Amazon has increased the fulfillment fees by over 30% since 2020. A series of small fee jumps has added up to a meaningful increase. Amazon is passing off its growing costs to third-party sellers.
Amazon will charge sellers $5.06 to ship a 1lb item during the holiday season (October 15th-January 14th). The fee for fulfilling the same product in 2020 was $3.48; it has increased by 45%. Smaller items will be roughly 30% more expensive to fulfill, while large and heavy items will only be 20% more expensive.
Since most Amazon sellers use Fulfillment by Amazon (FBA), these fee increases affect all and ultimately mean consumers are paying more. Increased FBA fees, rising advertising spending, and expensive freight imports all contributed to higher prices.
The fees increased in steps. For example, Amazon first raised the fee to fulfill a 1lb item by 77 cents on June 1st, 2021. Then, on January 18th this year, the fee increased by 27 cents. In April, Amazon added a fuel and inflation surcharge of 23 cents. And finally, Amazon said the fee would increase by 31 more cents during the holiday season. In total, the fee went up by $1.27. In addition, storage fees also increased at the start of 2022.
The fees will go down after the holiday season, but only to the current levels. Amazon has been slowly increasing them every year; thus, it is unlikely that they will ever decrease significantly, even when conditions that caused them to increase this year are no longer present.
|Year||Small 12oz||Large 1lb||Large 3lb||Small oversize|
USPS, FedEx, and UPS have all raised fees and introduced peak holiday surcharges over the past two years. Overall, fulfillment has gotten more expensive on and off Amazon FBA - many third-party logistics providers (3PLs) have been increasing their fees too.
“At a certain point, you can’t keep absorbing all those costs and run a business that’s economic,” Amazon CEO Andy Jassy told CNBC in April. “We have previously absorbed these cost increases, but seasonal expenses are reaching new heights,” Amazon wrote in an update to sellers in August.
Sellers, too, can’t keep absorbing increasing costs, and thus they raised prices.