For the first time, Amazon will be charging a fulfillment surcharge during the peak holiday season, matching a practice common among many popular logistics operators and package carriers.
This policy adjustment follows Amazon’s decision earlier this year to add a fuel surcharge to its Fulfillment by Amazon (FBA) service, another common practice in the logistics industry.
“For many years, we have continued to evolve how we charge fulfillment fees to better reflect the underlying operational costs while ensuring that we provide a great value for sellers,” Amazon said in its announcement of the new peak season surcharge.
The company further reasons that the busy holiday season means greater utilization of its fulfillment network, which increases operating costs during that time.
Amazon said this was not a decision they made lightly as they previously had absorbed the extra operational costs, but “seasonal expenses are reaching new heights.”
The company believes fulfillment fees during the peak period will “remain an average of 30% less expensive for slower standard shipping methods than other major third-party logistics providers, and an average of 70% less expensive than comparable two-day shipping alternatives.”
Therefore, starting on October 15, 2022, and through January 14, 2023, US and Canadian sellers will see an average fee increase of 35 cents (USD) domestically per item sold through Amazon FBA.
Amazon provided detailed pricing tables of how this will affect US and Canadian sellers:
- 2022 US FBA fulfillment fee changes
- 2022 Remote Fulfillment with FBA fee changes
- Fulfillment fees for Multi-Channel Fulfillment orders
US sellers participating in the Remote Fulfillment with FBA program will notice that the surcharges are much higher for Canada and Mexico. This is a point not highlighted by Amazon’s announcement.
Sellers should study the table on how this may impact their business, especially the much higher surcharges for Remote Fulfillment in Canada and Mexico.
Surcharge Should Help Amazon’s Bottom Line
Just as USPS broke the ice two years ago by adding yearly peak season surcharges, it seems Amazon will now follow this logistics industry norm too.
After the highs of 2020, when the pandemic boosted sales and profits, Amazon’s financial picture has been challenging on its North American and International marketplaces.
Besides spending billions on updating its logistics network to handle the volume, it now faces significant increases in operational costs due to inflation.
Additionally, more shoppers have returned to physical stores, adding more headwinds to growing its online commerce business.
By introducing the peak season surcharge, the company will not solve all the financial issues of its retail and marketplace operations, but it should help correct the ship a bit. Expect them to return in 2023.
While speculation at this point, there could be another fee adjustment looming soon.
This year Amazon raised its fulfillment fees on January 18, matching another logistics industry practice to raise prices after the holiday season.
On its Peak Season surcharge tables (see links above), Amazon says: “On January 15, 2023, FBA fulfillment fees will revert back to the non-peak period rates.”
But what will those fees be?
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