- Amazon told third-party sellers in an email on Friday that it would raise fulfillment fees by just 3% next year.
- The modest price increase follows a record year of investment in improving its storage and delivery capabilities.
- The move shows the importance with which Amazon views growing its third-party-seller base, even if it results in smaller profits for the company.
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Amazon is raising the fulfillment fees it charges third-party sellers in the US by just 3% next year — despite having spent a record amount in improving its storage and shipping infrastructure this year.
In an email sent to third-party sellers on Friday, which was obtained by Business Insider, Amazon said it was making “only moderate increases (about 3%)” in fulfillment fees. Third-party sellers have to pay this fee if they want to use Amazon’s warehouse and delivery services, called Fulfillment by Amazon.
The company added that it was keeping the fee “below industry average,” even though 2019 was its “largest one-year investment” period in fulfillment infrastructure. Amazon invested more than $15 billion in improving its fulfillment program this year, while spending over $3 billion to make one-day delivery the default for its Prime members.
The relatively small price increase for next year shows Amazon’s commitment to expanding its third-party-seller base, even if it results in lower profits, as the company is spending record amounts on building out its logistics footprint. Having more third-party sellers helps Amazon grow its product selection, without having to purchase inventory. But it also comes with the added risk of bad actors and counterfeit products.
In a statement to Business Insider, Amazon’s spokesperson confirmed the email, saying it wants third-party sellers to focus on “developing great products for customers” instead.
“We are committed to helping sellers grow their businesses and remain the most competitively priced option for entrepreneurs to reach customers with fast shipping,” the spokesperson said.
Price hikes announced by other shipping services for next year are mostly higher than Amazon’s 3% increase. UPS and FedEx said most of its shipping fees in the US would increase by 4.9%, while USPS’s will go up by at least 3.5% on average. Amazon’s fee change will take place on February 18.
In the email to third-party sellers, Amazon also said it was decreasing the commission rate it charges for most categories in the US. Most notably, Amazon is reducing the commission fee for personal-care products that cost less than $10 from 15 to 8%, giving sellers more incentive to handle cheap products that are largely unprofitable for Amazon to sell on its own.
Reuters was the first report the price increase on Friday.
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