Amazon has instituted its first-ever holiday price increase for third-party sellers that use Amazon's FBA (Fulfillment by Amazon) service. Read on to learn more about the holiday fee hike, what to expect, Amazon's reasons for the price increase, and ways you can avoid future FBA price hikes.
Amazon Holiday Fee Hike: What to Know
In a message sent to sellers on August 16, Amazon shared that it will charge an additional 35 cents per item for products sold in the United States of America and Canada from October 14, 2022, to January 14, 2022.
Though 35 cents an item might not sound like that much, it can be a staggering sum when you consider how Amazon's third-party marketplace accounts for nearly half of the company’s sales.
The 35-cent price hike is also on top of the existing charges that sellers have to pay for using Amazon's fulfillment services (FBA costs vary depending on an item's category, weight, and size.)
Amazon Price Hike: First for the Holidays, Not for this Year
This is Amazon’s first-ever price hike for the holiday season, but this is not the first price hike imposed on Amazon FBA sellers this year. In April, Amazon added a 5% fuel and inflation surcharge on its sellers.
Amazon's Reasoning for the Fee Hike
Holiday Price Hikes Are the "New Normal"
Amazon attributes the holiday fee hike to be an "industry-wide practice," and it has been around for many years. Amazon’s explanation for the price hike is that they are adopting a practice that other companies have already implemented (the US Postal Service has already announced a similar plan to increase prices for this year’s holiday season.)
Blame it on Inflation
Due to expenses reaching new heights, Amazon is finding it more difficult to absorb costs tied to the peak shopping season. Therefore, the holiday price hike is also said to be a way to pass off some of the increased costs from inflation to its millions of merchants.
Third-Party Seller Service Vs. Amazon's E-Commerce Revenue
Another potential reason for the holiday price increase is how third-party sellers are faring compared to Amazon's total e-commerce revenue. Revenue from third-party seller services rose 13% in the second quarter compared to last year. In contrast, Amazon's total e-commerce revenue declined by 4%.
How to Avoid Future Holiday Price Hikes
Do It Yourself
It used to be difficult for a company to compete with the fulfillment prowess of Amazon, but times have changed. Now there are tools out there that level the playing field. So, why should you keep letting Amazon eat up your profits? Zenventory is one tool that will make you as efficient as Amazon, with best-in-class fulfillment and shipping software.
Use a Non-FBA 3PL
An independent 3PL can help you avoid the Amazon holiday price hike and future price hikes, while also gaining a more personal service. A good 3PL partner can also help you set realistic reorder points and par levels so that you only pay for the space you need.
With additional customization services like branded packaging, improved customer loyalty, and dedicated support, a good 3PL is more than just a fulfillment solution - they are a partner that will help grow your brand.
If you are worried about Amazon's holiday price increase and any additional price increases in the future, it might be time to take a look at Zenventory Fulfillment Network.
Our fulfillment network connects you to a 3PL we've vetted on your behalf. So, find a fulfillment partner that fits your needs - today! Explore more here.
Conclusion
If you are getting tired of the price increases leveled against you, there are options out there that can free you from increased costs. Whether you choose to upgrade your in-house fulfillment capabilities or you choose to partner with an independent 3PL, you can save money while also strengthening your customer’s experience. If you have any questions on how to get started, our team of experts can help. Contact us if you would like to learn more.
