Amazon Sellers Hit With A 5 Percent Fuel And Inflation Fee But It's Buyers Who Will Pay

2022 has so far been a record year for inflation and gas prices. This has impacted everyone, including Amazon sellers. Amazon recently hit its sellers with a 5% fuel and inflation surcharge, which will likely hurt consumers as the added cost gets passed along.

The surcharge is particularly aimed at those who use the "Fulfillment by Amazon" service. First, what is a “Fulfillment By Amazon” listing? Sellers who use “Fulfillment By Amazon” store their inventory at Amazon’s Fulfillment Centers. Amazon then not only ships out the items but also handles customer service issues and returns. Amazon then charges the seller a fee based on the type of item they are shipping and the size of the item.

The new 5% fuel and inflation surcharge will go into effect on April 28th, 2022. This will apply to all items shipped on or after April 28th, including items that are technically ordered before that date. One thing to note is that the surcharge is not permanent. Amazon argued that it chose to implement the surcharge as “it's unclear if these inflationary costs will go up or down, or for how long they will persist.” However, we do not know at the moment how long the surcharge will persist.

Amazon’s latest surcharge will negatively impact sellers who have already needed to absorb increased fees this past year. Amazon increased its fulfillment fees by an average of 5% per sale and its storage fees by 11% per month in January. Amazon claimed that these fees were necessary as it had “more than doubled our US fulfillment capacity, spent over $15 billion across our fulfillment network to help keep employees safe, hired more than 628,000 people, and increased our US average starting wage to $18.00 an hour.” It further argued that it had done its best to avoid passing on increased costs to sellers but that the fees “partially offset the higher permanent operating costs we face going forward.”

Many sellers insist that they will need to raise prices to deal with the growing fees and surcharges. This will unfortunately affect consumers who are already more critically evaluating their budgets. Sellers who sell “non-essential” items are particularly concerned since consumers often cut down on non-essential purchases when money is tight. 

Why not just abandon the “Fulfillment by Amazon" program? Sellers feel pressured to use “Fulfillment by Amazon” to remain competitive. Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance commented to Bloomberg that “...Amazon locks you into using this service. It’s absolutely an antitrust vulnerability for Amazon, because that’s what monopolies do is they corner the market and raise prices.” We do not know that the exact long-term impact of these services and fees will be, but both sellers and consumers will hurt the most from them.