Amazon announced on Wednesday that it will tax sellers a 5% inflation and fuel tax for the first time in the company’s history.
According to the e-commerce behemoth, the new tax will go into effect on April 28th and will be imposed in phases owing to recent considerable increases in inflation.
” We anticipated a return to normalcy in 2022, when the Covid-19 restrictions were implemented around the globe eased,” Amazon wrote in a letter to CNN that was leaked. “However, inflation and fuel have caused further obstacles.” ” It’s unclear whether these inflationary prices will go up or fall, or how long they’ll last.”
The fee hike, according to Amazon spokesman Patrick Graham, only applies to fee rates paid by sellers who opt to use Amazon’s fulfillment services, which include packing, storing, and delivering products. Other merchants who don’t use Amazon Fulfillment will be unaffected. The announcement of the surcharge was first reported by Bloomberg News.
Though Amazon blames the premium on inflation and increased fuel costs, Stacy Mitchell, a co-director of the anti-monopoly nonprofit Institute for Local Self-Reliance, believes the corporation is taking advantage of the situation.
“Amazon keeps getting higher its costs on sellers who must rely on its program,” Mitchell said, adding that the additional fees were a method for Amazon to ” Take the power out of the pockets of small businesses and channel it into Amazon’s coffers.”
A substantial chunk of Amazon’s revenue comes from its third-party platform, where independent merchants list millions of their products. Amazon.com has roughly 2 million merchants, who account for half of all purchases.
Last year, Amazon received around $103 billion in fees from sellers, accounting for roughly 22% of the company’s total revenues. According to the online store, the higher fees will apply to everything ordered before April 28 but delivered and received after that date. On the 28th of April, Amazon is expected to announce its profits report for the first three months of this year.
The company has long been accused of making knockoffs or extremely similar products and marketing them on its platform in order to undercut shops selling on the platform.
Amazon received a 34% cut of each seller’s sale on the site in 2021 according to the frequent Amazon critic, and Its take will be boosted even more by the increased fuel charge.
“We clearly will need to boost pricing,” said Molson Hart from Viahart Toy Co., which offers educational toys and other products on Amazon. “Some vendors are unable to do so because their customers refuse to accept the increased rates.”
Hart said he’s already had to cut profit margins on certain larger toys with higher shipping costs because customers wouldn’t pay the increased prices.
“When money is tight, individuals tend to cut back on non-essential things,” he said. “As an educational toy company, we hope that parents will continue to see our goods as necessary, but only time will tell.”