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Amazon Says New Fulfillment Fees Reflect Underlying Costs

Amazon said Thursday (May 9) that the updated fees for merchants using its fulfillment, storage and shipping services reflect underlying costs and are “significantly less” than those announced by other major fulfillment services. 

“We have been listening to seller feedback and working with our seller partner community to explain our updated fees, which are designed to more accurately reflect underlying input costs for Amazon and sellers, give sellers more choice for how they inbound their inventory to our sites, and ultimately help spread inventory across our fulfillment network so we can deliver products faster and increase sales for our selling partners,” an Amazon spokesperson said in a statement emailed to PYMNTS Thursday (May 9).

This statement followed a Bloomberg report posted Thursday that said that Amazon’s revised fees have shifted more costs onto merchants even as shoppers are trading down to less expensive products, merchants are struggling to make money and Amazon’s revenue from seller services has grown faster than its cost of providing those services.

The report quoted one merchant who said the new fees will reduce his profit margin from 20% to 8%, another who said the fee structure is getting increasingly complicated and cost-prohibitive, and a third who said Amazon reduced a size limit and increased the shipping cost of one of his products from $10 to $26.

Amazon announced in December that it was going to adjust its fulfillment fee structure to provide more transparency to sellers by creating separate fees for specific capabilities, including those for sending products into its fulfillment network and those for shipping products out of its network.

The company said at the time that it expected that retailers would see an average increase of 15 cents in fees per unit sold — a figure “significantly less” than the increases announced by other logistics providers — and that the cost of its two-day shipping methods would remain 70% lower than those offered by others.

In the statement provided to PYMNTS Thursday, the Amazon spokesperson said: “As sellers are adapting to these changes we have seen that the actual impact is even lower and many more sellers are seeing a decrease in the average fees that they are paying to Amazon.”