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If you’re planning to sell on Amazon, you might want to consider selling with Amazon. Starting in October, the e-commerce giant will be implementing an additional fee for third-party merchants who choose not to use its accompanying logistics and fulfillment service, according to a recent report from Bloomberg.
Amazon’s New Fee
The new 2% fee will be added on top of the existing 15% commission that Amazon already takes from third-party sellers. This fee is part of the various charges and fees that contributed to Amazon taking over 50% of third-party seller revenue last year, as reported by Marketplace Pulse. The additional fee will be imposed on merchants who use the Seller Fulfilled Prime service, which is a program that verifies consistently fast third-party delivery. This service is often utilized by merchants selling large items like sofas, which can be challenging to handle within Amazon’s own warehouse systems.
While Amazon did not provide a specific explanation for the new fee, several merchants believe that it is a tactic to encourage them to sign up for the logistics service. However, Amazon did mention to Bloomberg that the fees are intended to cover the costs of maintaining separate infrastructure for indie fulfillers. This move comes as Amazon prepares for a potential battle with the FTC over allegations of its market power over third-party sellers:
- The FTC is expected to claim that Amazon pressures third-party sellers into using its logistics services by rewarding those who comply with higher search result placements and penalizing those who don’t with buried listings, according to sources cited by Politico.
- In the second quarter, Amazon’s third-party Seller Services segment generated over $32 billion, marking an 18% YoY increase and approximately $10 billion more than its Web Services, with higher profits.
Amazon’s Dominance
Amazon is undeniably a dominant force in the e-commerce industry, accounting for nearly 40% of all US e-commerce sales, as reported by Insider Intelligence. This is approximately six times more than its closest competitor, Walmart. Such a significant market share has caught the attention and concern of FTC Chair Lina Khan.