Amazon Adding Fuel and Inflation Surcharge for First Time in History of the Company
The cost of fuel and inflation is causing issues for more than just the average American. Amazon announced it will charge sellers a 5% fuel and inflation surcharge, as CNN reported . “In 2022, we expected a return to…
The cost of fuel and Inflation is causing issues for more than just the average American.
Amazon announced it will charge sellers a 5% fuel and Inflation surcharge, as CNN reported.
“In 2022, we expected a return to normalcy as Covid-19 restrictions around the world eased, but fuel and Inflation have presented further challenges,” Amazon wrote in a memo obtained by CNN.
The company added, “It is unclear if these inflationary costs will go up or down, or for how long they will persist.”
The outlet noted the fee will begin on April 28.
Amazon spokesman Patrick Graham told CNN the “fee surcharge applies only to fee rates paid by sellers that choose to use Amazon’s fulfillment services, which include storing, packing and shipping products.”
According to Graham, the sellers that do not use Fulfillment by Amazon will not be affected by the fee.
This was first reported by Bloomberg.
Additionally, Amazon said in its memo the company has “experienced significant cost increases and absorbed them, wherever possible, to reduce the impact on our selling partners.”
The memo continues, “When we did increase fees, we were focused on addressing permanent costs and ensuring our fees were competitive with those charged by other service providers.”
Bloomberg Quicktake’s Alex Webb explained it is forgotten that “e-commerce operations are not terribly profitable.”
He added, “Amazon itself operates on very fine margins. It makes more than three-quarters of its profit from Amazon web services, its cloud services. That subsidizes the rest of it, so in order to ensure they’re not being pushed into big loss-making territory these sort of things maybe are necessary.”
Check out Webb’s comments below:
The New York Times reported the “overall cost of gas, food and other everyday items is increasing at its fastest rate in more than 40 years.”
The newspaper pointed out experts are unable to determine whether price increases will ramp up or not in the coming months.
According to the CNBC All-America Economic Survey, 47% of Americans say the economy is “poor” amid the spike in Inflation.