Profits reduced by one-third! Amazon takes action against sellers’ self-delivery services

As Amazon faces the possibility of an antitrust lawsuit, it announced an additional fee for third-party sellers who ship their own products.

Starting October 1, all third-party sellers who ship their own items will pay a 2% fee on top of their commission (usually 8%-15%) for each item sold.

The new fee targets merchants who use the Seller fulfillment Prime (SFP) service. Launched in 2015, the SFP program allows sellers to earn the Amazon Prime badge while fulfilling their own orders. Since sellers need to meet the company's Prime delivery standards, such as fast delivery and weekend service, the SFP program has not attracted as many users as FBA. The company tentatively scheduled the program in 2019 and reopened registration for invited users in June of this year.

It is understood that sellers participating in SFP usually sell larger goods, such as furniture, which are not well matched with Amazon's highly automated warehouses, which are mainly used to handle smaller products.

Many sellers believe that Amazon's new fee is intended to force them to use Amazon's logistics services. The company did not explain to sellers why it imposed this fee, but told the media that this move will help cover the cost of operating an independent infrastructure and measure its benefits.

  One office furniture seller who signed up for Seller Fulfillment Prime said the fee would cost his company almost $1 million a year and force him to raise prices ; he would likely continue to use the service because of Amazon’s broad user base, but he also noted that paying the fee didn’t bring him any additional performance returns.

Another merchant also said he expected to raise prices to cope with the new fees, saying that for many merchants using the service, the 2 % fee would squeeze their already small profits by a full third . He also said Amazon only gave sellers a few weeks' notice, making it difficult to adjust because he had already stocked up on inventory for the upcoming holiday shopping season.

In recent years, Amazon has been raising fees for sellers , who typically pay for advertising and logistics to help maximize sales in stores. As sales growth in the company's core online business slows, seller services have become increasingly important to the company. Data shows that seller services generated $32.3 billion in revenue in the second quarter, up 18% year-on-year. Last year, seller fees accounted for about half of the cost of each transaction, making it more difficult for sellers to make a profit.

Amazon has also been accused of wielding too much power over the roughly 2 million sellers who use its platform , and it captures 37.6% of all online spending in the U.S., six times that of its largest online rival, Walmart Inc, according to Insider Intelligence.

It is reported that the US Federal Trade Commission's antitrust case against Amazon has entered the final preparation stage. The announcement of this new charge has really surprised many sellers and industry insiders.

Amazon

SFP

Fee Changes