Amazon FBA fees are going up again, this time for the European site

After Amazon updated its FBA delivery fees in the US on April 14 and announced that it would add a 5% fuel and inflation surcharge on top of the current FBA delivery fee per item starting on April 28, Amazon's European site was no exception and also received a price increase notice.

The increase in FBA shipping costs in Europe has eased Amazon's cost pressure to a certain extent, but these costs will ultimately be paid by sellers and consumers. In this context, what should platform sellers do?

European logistics costs increased

On April 21, Amazon officially announced that it would impose a 4.3% fuel and inflation surcharge on top of the current Amazon Logistics FBA delivery fee per unit rate in the UK, Germany, France, Italy and Spain starting on May 12. In the UK, this will result in an average delivery fee increase of £0.10 per unit.

Since the outbreak of the epidemic at the end of 2019, Amazon has made significant investments in its stores and fulfillment operations to better support platform sellers and customers. In the European market, Amazon has opened more than 250 new fulfillment centers, sorting centers, regional air hubs and distribution stations, and its fulfillment capacity has more than doubled.

Amazon's investments have brought huge growth to sellers, and its stores have seen sales increase by more than 70% during the pandemic . However, investment growth means rising costs, especially in the context of the current global energy shortage caused by the Russian-Ukrainian conflict and the double blow of the pandemic. No one knows how long these inflationary costs will last.

As for the increase in fuel and inflation surcharges on Amazon's European FBA fees, Amazon emphasized that this is not a permanent fee change, but a mechanism widely used among supply chain suppliers.

As soon as Amazon’s European FBA price increase notice was released, it attracted complaints from sellers .

Seller A: It's expected. Generally, if the US site changes its policy, the European site will follow suit within two months. Moreover, this kind of policy that requires additional fees will definitely be launched online as soon as possible.

Seller B: "During this period, sellers' sales on Amazon have increased by more than 70%." This sentence is inexplicably familiar. Amazon intends to use this sentence as an excuse every time there is a price increase, right?

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Some sellers also said that they can understand the price increase of Amazon FBA . The seller said: As fuel prices rise, the cost of Amazon transporting goods between fulfillment centers is also rising; in addition, the increase in natural gas and electricity prices has led to an increase in the cost of Amazon fulfillment center operations. I say this not to defend the price increase, but I can understand why Amazon would do this.

Regardless of whether Amazon’s policy of raising FBA fees in Europe is reasonable, the reason behind the price increase is that sellers are paying for these increased costs.

Amazon passes on costs, and sellers and consumers ultimately pay for it

Amazon has added fuel and inflation surcharges on top of the original rates in order to offset rising logistics costs, but these costs will ultimately be borne by sellers and consumers.

For sellers on the European site, the falling exchange rate has already affected their normal profits, and the increase in advertising costs has also become a headache for sellers. In recent years, many platform sellers have raised objections to regulators and complained about Amazon. In addition to paying Amazon's shipping costs, sellers have to spend huge amounts of money on advertising to get better traffic and rankings for their products.

The imposition of fuel and inflation surcharges has increased transportation costs again, squeezing sellers’ profits again. Some sellers said: It is basically impossible to make a profit through FBA now , as the fees have increased rapidly twice in a row, and all this happened when the number of orders fell.

Some sellers also said that the fees had just increased in April , and they continued to increase this time. Amazon must be addicted to cutting leeks!

The 4.3% fuel and inflation surcharge is also a considerable cost. The rising transportation costs have a huge impact on small Amazon sellers. In this case, small sellers can either bear the cost themselves or pass it on to consumers by raising the price of goods. On the other hand, price increases may affect the number of orders. How to strike a balance between cost and profit has become a question that Amazon sellers need to think about.

According to Stacy Mitchell, co-director of Local Self-Reliance, Amazon now charges a 34% commission on sellers' sales, which is already much higher than the 19% in 2014. The new surcharge will further increase the commission, and sellers and consumers will ultimately pay the bill.

With fees rising, is there still room for sellers to make a profit ?

In fact, Amazon is not the only company that imposes surcharges. FedEx and UPS have also been imposing new surcharges since the start of the Russian-Ukrainian war and the increase in fuel costs. Recently, several international airlines have announced that they will increase the General Rate Surcharge (GRI) on Asia-US routes from May 1.

The price adjustment this time is based on each FEU (40-foot standard container), with an additional fee ranging from US$1,000 to US$2,000, which is equivalent to a 10%-20% increase. Domestic shipping companies including Evergreen and Yang Ming are among those that have increased their prices. It is reported that Evergreen, Yang Ming, and HMM will charge between US$1,000 and US$2,000 per FEU, and Zim will increase its fee by US$1,000 per FEU...

It is reported that the collective price increase by international shipping companies is related to the resumption of production and work in Shanghai. According to industry estimates, as Shanghai companies gradually return to normal, the volume of sea freight will increase rapidly starting in May.

With shipping costs, advertising costs , and other costs rising, do cross-border sellers still have room for profit ?   A survey conducted by Scout on 3,500 US Amazon sellers in December last year showed that Amazon sellers are still profitable.

Jungle   Scout data shows that despite supply chain disruptions, 76% of sellers were profitable between 2020 and 2021 , 45% saw increased profits , and 58% had aggressive growth plans for 2022. The biggest concern for these sellers is increased shipping costs for inventory and order fulfillment , followed by price cuts due to increased competition and increased advertising costs .

In this situation, more than half of the respondents have already started multi-platform layout , and some sellers plan to start multi-platform layout this year, among which platforms such as Walmart, Shopify, eBay, Facebook and Etsy are the most popular .

Although sellers have started to deploy on multiple platforms, they have not given up on Amazon. In the context of fierce competition among e-commerce platforms, sellers hope that Amazon can introduce more favorable policies while ensuring their interests, and hope that Amazon can provide sellers with better services after the price increase, so that they can gain something from the price increase!

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