Amazon delays increasing charges for third party resellers for express delivery and warehousing

Amazon announced that it would postpone its plan to increase storage and courier fees from third-party sellers until June 2021. Previously, many sellers were angry about the rising cost of doing business with Amazon.

Jeff Wilke, the outgoing chief executive of Amazon’s retail division, pointed out in a post to merchants that other logistics companies have announced higher fees. He wrote: “Under normal circumstances, we will do the same. But this year is not a normal year. We have decided to postpone the fee increase plan and continue to bear the additional costs instead of third-party sellers.”

Amazon encourages many third-party sellers to use the company’s Fulfillment by Amazon service, which includes product storage, packaging, and delivery to customers’ homes. Amazon said the expansion of its delivery network and services is beneficial to sellers because they can reach more customers more easily.

But third-party sellers complained to US and EU regulators that they are completely affiliated with the world’s largest online retailer. In addition to paying Amazon to handle the shipping business, many sellers also feel the need to buy ads to make their products stand out on Amazon.com. There were reports last year that the total cost can sometimes account for 40% of each transaction.

Amazon usually announces fee adjustments in December and will take effect early next year. In each of the past four years, this means that many sellers who use Amazon’s warehousing and shipping services will increase their costs. An Amazon spokesperson said the company occasionally reduces the cost of certain services.

In early 2020, Amazon will increase the shipping rates for the most common products by 2.9% to 6.1%. The monthly fee for storing items in Amazon’s warehouses will climb 8.7% for most of the year. The current fee adjustment plan will last until June 1st next year and is applicable to third-party sellers in the United States, Europe, and Japan.

Both United Parcel Service (UPS) and Federal Express (FedEx) announced that the total package delivery rate will be increased by 4.9% in 2021, consistent with the previous increase. Most importantly, as the surge in residential express delivery caused by the epidemic continues until 2021, both express companies plan to impose an indefinite surcharge on certain package categories starting in mid-January.

As the market shifts to more residential deliveries rather than commercial deliveries, couriers want merchants to increase their fees to make up for their losses. A commercial delivery is more profitable because commercial customers tend to gather together and couriers can send more packages at each stop.

Amazon’s Wilk said the company will share more details about the fee hike plan in the spring. He said: “We did this because we want to continue to provide people with stable support during the vaccine distribution period because this winter is likely to remain a challenging season.”

(Source)