Amazon is blaming rising fuel costs and inflation for its decision to impose an average 5% surcharge on merchants to store and ship their products in the United States, Reuters reported Wednesday (April 13).
The price increase marks the company’s first such surcharge and comes after months of rising wage- and labor-related costs that have cut into the retail mammoth’s profits, the report stated. Beginning April 28, Amazon said it will charge an average 24 cents more per unit it stores and ships using its Fulfillment by Amazon (FBA) service.
The surcharge is not permanent and is “a mechanism broadly used across supply chain providers,” Amazon said in a message to merchants, per the report.
“We have experienced significant cost increases and absorbed them, wherever possible, to reduce the impact on our selling partners,” the message stated, according to the report. “In 2022, we expected a return to normalcy as COVID-19 restrictions around the world eased, but fuel and inflation have presented further challenges.”
For now, the surcharge only applies to the U.S., Amazon’s biggest market, the report stated. Although sellers can skirt the surcharges by shipping goods to customers directly, many of these merchants use FBA as it lets them access Amazon’s fast-delivery club, Prime.
Amazon argued its fulfillment service “continues to cost significantly less than alternatives.”
Last month, Amazon launched a program that will double cash back rewards on fuel purchases to up to 12% for debit card holders using its Amazon Flex, which oversees deliveries of common household goods to customers through Prime Now, Amazon Fresh and other programs.
Flex drivers use their own vehicles and typically earn an average of more than $26 an hour in the U.S.
Amazon also handles fuel costs for its delivery service partners and Amazon Freight Partners, which uses independent trucking companies to transport goods between Amazon facilities.