'It Just Seems Really Unethical': Amazon Adds Holiday Surcharge For Sellers
Amazon is adding about a 35-cent per product surcharge for the holiday season, another strain on sellers.
It just keeps getting more expensive to sell on Amazon— at least, that's how it feels to Meaghan Thomas, co-owner of Pinch Spice Market.
Thomas and her partner, Thomas McGee, started a direct-to-consumer retailer selling organic spices in 2012, and said selling on Amazon has helped them reach customers they would not have been able to using only their website.
But after Amazon added a 5% "fuel and inflation" surcharge in April, and announced Tuesday it will charge sellers who use Fulfillment by Amazon (FBA) an extra 35 cents per product sold during the holiday season, Thomas is feeling fed up.
"We are literally growing our business out of our own pockets and have been for 10 years, and it's been growing, we're doing well, but these kinds of hits just absolutely gut us," Thomas told Entrepreneur.
"I think a lot of us, small mid-size sellers, are just tired of this, but what are we going to do," she added.
Amazon told sellers in an email Tuesday that it would charge an extra 35 cents a product for third-party sellers who use FBA, from October 15 through January 14, per CNBC. It will depend on weight, dimension, and category, the outlet added.
With FBA, Amazon ships your products for you, but it is almost impossible to be an Amazon Prime seller — which is huge for sales — without using FBA, says Eli Coen, the CEO of Lero, an Amazon consultancy that helps sellers.
This is the first time Amazon has done this, but it is typical for companies like UPS and FedEx to add holiday surcharges, according to CNBC, and USPS requested last week.
"Everyone's flipping out," Coen said, referring to his Facebook group of sellers.
The worst part, he said, is that the policy will be in place every holiday season, based on the email he received from Amazon announcing the change, a screenshot of which was viewed by Entrepreneur. (He also sells on Amazon.)
"We decided that, similar to other carriers, we will implement a holiday peak fulfillment fee that applies during a timebound period each year," the email said, according to the screenshot.
His advice to businesses: "I think the best advice is to raise prices if they can," he said.
The holiday season is one of the busiest for Amazon, known as "peak." In another busy season, Amazon Prime Day, a warehouse worker in New Jersey died, and The Guardian reported that the warehouses have high injury rates and that workers see the conditions as stressful and unsafe.
Amazon said in the email it is adding the surcharge because "expenses are reaching new heights," per CNBC.
"Our selling partners are incredibly important to us, and this is not a decision we made lightly," Amazon reportedly added in the email.
Thomas estimated that based on the sales from October through January 2021 of one of their mid-sellers, an organic spice mix Ras El Hanout, this 35 cent-surcharge will cost them about $18,725 more than last year, assuming that one product sells the same this year as last year.
Thomas added she has been trying to wean her business off Amazon for years, and she says it's working; two years ago, it accounted for 41% of their sales, and this year, it's 32%, she said. She writes recipes online, shares them on social media, works with the site's SEO, and keeps trying to refine products to drive organic traffic.
But she isn't planning to pass prices off to the consumer, arguing that corporations raising prices is contributing to inflation, as some critics have said, per USA Today. Analysts have estimated it will add millions in revenue for Amazon, per Barron's.
"We think people are getting slammed too much by companies raising prices and we don't want to be part of the problem," she said.
"I think instead of inflation we're looking at corporate greed right now," she added. "It just seems really unethical."
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