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Supply Chain News: Amazon to Delay Hike in 3rd Party Fulfillment Services


FBA Hiked FBA Fees 8.7% in 2020

Dec. 29, 2020
SCDigest Editorial Staff

Customers of Amazon's Fulfilled by Amazon (FBA) third-party logistics service received a Christmas present of sorts – delays in expected 2021 fee hikes until June.

Supply Chain Digest Says...

Bloomberg also reports that at the beginning of 202o, Amazon raised fees to ship items by 2.9% to 6.1% for the most common small items.

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Bloomberg reported this week that Amazon was postponing the normal yearly increases in the fees it charges merchant that use the service for storing and shipping their good.

Such FBA customers have "sometimes bristled at the rising costs of doing business with the company," Bloomberg says.

In a blog post to marketplace sellers, Jeff Wilke, who is soon leaving his spot as head of Amazon's retail unit, noted that other logistics companies have already announced fee increases.

"In a normal year we'd be doing the same," Wilke said in the blog, adding "But this isn't a normal year and we've made the decision to postpone our annual fulfillment fee adjustments and continue to absorb the costs we are incurring on your behalf."

The FBA service is for companies that sell products themselves using Amazon's Marketplace service but do not to manage their own distribution. Amazon of course also sells and does fulfillment for millions of products directly, taking ownership of the inventory.

Bloomberg notes Amazon says the expansion of its delivery network and services has been good for sellers because they can reach more customers more easily.

However, the article says many of these FBA users have complained to regulators in the US and the European Union that they have a "one-sided relationship" with Amazon.

The heart of the complaint is that in addition paying Amazon for the fulfillment services, many sellers feel they must also also buy advertising to get visibility on Amazon.com.

Some estimates are that between FBA fees and the advertising cost, payments to Amazon can reach 40% of sales revenue.

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Amazon typically announces changes to its fees, including FBA, in December, to take effect early in the upcoming new year.

Bloomberg also reports that at the beginning of 2020, Amazon raised fees to ship items by 2.9% to 6.1% for the most common small items. Monthly charges to store items in Amazon fulfillment centers climbed 8.7%.

The announced delay in changes to the fees will last through June 1 and applies to sellers in the US Europe and Japan.

Amazon's Wilke said the company would share more details on its plans for fees in the spring. "We are doing this because we want to provide stability and support for you during what will likely remain a challenging winter as vaccine distribution gets underway," he said.


Any reaction to the delay in Amazon FBA fee hikes? Let us know your thoughts at the Feedback section below.




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