US sellers are taking a serious hit this week, as Amazon adds to the transaction fee madness with a 5% fuel and inflation charge to all those who use the platform to move products.
Between gas prices, overall inflation and increasing transaction fees, business owners around the world are feeling the squeeze. The cost of virtually everything is rising at record-breaking pace and staying solvent gets harder and harder every day.
Now, Amazon is making it even harder, with the ecommerce giant adding a substantial surcharge on its sellers, and it's not a good look.
Amazon Adds Fuel and Inflation Surcharge for the First Time Ever
In a first for the company, Amazon has announced that it will be adding a 5% fuel and inflation surcharge to sellers using its packaging and deliver services, dubbed “Fulfillment by Amazon.” In the memo to sellers, Amazon noted that the charge would be temporary:
“In 2022, we expected a return to normalcy as COVID-19 restrictions around the world eased, but fuel and inflation have presented further challenges,” read the memo. “It is still unclear if these inflationary costs will go up or down, or for how long they will persist, so rather than a permanent fee change, we will be employing a fuel and inflation surcharge for the first time—a mechanism broadly used across supply chain providers.”
As Amazon is happy to point out, even with the 5% upcharge, the company still provides one of the more affordable means of shipping and processing products. Still, it's not a good look for a company that already rakes in more than $100 billion from these fees, making up 22% of Amazon's revenue.
Amazon's Rising Profits
While this news might make it sound like Amazon is struggling, this couldn't be further from the truth. The pandemic presented a massive opportunity for Amazon, which recorded nearly $500 billion in ecommerce sales in 2020, representing a 42% increase year-over-year.
That growth has slowed down a bit since the beginning of the pandemic, but not by much. In 2021, the company enjoyed nearly $615 billion in ecommerce sales and is poised to hit $730 billion in revenue in 2022.
Suffice it to say, Amazon is doing fine, which makes these surcharges seem like a needless charge on those who are already struggling with inflation. Obviously, Amazon could take the relatively small hit from inflation and fuel costs and pass that down to its sellers. Unfortunately, that's just not the world we live in.
Increasing Fees for Small Businesses
Amazon isn't the only company ramping up prices for small businesses around the world. Popular ecommerce platform Etsy increased its transaction fees earlier this year by 30% and its sellers are not happy about it.
In fact, earlier this week, Etsy sellers went on strike to protest the rising transaction fees, which have increased by more than 80% over the last five years. The group of protestors is unfortunately small, but the message is clear: stop charging small businesses more just to line your pockets.
Fortunately, if you're looking to move on from Amazon or Etsy when it comes to selling products, there are plenty of options out there. These ecommerce website builders are a great place to start, with our research showing that Shopify provides one of the more comprehensive and affordable options on the market today.