Amazon.com Inc. is going to impose a new price on merchants who do not utilize the company’s logistical services, a move that many of these sellers see as coercive and unexpected given that the US government is preparing to sue the e-commerce behemoth.
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The new cost is aimed at merchants that use Seller Fulfilled Prime, a program that allows them to manage logistics themselves while still receiving an Amazon Prime badge, which indicates to buyers that they may anticipate fast delivery. These merchants frequently offer larger things like furniture, which do not work well with Amazon’s highly automated warehouses, which are meant to handle smaller products.
Furthermore, the documents reviewed by Bloomberg reveal that thousands of third-party vendors who transport items themselves will pay a 2 percent charge in October, which is on top of the 15 percent commission that merchants pay as a part of selling products on the platform.
Amazon has been increasing costs for merchants in recent years, which normally pay for advertising and shipping to help optimize their sales. As core internet sales growth slows, the business has grown in importance.
In the second quarter, seller services produced $32.3 billion, up 18 percent from the same period last year and more than the successful cloud services sector.
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For the first time last year, seller fees began eating up about half of the cost of each transaction, making it more difficult for merchants to turn a profit.
Bloomberg cited Jason Boyce, CEO of Avenue7Media, saying, “We’re sitting here waiting for the FTC to take action against Amazon for antitrust issues, and this fee shows Amazon is not scared at all.”
Amazon has been accused of wielding excessive control over the over 2 million businesses that use its platform, which accounts for around 37.6 percent of all online spending in the United States, according to Insider Intelligence, or approximately six times more than its nearest online competition, Walmart Inc.
Moreover, seeing the increasing dominant control of Amazon, the Federal Trade Commission is planning an antitrust action against Amazon, and the timing of the additional tax caught several merchants and consultants off guard.
Bloomberg contacted some retailers who saw the additional price as an effort to get them to use Amazon’s logistical services instead of shipping orders themselves. One furniture merchant enrolled in Seller Fulfilled Prime fears that the fee will cost his company approximately $1 million a year, so he would rather use the service of Amazon as leaving the platform is not an option, seeing the size of Amazon’s customer base.
