Also read/watch | CPI soars to 6.9%, Food inflation skyrockets to 7.6%

"Amazon now controls access to such a huge share of the online market that any business really that makes or sells anything, they have to go through Amazon in order to reach consumers, and that means that Amazon effectively is like a big tollbooth for these businesses. They have to pay whatever fees Amazon imposes on them. And they really have no alternative. There's no competition in the online market," she said.

Amazon's third-party marketplace, where independent merchants list millions of their products, is a huge part of its business. It has about 2 million sellers, and more than half the goods sold on Amazon.com come from these sellers.

Also read/watch | RBI says brace for more price hikes, inflation is here to stay

Last year, sellers paid Amazon about $103 billion in fees, which made up about 22% of the company's revenue. The online retailer said the new fees will apply to products ordered before April 28 but shipped and delivered after that date. Amazon is also expected to release its earnings report from the first three months of this year on April 28.

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