Amazon to Impose New Fee on Merchants, Prompting Criticism Amid Antitrust Lawsuit
Amazon.com Inc. has announced a new fee for merchants who do not utilize the company’s logistics services, a move that has been met with resistance and surprise as the US government prepares to file an antitrust lawsuit against the e-commerce giant.
According to documents reviewed by Bloomberg, thousands of third-party sellers who handle their own shipping will be required to pay a 2% fee on each sale starting in October. This fee is in addition to the commission, typically 15%, that merchants already pay Amazon for selling products on its popular web store.
Many merchants interviewed by Bloomberg view this new fee as an attempt to pressure them into using Amazon’s logistics services instead of fulfilling orders themselves. While the company did not provide an explanation for the levy, it stated that it would help cover the costs of running a separate infrastructure and measuring its effectiveness.
Amazon has faced criticism for its perceived control over the approximately 2 million merchants who use its platform. Insider Intelligence reports that Amazon captures about 37.6% of all online spending in the US, which is roughly six times more than its closest competitor, Walmart Inc.
The Federal Trade Commission is currently preparing an antitrust case against Amazon, and the timing of the new fee has caught some merchants and consultants off guard. Jason Boyce, whose Avenue7Media assists around 100 businesses in selling products online, expressed surprise at the fee, stating, “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.”
In recent years, Amazon has steadily increased fees on merchants who typically pay for advertising and logistics to maximize their sales. Seller services generated $32.3 billion in the second quarter, surpassing the profitable cloud services business and accounting for about half of each sale’s cost.
The new fee specifically targets merchants who use Seller Fulfilled Prime, a service that allows them to handle logistics independently while still receiving an Amazon Prime badge for quick delivery. These merchants often sell larger items like furniture, which are not well-suited for Amazon’s highly automated warehouses designed for smaller products.
Amazon initially launched Seller Fulfilled Prime in 2015 to expand inventory without overwhelming its fulfillment centers. However, enrollment in the program was later closed due to difficulties merchants faced in meeting Amazon’s delivery standards. The company recently reopened enrollment as a potential response to ongoing antitrust investigations.
Merchants were notified of the new fee last week, with one office furniture merchant estimating that it will cost their company approximately $1 million annually, necessitating price increases. Another merchant expects the fee to wipe out up to one-third of already slim profit margins for many users of the service. Both merchants expressed frustration at the short notice provided by Amazon, making it challenging to adjust inventory for the upcoming holiday shopping season.
Amazon spokesperson Jonathon Hillson defended the fee, stating, “We are excited to offer Seller Fulfilled Prime to sellers as a way to independently handle fulfillment of their products while also making those products available to Prime customers with fast, free delivery, great customer service, and free returns.”
Amazon’s seller fees have been under scrutiny from regulators and lawmakers since 2019 when a merchant accused the company of using its e-commerce dominance to force sellers into using its logistics services. This allegation has become a focal point of the FTC’s antitrust case against Amazon.
Juozas Kaziukenas, founder and CEO of Marketplace Pulse, which monitors online sales, noted that Amazon has increasingly made it difficult for merchants to qualify for Seller Fulfilled Prime, leading most sellers to opt for Fulfillment By Amazon instead.